The Company had a net loss of $12.4 million during the six months ended June 30,
2022 and has an accumulated deficit of $225.8 million at June 30, 2022 resulting
from having incurred losses since its inception. The Company had $24.1 million
of cash and cash equivalents on hand at June 30, 2022 and used $11.0 million of
cash in its operating activities during the six months ended June 30, 2022. The
Company has financed its operations principally through issuances of equity
securities. In March 2022, the Company completed a public offering of 40,000,000
shares of its common stock and, for certain investors, in lieu of common stock,
pre-funded warrants to purchase 20,000,000 shares of common stock at an exercise
price of $0.01 per share, and raised $13.8 million in net proceeds after
deducting the underwriting discount and other estimated offering costs. Each
share of common stock or pre-funded warrant was sold together with one
immediately exercisable common warrant to purchase one share of common stock.

The accompanying condensed consolidated financial statements have been prepared
under the assumption the Company will continue to operate as a going concern,
which contemplates the realization of assets and the settlement of liabilities
in the normal course of business. The condensed consolidated financial
statements do not include any adjustments to reflect the possible future effects
on the recoverability and classification of assets or the amounts of liabilities
that may result from uncertainty related to the Company's ability to continue as
a going concern.

The Company expects to continue incurring losses for the foreseeable future and
will be required to raise additional capital to complete its clinical trials,
pursue product development initiatives, obtain regulatory approval and penetrate
markets for the sale of its products. Management believes that the Company will
continue to have access to capital resources through possible public or private
equity offerings, debt financings, corporate collaborations or other means, but
the Company's access to such capital resources is uncertain and is not assured.
If the Company is unable to secure additional capital, it may be required to
curtail its clinical trials and development of new products and take additional
measures to reduce expenses in order to conserve its cash in amounts sufficient
to sustain operations and meet its obligations. These measures could cause
significant delays in the Company's efforts to complete its clinical trials and
commercialize its products, which are critical to the realization of its
business plan and the future operations of the Company.

Management believes that the Company does not have sufficient capital resources
to sustain operations through at least the next twelve months from the date of
this filing. Additionally, in view of the Company's expectation to incur
significant losses for the foreseeable future it will be required to raise
additional capital resources in order to fund its operations, although the
availability of, and the Company's access to such resources is not assured.
Accordingly, management believes that there is substantial doubt regarding the
Company's ability to continue operating as a going concern through at least the
next twelve months from the date of this filing.

                                       7
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Note 3. Basis of presentation and summary of main accounting methods

Significant Accounting Policies

There were no significant changes in the main accounting policies during the six months ended June 30, 2022 to the significant accounting policies described in Note 3 of the “Notes to Consolidated Financial Statements” in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2021.

presentation basis

The accompanying unaudited condensed consolidated financial statements of the
Company have been prepared on a going concern basis in accordance with
accounting principles generally accepted in the United States of America (GAAP)
for interim financial reporting and as required by
Regulation S-X, Rule 10-01. Accordingly, they do not include all of the
information and footnotes required by GAAP for complete financial statements. In
the opinion of management, all adjustments (including those which are normal and
recurring) considered necessary for a fair presentation of the interim financial
information have been included. When preparing financial statements in
conformity with GAAP, the Company must make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues, expenses and
related disclosures at the date of the financial statements. Actual results
could differ from those estimates. Additionally, operating results for the three
and six months ended June 30, 2022, are not necessarily indicative of the
results that may be expected for any other interim period or for the fiscal year
ending December 31, 2022. For further information, refer to the financial
statements and footnotes included in the Company's annual financial statements
for the fiscal year ended December 31, 2021, which are included in the Company's
annual report on Form 10-K filed with the SEC on March 31, 2022.

Use of estimates

The preparation of condensed consolidated financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities, and reported amounts of expenses in the financial statements and
accompanying notes. Actual results could differ from those estimates. Key
estimates included in the financial statements include the valuation of deferred
income tax assets, the valuation of financial instruments, stock-based
compensation, accrued costs for services rendered in connection with third-party
contractor clinical trial activities, and the valuation of contingent
liabilities for the purchase price of assets obtained through acquisition.

Recent accounting standards

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standards bodies that are adopted by the Company on the effective date specified.

During the three and six months ended June 30, 2022, there have been no recently
adopted accounting standards and no new, or existing recently issued, accounting
pronouncements that are of significance, or potential significance, that impact
the Company's condensed consolidated interim financial statements.

Note 4. Fair value of financial instruments

The carrying value of the Company’s cash, cash equivalents and accounts payable approximates fair value due to the short-term nature of these items.

