“In the course of its development activities, the company has sustained operating losses and expects such losses to continue over the next several years” – Adicet Bio 2019 10-K Report.
The race to cure cancer at an accessible cost continues. In the coming years, Adicet Bio expects to finally find the solution to one of the world’s most challenging diseases by releasing a product that targets very specific types of tumors. The company focuses on developing novel drugs that will allow consumers to purchase cancer medication directly from the shelves of their local pharmacies. Such an accomplishment would be disruptive and revolutionary to the healthcare industry. Adicet Bio’s gamma delta T cell treatment was recently approved to begin clinical trials, and the company has major hopes of finally developing a marketable product. Revolutionary technology, however, does not come at a low price, and Adicet Bio states that they may be at a loss for years to go before turning a profit.
The company has no income source as of 2021 and continues to rely on licensing agreements and investors. Completing research, creating distribution channels, commercializing, and getting physicians to recommend the gamma delta T cell treatments are years away, as stated in the company’s 10-K. The drug will also need to be sold at a reasonable price in order to compete in the market and be approved by regulators in the U.S.
Worldwide distribution could become even more challenging for the company, given that different countries may have different standards for medical products. Adicet Bio also relies a lot on Regeneron, a company that now owns certain rights of the drug’s future commercialization process. In exchange, Regeneron will continue to provide funding once Adicet achieves certain milestones. Recently, Regeneron granted $10 MM to begin clinical studies due to the t cell drug’s approval. There are many obstacles that Adicet Bio has to overcome to achieve some level of success, making it a very risky investment in the near term.
In 2020 they completed a merger with resTORbio for both companies to leverage their expertise in the ongoing research. resTORbio also has valuable experience in their personnel, most notably their Chief Scientific and Operating Officer Stewart Abbot and board member Bastiano Sanna. Abbot and Sanna bring valuable expertise in similar fields with extensive success in multi-billion-dollar projects.
The stock is trading at around $14, just $8 above its all-time low
Investors have to be wary of shorting. It was in the March 2020 market crash that the company reached its all-time low. Any negative news could make the current difference even smaller. However, if positive news were to be revealed and the company’s financials improved, it could be set to a substantial increase in valuation. With 2020’s 10-k filing to be reported, it is expected that the company continues to see net losses and minimal change in balance sheets and cash flow statements. It would be unlikely to see drastic positive changes for the time being.
In conclusion, Adicet Bio will continue to be unprofitable for years to come, which is entirely normal in early-stage biotechnology companies. It is imperative to keep an eye on this company’s news releases, as major breakthroughs could give investors insight into major earnings in the future.
With its 2020 10-K to be published and clinical tests beginning this year, the company could have massive potential in years to come. The healthcare industry is extremely competitive, and the company will face very tough competitors in the future. If Adicet Bio manages to efficiently complete its revolutionary/novel technologies, the business could be once in a lifetime investment. Only time will tell what will be of Adicet Bio, but one thing is certain, the company is burning cash and will continue to do so for the foreseeable future. In business, cash at hand is oxygen. Adicet Bio has to find a way to effectively stay in the game while progress continues with its novel product.