Many biotech stocks were the darlings of investors during the pandemic as they helped the world fight against the deadly virus by developing vaccines and therapies. However, all stocks in this space could not capitalize on the positive investor sentiment about the industry. Several industry participants, such as Timber Pharmaceuticals, Inc. (TMBR), have delivered disappointing stock market performance this year.

TMBR is a clinical-stage biopharmaceutical company focused on developing and commercializing treatments for rare and orphan dermatologic diseases.

TMBR’s stock has declined 71% in price year-to-date and 87.8% over the past year to close the last trading session at $0.11. It is trading 88.3% below its 52-week high of $0.94.

On August 29, 2022, TMBR announced that it had received a deficiency letter from the NYSE American LLC stating that the company was not in compliance with the continued listing standards as outlined in Section 1003(f)(v) of the NYSE American Company Guide as the company’s common stock has been trading for a low price per share for a substantial period.

TMBR missed consensus EPS estimates in the last reported quarter. Street expected a loss per share of $0.04, but the company missed estimates significantly. Analysts expected revenue of $150K, but the company did not report any revenue in the last reported quarter.

Here’s what could influence TMBR’s performance in the upcoming months:

Positive Development

On September 14, 2022, TMBR announced that the Committee for Orphan Medicinal Products (COMP) at the European Medicines Agency (EMA) issued a positive opinion on the company’s application for orphan designation for TMB-001 for the treatment of autosomal recessive congenital ichthyosis (ARCI).

Weak Financials

TMBR’s total operating expenses increased 180.2% year-over-year to $9.40 million for the second quarter that ended June 30, 2022. The company’s loss from operations widened 216.9% year-over-year to $9.40 million. Its net loss widened 220.1% year-over-year to $9.50 million. In addition, its loss per share widened 87.5% year-over-year to $0.15.

Unfavorable Analyst Estimates

TMBR’s EPS is expected to be negative for fiscal 2022 and 2023. Its revenue for fiscal 2022 is expected to decline 90.6% year-over-year to $83K.

Stretched Valuation

In terms of forward EV/S, TMBR’s 97.01x is significantly higher than the 3.97x industry average. Likewise, its 5.20x trailing-12-month P/B is 165% higher than the 1.96x industry average. And the stock’s 175.54x forward P/S is significantly higher than the 4.32x industry average.

Lower-than-industry Profitability

TMBR’s trailing-12-month Capex/Sales is 1.27% compared to the 4.55% industry average. Furthermore, the stock’s 0.06% trailing-12-month asset turnover ratio is 82% lower than the industry average of 0.34%.

POWR Ratings Reflect Bleak Prospects

TMBR 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.

Our proprietary rating system also evaluates each stock based on eight distinct categories. TMBR has an F grade for Quality, consistent with its lower-than-industry profitability.

It has a D grade for Sentiment, in sync with its unfavorable analyst estimates.

TMBR is ranked #480 out of 495 stocks in the F-rated Biotech industry. Click here to access TMBR’s ratings for Growth, Value, Momentum, and Stability.

Bottom Line

TMBR is trading below its 50-day and 200-day moving averages of $0.15 and $0.28, indicating a downtrend. Despite the positive developments, including the launch and enrollment of the first patients for the Phase 3 ASCEND study, the Breakthrough Therapy designation from the FDA in May, and the Fast Track designation in April, the company is still far from reporting profits.

Analysts expect the company to keep reporting losses over the next two years. Given its weak financials, stretched valuation, and low profitability, it could be wise to avoid the stock now.

How Does Timber Pharmaceuticals, Inc. (TMBR) Stack Up Against Its Peers?

TMBR has an overall POWR Rating of F, equating to a Strong Sell rating. Therefore, one might want to consider investing in other Biotech stocks with an A (Strong Buy) or B (Buy) rating, such as Vertex Pharmaceuticals Incorporated (VRTX), Biogen Inc. (BIIB), and Gilead Sciences, Inc. (GILD).

TMBR shares were trading at $0.11 per share on Friday afternoon, down $0.00 (+2.91%). Year-to-date, TMBR has declined -71.05%, versus a -22.03% rise in the benchmark S&P 500 index during the same period.

About the Author: Dipanjan Banchur

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...

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