Fair value is defined as the exchange price that would be received for an asset
or an exit price paid to transfer a liability in the principal or most
advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. Valuation techniques used to
measure fair value must maximize the use of observable inputs and minimize the
use of unobservable inputs.

The fair value hierarchy defines a three-level measurement hierarchy for disclosing fair value measurements as follows:

• Level I: unadjusted quoted prices in active markets for identical assets

or passive;

• Tier II – Inputs other than quoted prices included in Tier I that are

observable and unadjusted quoted prices in markets that are not active, or

other inputs that are observable or that can be supported by observable data

       market data for substantially the full term of the related assets or
       liabilities; and

• Level III – Unobservable inputs supported by little or no market

activity for the corresponding assets or liabilities.

The categorization of a financial instrument in the valuation hierarchy is based on the lowest level of entry that is significant for the measurement of fair value.

                                       8
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The following table sets forth the Company's financial instruments that were
measured at fair value on a recurring basis by level within the fair value
hierarchy (in thousands).

                                                          Fair Value Measurements at June 30, 2022
                                               Total             Level 1            Level 2             Level 3

Passives

2018 PIPE warrant liability                $           2       $          -       $          -       $           2
Essentialis purchase price contingency
liability                                          9,305                  -                  -               9,305
Total common stock warrant and
contingent
  consideration liability                  $       9,307       $          -       $          -       $       9,307



                                                        Fair Value

Measures to December 31, 2021

                                               Total             Level 1            Level 2             Level 3

Passives

2018 PIPE warrant liability                $          31       $          -       $          -       $          31
Essentialis purchase price contingency
liability                                          9,547                  -                  -               9,547
Total common stock warrant and
contingent
  consideration liability                  $       9,578       $          -       $          -       $       9,578




The Company's estimated fair value of the 2018 PIPE Warrants was calculated
using a Black-Scholes pricing model. The Black-Scholes pricing model requires
the input of highly subjective assumptions including the expected stock price
volatility, the expected term, the expected dividend yield and the risk-free
interest rate.

Based on the terms of the Company's completed merger with Essentialis on March
7, 2017, the Company was obligated to make cash earnout payments of up to a
maximum of $30.0 million to the former Essentialis stockholders. On December 28,
2021, in connection with the dissolution of two of the former Essentialis
stockholders, the two former stockholders entered into an agreement with the
Company which assigned the right, title and interest to all their future earnout
payments to the Company. As a result of the assignment, as of December 31, 2021,
and going forward, the maximum cash earnout payments are $21.2 million. The fair
value of the Essentialis purchase price contingent liability is estimated using
scenario-based methods based upon the Company's analysis of the likelihood of
obtaining specified approvals from the U.S. Food and Drug Administration (FDA)
as well as the likelihood and anticipated timing of reaching cumulative
revenue milestones. The Level 3 estimates are based, in part, on subjective
assumptions. In determining the likelihood of obtaining FDA approval, the
analysis relied on published research relating to clinical development success
rates. Based on management's assessment, a 72% probability of achieving each
milestone was determined to be reasonable as of each of June 30, 2022 and
December 31, 2021. During the periods presented, the Company has not changed the
manner in which it values its Essentialis purchase price contingent liability.

The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period. There were no transfers between levels within the hierarchy during the periods presented.

The following table sets forth a summary of the changes in the fair value of the
Company's Level 3 liabilities for the six months ended June 30, 2022 and 2021
(dollars in thousands).

                                                 2018 PIPE Warrants             Purchase Price
                                            Number of                             Contingent
                                             Warrants          Liability           Liability
Balance at January 1, 2022                       513,617     $           31     $         9,547
Change in value of 2018 PIPE Warrants                  -                (29 )                 -
Change in value of contingent liability                -                  -                (242 )
Balance at June 30, 2022                         513,617     $            2     $         9,305

                                                 2018 PIPE Warrants             Purchase Price
                                            Number of                             Contingent
                                             Warrants          Liability           Liability
Balance at January 1, 2021                       513,617     $          539     $        10,278
Change in value of 2018 PIPE Warrants                  -               (257 )                 -
Change in value of contingent liability                -                  -               2,047
Balance at June 30, 2021                         513,617     $          282     $        12,325




                                       9

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Note 5. Liabilities related to warrants

The Company has issued multiple warrant series, of which the 2018 PIPE Warrants
were determined to be liabilities pursuant to the guidance established by ASC
815 Derivatives and Hedging.

Warrants issued in connection with the units as part of the PIPE 2018 placement

The 2018 PIPE Warrants were issued on December 19, 2018 in the 2018 PIPE
Offering, pursuant to a Warrant Agreement with each of the investors in the 2018
PIPE Offering, and entitle the holders to purchase 513,617 shares of the
Company's common stock at an exercise price equal to $2.00 per share, subject to
adjustment as discussed below, at any time commencing upon issuance of the 2018
PIPE Warrants and terminating on December 21, 2023.

