14. (ABUS)-How Will Patent Win Impact Stock Outlook?

Dec. 17, 2021, JR Research

Summary

• In December 2021, ABUS reported its victory in the patent dispute over Moderna, involving its licensed four-lipid nanoparticles delivery system.
• The future royalties from mRNA COVID-19 vaccine producers remain uncertain as the US government pushes for vaccine IP waivers.

ABUS' Revenue Stream From Patent Licencing

As a clinical-stage biopharmaceutical company, ABUS's only form revenue is its patents licensing program to ALNY and BNTX, among others. Consensus estimates project that ABUS will not be reporting massive revenues in the next five years, as most of its pipelines are still in the early stages of clinical trials. Nonetheless, in FY2021, consensus estimates project that ABUS will report $11M of revenue from its patent licenses.

So, Is ABUS Stock A Buy?

ABUS is currently trading at an EV/NTM revenue of 41.42x, higher than its 3Y mean of 33.18x.

However, we must inform investors that ABUS is not expected to report meaningful revenue in the next five years. The company will only report minimal revenue from its licensing agreements. Therefore, if they are adding exposure to the stock now, it is a highly speculative opportunity. Therefore, we suggest that investors consider adding exposure only upon the positive results from AB-729 phase 3 clinical trials or its COVID-19 anti-viral treatment. As a result, ABUS stock is a highly speculative play for aggressive investors only.

Given its current prospects, we rate ABUS stock at Neutral.