NEW YORK – Investment bank BTIG on Friday downgraded Talis Biomedical from a Neutral to a Sell rating and initiated a price target of $1.00 per share following the point-of-care testing firm's announcement earlier this week that it is delaying the beta-phase rollout of its Talis One molecular diagnostic system, which was planned for the first quarter of this year.
On its fourth quarter earnings call earlier this week, Talis announced it had not launched its Talis One COVID-19 point-of-care test due to manufacturing issues and invalid rates greater than 10 percent. In his research note, BTIG analyst Mark Massaro said the development marks "a delay of at least three months."
Talis had received US Food and Drug Administration Emergency Use Authorization for the test last November.
Talis also indicated this week that it did not know when it will be able to resolve manufacturing issues or commercialize its products. Additionally, the company announced that Chief Operating Officer Doug Liu is leaving the firm, and it is reducing its workforce, "across mostly sales and marketing teams, in order to preserve cash," Massaro said, adding that the firm has $233 million of cash, enough to keep the business going for approximately three years.
Though Talis "indicated that its invalid or failed rates on its products exceed 10 percent, [it] would not quantify the exact level," Massaro said, adding, "Fail rates at that level are typically a non-starter, which is why [Talis] has elected not to launch its products."
BTIG also lowered Talis' full-year 2022 revenue estimate to $3 million from a previous estimate of $40 million; reduced the 2023 revenue estimate to $15 million from $78 million; and the 2024 revenue estimate to $36.5 million from $140 million.
Massaro said that he expects the company to post a net loss of $84 million in 2022; $58 million in 2023; and $88 million in 2024.
The Menlo Park, California-based firm has experienced a series of changes at executive levels recently.
Last August, it announced that Brian Coe, then its president, CEO, and director, was stepping down, and appointed Kim Popovits as interim CEO.
In November, the company announced Brian Blaser as its director, president, and CEO effective Dec. 1, but Blaser resigned after one week for personal reasons and Talis promoted Chief Commercial Officer Rob Kelley to CEO.
On Tuesday, the firm announced that its full-year 2021 grant revenue was $8.2 million, down 25 percent year over year from $10.9 million. The grant revenue came primarily from a National Institutes of Health's Rapid Acceleration of Diagnostics contract that is now completed.
In Friday morning trading on the Nasdaq, Talis shares were down more than 2 percent to $1.38.