Pfizer Collaboration Offers Potential Milestone Windfalls For TBIO, Despite Financial Hurdles: Analyst

KeyBanc Capital Markets analyst Paul Knight downgraded Telesis Bio, Inc. TBIO to Sector Weight from Overweight.

TBIO slightly exceeded consensus in 2Q23 results, with Pfizer, Inc. PFE milestone payment showing progress in its technical collaboration.

Product revenue increased about 14% with a slowdown from 35% in 1Q23, with customers focusing on the lower ASP BioXp 3200/3250 vs. BioXp 9600.

Facing a tepid biopharma spending environment, the analyst sees limited top-line visibility and reduced rating on TBIO.

The analyst projects lower long-term visibility on the stock, dragged by significant dilution via raising capital through an equity plus-warrant transaction and a slowdown in the biopharma spending environment.

The company expects two more technical milestone achievements of ~$2.5 million each, one in 2H23 and the final in FY24. 

Following the conclusion of technical milestone payments, Pfizer has the option to move forward and trigger additional charges, dependent upon the products meeting certain clinical milestones, with each product being eligible for milestone payments up to $20 million, notes the analyst. Additionally, if aggregate net sales of the product reach $180 million, a $60 million sales milestone is generated. 

For FY23, Knight now projects $(1.32) EPS loss, wider than the previous estimate of $(1.25).

For FY24, the analyst projects EPS loss of $(0.81), wider than the prior estimate of $(0.60) loss.

Price Action: TBIO shares are trading lower by 4.3% to $1.33 on the last check Friday.