Forte Biosciences Inc. (NASDAQ ticker: FBRX) is a biopharmaceutical company based in the USA, which is engaged in the research and development of medication for the treatment of various autoimmune diseases. Forte’s leading product, called FB-102 is currently in the preclinical development stage, expected to be approved for clinical use by early 2024. It is a proprietary molecule that has the potential to be a biotherapeutic cure for various diseases, particularly Alopecia Areata, Graft-versus-Host Disease (GvHD), Transplant Rejection, and Vitiligo.
Forte Bio was founded by Paul Wagner in 2017 and later merged with a publicly traded biotechnology company, Tocagen Inc., in 2020. Institutional shareholders currently own 18.11% of Forte Bio, 33.48% company insiders, and 48.41% retail investors. Given that the firm is involved in a highly innovative and unique segment of the health sector, we will try to analyze its underlying technical and financial fundamentals in this article, aiming to uncover if FBRX might be an interesting investment opportunity.
Providing a price forecast for any company’s stock is not an easy task, as there are too many interacting factors that may impact on its upside or downside movements. However, it’s clearly of crucial importance to potentially interested investors for their decision-making. Therefore, a thorough analysis of large volumes of data and related information is required, including but not limited to the following:
- Financial Statements;
- Trends in the Market and Industry;
- Historical Stock Performance;
- Technical and Economic Indicators;
- Other Facts.
The existing economic and geopolitical realities, such as persistent inflation, interest rate hikes, ongoing wars, bank failures, and fears of a global recession are making any projections more complicated. Still, in this short piece, we’ll try forecasting the FBRX’s movement pattern for the rest of the current year.
Stock Forecast for 2023
Forte Bio is a microcap company, with a market capitalization of a mere US$20.5 million and a public float of 18.1 million shares. Watching FBRX’s recent performance we observe that it started the year with a price level of $1.06 per share and is currently trading at $0.978 per share, which represents a YTD decline of about 7.74%.
Viewing the period of the last 12 months, FBRX had a declining pattern overall, from the area of $1.48 in April 2022 down to the current levels of below a dollar per share. It had two brief recoveries, moving up to $1.53 and $1.37 in July and August, respectively. However, the 12-month cycle resulted in a drop of about 33% for the stock.
For comparison, the commonly used benchmark index – the S&P 500 – declined 14% in the same period. The 52-week highs and lows for FBRX were at $1.55 and $0.898 per share. However, the stock price suffered its sharpest decline in history back in September 2021, when the company’s stock fell over 85% from the area of $30 down to the level of $4 within a few trading days, after announcements on failed FB-401 trials.
Based on the analysis of the company’s balance sheet and its recent P&L statement, its book value is $42.84 million, which compared to its current market valuation delivers a Price to Book ratio of a mere 0.5. This suggests that the company and its stock price are strongly undervalued now.
Let’s switch to the technical part of our analysis, looking at the key ratios which impact any stock price forecasts in the future, particularly:
- Relative Strength Index (RSI), representing the over- or undervalued level of the stock, shows that the price is moving deeper down into undervalued territory.
- Bollinger Bands (BB), which demonstrates the high or low price levels relative to historical price performance, also indicates the stock price is at low levels while its path is still downward.
- Moving Average Convergence/Divergence (MACD), showing a bear or bullish run on the stock price, indicates that the stock is still in the bearish run for the near short term.
All the above-mentioned ratios currently indicate a “buy” or “strong buy” signal for FBRX. The main part of moving averages with different durations (10 to 100 days) is also in the “buy” area, except the 200 days moving averages, which are giving a ”sell” signal for the stock.
In addition to the technicals, it is important to look into the fundamentals of Forte Bio, to understand how healthy the company is now. There is a limited volume of information on the company available for financial analysis. Based on the published annual reports and other available sources, Forte Bio seems to have presented mixed results in the last few years.
As of the latest available information, Forte Biosciences had a net loss of $15.3 million for the year ended December 31, 2020, and held $59.6 million in cash and cash equivalents. The company has not yet generated any revenue, as it is still in the early stage of developing its products. Therefore, investors should carefully consider the company’s financial situation and potential for future revenue growth when evaluating FBRX as an investment opportunity.
In conclusion, it must be emphasized that the biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, strong competition, and an emphasis on proprietary products. There are multiple factors affecting the success of any product candidate, like FB-401 or FB-102, such as efficacy, safety profile, administration methods, related costs, level of promotional activity, and intellectual property protection.
Meanwhile, many of Forte Bio’s competitors are in the possession of significantly larger financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals, and marketing approved products. Thus, there is also a complex of material risks, that the company might not fully succeed in its efforts to bring the products it currently has in the pipeline to a final stage – their full implementation and use.
For those ready to embrace the risks involved with investing in a clinical-stage biopharmaceutical business, Forte Biosciences Inc. represents an intriguing investment option. FB-102, the company’s main product, has the potential to be a game-changing biotherapeutic solution for a variety of autoimmune disorders such as Alopecia Areata, Graft-versus-Host Disease, Transplant Rejection, and Vitiligo. Forte Biosciences’ merger with Tocagen Inc., as well as its solid management team with considerable biopharmaceutical industry expertise, provide good reasons for optimism.
However, it is crucial to realize that investing in Forte Biosciences also has related risks, including the company’s early stage of development, reliance on successful product commercialization, and the possible influence of the currently uncertain macroeconomic and fragile geopolitical conditions. As a result, before making any investment decisions, investors and traders should undertake comprehensive research and carefully examine the relationship between potential risks and expected rewards.
Forte Biosciences’ financial statements, market and industry trends, past stock performance, technical and economic indicators, and other pertinent details should be further researched and analyzed. While forecasting the price of any business stock is difficult, tracking the movement pattern of FBRX for the next few quarters may provide additional guidance for interested investors.
According to the latest information, Forte Bio is owned 18.11% by institutional shareholders, 33.48% by company insiders, and 48.41% by retail investors.
The analysts who cover it have a consensus recommendation of hold for the time being.
The crash of the company’s stock price was triggered by the reported failure of its FB-401 phase 2 trial tests.
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