The biotech industry garnered huge revenues during the COVID-19 pandemic as companies fostered advancements in drug development and introduced vaccines to help the world fight the deadly virus. Moreover, breakthrough developments to prevent the incidence of chronic diseases, rising investments in innovative technologies, and increased aging population’s needs are creating lucrative growth opportunities for this sector.

However, this industry has witnessed a slowdown this year due to the broader market correction and the improving pandemic crisis. Some believe it is facing its worst time since its inception. Amidst the rumblings of a global recession, access to capital has become seemingly difficult for the sector. According to Barbara Ryan, founder of Barbara Ryan Advisors, a life sciences capital markets strategic advisory firm, the industry has gone “from hero to zero.”

Given this scenario, we think it might be best to avoid biotech stocks Ginkgo Bioworks Holdings, Inc. (DNA), GeoVax Labs, Inc. (GOVX), and Aditxt, Inc. (ADTX), considering their bleak fundamentals.

Ginkgo Bioworks Holdings, Inc. (DNA)

DNA develops a platform for cell programming to enable the biological production of products such as novel therapeutics, food ingredients, and chemicals derived from petroleum. The company serves various markets, including specialty chemicals, agriculture, food, consumer products, and pharmaceuticals.

DNA’s total operating expenses increased 664.2% year-over-year to $791.53 million in the second quarter ended June 30, 2022. The company’s loss from operations widened 979.2% year-over-year to $646.91 million, while its net loss came in at $668.83 million. Also, the loss per share increased 925% year-over-year to $0.41.

The consensus EPS estimate of negative $0.22 for the ongoing fiscal quarter represents a 175% year-over-year decline. The consensus revenue estimate of $57.65 million indicates a decrease of 25.7% year-over-year in the same period.

DNA’s forward Price/Sales multiple of 11.28 is 1,035.4% higher than the industry average of 0.99. In terms of its forward EV/Sales, the stock is trading at 8.27x, 548.7% higher than the industry average of 1.27x.

DNA’s stock has declined 77.2% in price over the past year to close the last trading session at $2.80. 

DNA has an overall F rating, equating to a Strong Sell in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

DNA also has an F grade for Stability and a D for Growth, Value, Quality, and Sentiment. In the F-rated 395-stock Biotech industry, DNA is ranked last. Click here to access DNA’s ratings for Momentum.

GeoVax Labs, Inc. (GOVX)

GOVX, a clinical-stage biotechnology company, develops vaccines and immunotherapies against various infectious diseases like HIV, Zika, malaria, hemorrhagic fever viruses, and cancer.

For the second quarter ended June 30, 2022, GOVX didn’t report any revenue, while its operating expenses increased 43.2% from the prior-year period to $2.24 million. The company’s net loss increased 70.6% year-over-year to $2.24 million, while its loss per share came in at $0.18 during the quarter.

GOVX is expected to report a loss per share of $0.97 and $0.81 in the ongoing and next fiscal year.

GOVX’s trailing-12-months Price/Sales multiple of 33.85 is 709.8% higher than the industry average of 4.18.

The stock has plummeted 73.7% over the past year and 68.2% year-to-date to close the last trading session at $1.15.

GOVX’s bleak outlook is reflected in its POWR Ratings. The stock has an overall rating of D, which translates to a Sell in our proprietary rating system. It has an F grade for Momentum and Stability. In the Biotech industry, GOVX is ranked #244.

To see additional POWR Ratings for GOVX for Growth, Value, Sentiment, and Quality, click here.

Aditxt, Inc. (ADTX)

ADTX, a biotech company, develops technologies that focus on improving the immune system’s health through immune mapping and reprogramming. The company develops AditxtScore, which allows individuals to understand, manage, and monitor their immune profiles; and Apoptotic DNA Immunotherapy, a nucleic acid-based technology that mimics the way the body naturally induces tolerance to its tissues. 

For the fiscal quarter ended June 30, ADTX’s total operating expenses increased marginally year-over-year to $5.81 million. Net loss from operations also increased marginally from the prior-year quarter to $5.77 million. The company’s net loss and net loss per share came in at $5.85 million and $0.13, respectively.

In terms of its trailing-12-months EV/Sales, ADTX is currently trading at 18.73x, 385% higher than the industry average of 3.86x. Its trailing-12-months Price/Book multiple of 2.16 is 12.5% higher than the industry average of 1.92.

The stock has slumped 97% over the past year and 68.1% over the past month to close the last trading session at $2.66.

It’s no surprise that ADTX has an overall D rating, which translates to Sell in our POWR Ratings system. The stock has an F grade for Momentum, Stability, and Quality. It is ranked #336 in the Biotech industry.

Beyond what is stated above, we have also rated ADTX for Growth, Value, and Sentiment. Click here to check ADTX’s POWR Ratings.

DNA shares were trading at $2.75 per share on Monday afternoon, down $0.05 (-1.79%). Year-to-date, DNA has declined -66.91%, versus a -22.26% rise in the benchmark S&P 500 index during the same period.

About the Author: Komal Bhattar

Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...

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