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As investors await the upcoming quarterly results from major biotech companies such as Merck (NYSE:MRK) (due out February 1st) and Edwards Life Sciences (NYSE:EW) (due out February 4th) I wanted to take a closer look at three small-cap biotech companies that carry absolutely no debt, and meet the following criteria I've set forth in this multi-level screen. For this analysis, the companies needed to meet the following primary and secondary criteria:

Primary Criteria

  • Shares must trade below $5.00/share and above $0.50/share.
  • Companies must possess a market cap above $20 million.
  • Companies must possess at least $12.50 million in cash as of their most recent quarter.
  • Companies must have generated at least $4 million in revenue over the last year.

Secondary Criteria

  • Currently have Total Debt to Total Cash (TD/TC) ratio of 0.00.
  • Currently have Total Debt to Revenue (TD/R) ratio of 0.00.

After developing this screen, I found three small-cap biotech companies which carry both TD/TC and TD/R ratios of 0.00. I personally consider any ratio under "1" very healthy, under "2" satisfactory, under "3" cautionary, and anything over "3" a warning sign. Also, I've chosen to include stocks that are currently trading under $5/share in effort to bring to light some of the revenue generating biotechs which may on the prospect lists of the bigger institutions.

Company

Symbol

Price

Mkt Cap (Millions)

Total Debt

TotalCash [mrq]

Revenue [ttm]

TD/TC

TD/R

Inovio Pharmaceuticals

(NASDAQ:INO)

$0.64

$89.60

0.00

$15.14 M

$4.62 M

0.00

0.00

Immunomedics, Inc.

(NASDAQ:IMMU)

$2.85

$215.62

0.00

$25.52 M

$32.64 M

0.00

0.00

GenVec, Inc.

(NASDAQ:GNVC)

$1.72

$22.27

0.00

$18.19 M

$11.22 M

0.00

0.00

Inovio Pharmaceuticals: It should be noted that shares of Inovio closed Wednesday's trading session at $0.64/share, currently possess a market cap of $89.60 million, and have generated $4.62 million in revenue over the past 12 months. Based on my calculations Inovio had been given a TD/TC ratio of 0.00 and a TD/R ratio of 0.00 since the company possesses absolutely no debt. The company's fundamentals include a total of $15.14 million in total cash on its books (it should be noted that the company currently has a negative operating cash flow of $21.32 million and a negative free cash flow of $9.89 million), a book value of $0.22/share and zero debt.

Recent Actionable News

January 18th: Analyst Firm Piper Jaffrey noted the company is developing a novel DNA-based vaccine platform that is demonstrating "provocative" immune responses in early studies against a multiplicity of non-viral oncology targets, as well as several infectious diseases such as HIV, HCV, HPV, and the flu. The firm adds that multiple Phase II catalysts are expected this year in its HCV and leukemia platforms.

October 10th: Inovio announced Phase I clinical results indicating that its DNA-based synthetic vaccine VGX-3100 is not only capable of boosting immune responses to antigens from high risk types of human papillomavirus infection, but also killing cells changed by the virus into precancerous dysplasias.

Immunomedics, Inc.: By the end of Wednesday's trading session shares of Immunomedics closed at $2.85/share, currently possess a market cap of $215.62 million, and have generated $32.64 million in revenue over the past 12 months. Based on my calculations Immunomedics had been given both a TD/TC ratio and a TD/R ratio of 0.00 since the company possesses absolutely no debt. The company's fundamentals include a total of $25.52 million in total cash on its books (it should be noted that the company currently has a positive operating cash flow of $3.27 million and a positive free cash flow of $3.71 million), a book value of $0.33/share and zero debt.

Recent Actionable News

January 28th: Immunomedics said it has entered into an agreement with Algeta ASA (OTCPK:ALGZF) for the development of a potential cancer treatment using IMMU's humanized anti-CD22 antibody, epratuzumab. Under the terms of the agreement, IMMU will provide clinical-grade antibody to Algeta, which has rights to evaluate epratuzumab for the treatment of cancer. Algeta will fund all preclinical and clinical development costs up to the end of Phase I testing.

December 12th: Immunomedics had announced that it created two new classes of bi-specific antibodies as the Dock-And-Lock complexes using the company's patented platform technology. These bi-specific antibodies exhibited potent cell killing activity against lymphoma cell lines in vitro, with superior pharmacokinetic profiles and a higher effector functions.

GenVec, Inc.: At the close of Wednesday's trading session shares of GenVec finished the day at $1.72/share, possessed a market cap of $22.27 million, and had generated $11.22 million in revenue over the past 12 months. Based on my calculations GenVec had been given both a TD/TC ratio and a TD/R ratio of 0.00 since the company possesses absolutely no debt. The company's fundamentals include a total of $18.19 million in total cash on its books (it should be noted that the company currently has a negative operating cash flow of $9.84 million and a positive free cash flow of $5.15 million), and a book value of $1.28/share.

Recent Actionable News

December 17th: GenVec has reported that a single dose of its genetic vaccine showed it was effective against Herpes Simplex Virus or HSV2 in two industry-accepted HSV disease models. The company added that immunization was also shown to reduce viral shedding and the recurrence and severity of lesions.

Final Analysis

For potential investors looking to establish a position in Inovio, Immunomedics or GenVec, I'd take a closer look at each company and keep in mind all of the necessary catalysts moving forward. Given the fact that all three companies have considerable strides in terms of their respected lead-drug candidates, carry zero debt, and have generated what seems like sustainable revenue over the last year I'd look to establish a small to medium position at current levels and add to that position once future developments are announced. I'd also continue to pay close attention to each company's debt levels, and any as ratio above 1.50 could warrant a the reduction of any near-term position.

Source: 3 Small-Cap Biotechs With Zero Debt And Sustainable Revenue