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Friday, May 20, 2022

Petros Pharmaceuticals, Inc. (PTPI) Stock Worth Buying Amid High Risks.

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Petros Pharmaceuticals is a New York-based pharmaceutical company dedicated to becoming a global leader in specialized men’s health by developing and marketing novel therapeutics for men’s health problems, including erectile and endothelial dysfunction, psychosexual and psychosocial problems, and Peyronie’s disease. Its lead product candidate is Stendra or avanafil for treating ED and H100 formulation for its potential use in Peyronie’s disease. The company is positioned 100 out of 253 in the biotherapeutics industry and is making strides to register itself as a global leader in its field.

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The international pharmaceuticals market grew from 2020 to 2021 at a compound annual growth rate of 1.8%, from $1228 billion in 2020 to $1250 billion in 2021. The market, as estimated by the analysts, will reach a CAGR of 8% by 2025 with a worth of $1700 billion. The major focus of the pharmaceutical industry shifted towards the reemergence of consequences of the COVID-19 shut down by 2030.

Introduction and Announcements

PTPI stock leaped during the most recent regular trading by 20% after providing positive outcomes from its over-the-counter comprehensive trials for erectile dysfunction treatment STENDRA. The outcomes recommended the draft drug facts labeling language as written may be suitable for its submission to the Food and Drug Authority for the assessment of OTC labeling.

The pivotal study collected 453 interviews including a substantial unit of low health literacy entities for the determination of draft drug facts labeling comprehension for STENDRA. An immediate response showed that OTC labeling was well understood according to the parameters of the study by the participating consumers as up to 95% of participants provided correct responses to the study which assessed nine primary communication messages comprehension. It is predicted that only 25% of up to 30 million men suffering from ED in the US have taken oral ED therapeutics.

In January and February 2022, PTPI announced two important updates regarding its recent collaborations. The company has signed a partnership contract with famous physician Dr. Drew Pinsky to raise awareness and educate the masses to lessen the stigma associated with ED and sexual dysfunction which comes under the men’s health landscape. Dr. Drew will use his expertise and online channels on the company’s behalf to shed the light on potentially available treatment options for men’s sexual health disparities.

In January, PTPI reported about its collaboration with a prominent Contract Development and Manufacturing Organization, for the commercial manufacture of STENDRA tablets. The collaboration will be beneficial in the long run to transfer the product manufacturing to the US, by providing cost savings and a surge in the company’s gross margin.

Catalysts

The major catalyzing force behind the rise in the company’s shares price currently is the positive outcomes from its OTC comprehensive trials for STENDRA which brought a phenomenal gain of 20% in the company’s shares. PTPI’s stock was continuously on a downwards swing from the past year and observed a decline of almost53% and continued within the higher and lower limits of $1.05-$5.20.

Source: Yahoo Finance

As the people around the world struggle with an everlasting pandemic and dreadful escalation in European tensions, the pharmaceutical industry is hit hardest. The ongoing global events have led prominent analysts to reconsider their performance expectations from almost all the leading pharma. Along with other factors, the strengthening in the US dollar price is also one of the core reasons that the investors have lowered their growth forecasts.

Comparison with Peers

When comparing the PTPI stock with its competitors for their annual total returns, the company’s stock solidifies the fact that it was the worst performer during the YTD period by -60%. Almost all the competitors of PTPI (NURO, YMTX, OCX, and SONX) outperformed in their annual total return category.

Source: Ycharts

When PTPI’s one-year performance is compared with its peers (including GRAY, VRPX, IMRA, and NBRV), it becomes crystal clear that although the company performed negatively during the year, its performance was well above other peers (excluding VRPX). The same is the case with its one-month performance, which supersedes the competitors.

Source: Seeking Alpha

Revenue

PTPI issued the full fiscal year 2021 financial outcomes at the beginning of April. As the company did not meet the analysts’ forecasts of revenue and earnings expectations. For the fiscal year 2021, the company reported net sales worth $7.8 million, comprising $4.6 million from the Prescription Medicines segment and $3.2 million from the Medical Devices segment. The company also observed a 56% reduction in its net loss over the year despite the limitations.  2021 proved to be a year of improvement in the company’s business efficiencies with the purpose to maintain development along with lessening its corporate expenditures. PTPI ended 2021 with a strong cash position of up to $24 million, giving it flexibility as the management executes the business plan.

Source: WSJ

When a comparison is made for the company’s revenue from the previous years, it becomes clear that PTPI’s net sales declined by 38% over the past two years. As long as the company’s earnings per share are concerned, for the FY21, they were recorded to be -$0.83 and showed an 88% increase YoY.

Financial Outlook

For the full fiscal year 2022, ending December 31, 2022, the company had not yet provided its financial outlook.

Insider Transactions

The number of outstanding shares of PTPIis20.6 million. The key shareholders in the company are certain institutional investors having 5.9% or 1.24 million shares held by them.

Source: Seeking Alpha

The insiders own much fewer shares as compared to institutional investors.e., 0.34% or 70.4 thousand shares. Recently, the company reported an insider transaction by its Director on January 3,whobought0.14 million outstanding shares of the company for $3.43 per share.

Analyst Rating

No analyst has rated PTPI stock as it has traded for a lesser amount of time (approximately one year), has not recorded an analyst coverage, and is a mortgage REIT or a closed-end fund.

Valuation

Source: Yahoo Finance

PTPI’s enterprise value remained at $1.59 million with no reported five-month beta valuation. The price-to-sales ratio shown by the company was 1.69 for the trailing twelve months with a price-to-book ratio of 0.70. PTPI is short interest with an average volume of 3.31 million by 0.26 million on April 11, 2022.

Risks

Pharmaceutical companies’ stocks have major opportunities to make significant gains along with the possibility of upsetting losses. Some companies (such as PTPI) have a relatively small number of projects, so the press releases regarding clinical studies and approval from the FDA are pivotal risk factors to give their stock a direction. Pharma companies are mostly influenced by these announcements.

Another factor that limits the company’s growth is its market volatility. The more volatile market sentiment turns the investment in the stock to be riskier with a much higher possibility for gains and losses.

Bottomline

PTPI stock is moving in a positive direction for the short span as the company’s one-month performance indicates. Still, it lags behind major financial hubs and needs to work on its overall build-up. The company should alleviate the risk factors by improving its pipeline product portfolio, so the stakeholders can positively invest in the company’s stock.

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