The exercise price and number of shares of common stock issuable upon exercise
of the 2018 PIPE Warrants may be adjusted in certain circumstances, including
the event of a stock split, stock dividend, extraordinary dividend, or
recapitalization, reorganization, merger or consolidation. However, the exercise
price of the 2018 PIPE Warrants will not be reduced below $2.00.

In the event of a change of control of the Company, the holders of unexercised
warrants may present their unexercised warrants to the Company, or its
successor, to be purchased by the Company, or its successor, in an amount equal
to the per share value determined by the Black Scholes methodology.

Since the Company may be obligated to settle the 2018 PIPE Warrants in cash, the
Company classified the 2018 PIPE Warrants as long-term liabilities at their fair
value and will re-measure the warrants at each balance sheet date until they are
exercised or expire. Any change in the fair value is recognized as other income
(expense) in the Company's condensed consolidated statements of operations and
comprehensive loss.

As of June 30, 2022, the fair value of the 2018 PIPE Warrants was estimated at
approximately $2,000. The approximate $2,000 and $56,000 million decrease in the
fair value of the liability for the 2018 PIPE Warrants during the three months
ended June 30, 2022 and 2021, respectively, was recorded as other income in the
condensed consolidated statements of operations and comprehensive loss.

The Company has calculated the fair value of the PIPE 2018 warrants using a Black-Scholes valuation model. The following text summarizes certain key assumptions used to estimate fair value.

                            June 30,       December 31,
                              2022             2021
Volatility                         95 %               95 %
Contractual term (years)          1.5                2.0
Expected dividend yield             - %                - %
Risk-free rate                   2.90 %             0.72 %

The Black-Scholes valuation model requires the use of highly subjective assumptions to estimate the fair value of stock-based awards. These assumptions include the following estimates.

• Volatility: The Company calculates the estimated volatility rate based on its

historical volatility over the expected life of the Warrants.

• Contractual term: The expected life of the warrants, which is based on the

contractual term of the warrants.

• Expected dividend yield: the Company has never declared or paid any money

dividends and does not currently intend to pay cash dividends

a foreseeable future. Therefore, the Company used an expected dividend

yield of zero.

• Risk-free rate: The risk-free interest rate is based on the WE Treasury

       rate for similar periods as the expected life of the warrants.

Note 6. Commitments and contingencies

Facility leases

The Company's operating lease for its headquarters facility office space in
Redwood City, California, terminated in May 2021. In April 2021, the Company
executed a non-cancellable operating lease agreement for the same 6,368 square
feet of space, which began in June 2021 and expires in May 2023. The lease that
expired in May 2021 also provided the Company with the right to use office
furniture in the space and allowed the purchase of this furniture at the end of
the lease term for $1, which it did. The Company has accounted for both leases
of office space as operating leases. The office furniture included in the lease
that expired in May 2021 was accounted for as a finance lease based on its
relative standalone price as compared to the office space.

                                       10
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The current lease was recognized at inception with a right-of-use asset equal to
$0.6 million and a liability for $0.5 million. The short-term liability was
equal to $0.3 million as of both June 30, 2022 and December 31, 2021, and the
long-term liability was equal to $0 and $0.2 million, as of June 30, 2022 and
December 31, 2021, respectively. The weighted average discount rate was 9% over
a remaining term of 11 months. The discount rate was determined based on
estimates of the Company's incremental borrowing rate, as the discount rate
implicit in the lease cannot be readily determined.

The following is a table by year of the future maturities of the Company’s operating lease obligations at June 30, 2022 (in thousands):

2022 (remainder of the year) $   175
2023                             179
Total lease payments             354
Less interest                    (17 )
Total                        $   337

Components of rental charges for the quarters and half-years closed June 30, 2022 and 2021 were as follows (in thousands):

                                       Three Months Ended          Six Months Ended
                                            June 30,                   June 30,
                                      2022             2021        2022          2021
Operating lease cost:
Operating lease cost                $      81         $   78     $    162       $  154
Variable lease cost                         -              3            -            6
Short-term lease cost                       7              5           12           12
Total operating lease cost          $      88         $   86     $    174       $  172

Finance lease cost:
Amortization of right-of-use assets $       -         $    2     $      -       $    4
Interest on lease liabilities               -              -            -            -
Total finance lease cost            $       -         $    2     $      -       $    4


Contingencies

In the normal course of business, the Company enters into contracts and
agreements that contain a variety of representations and warranties and provide
for general indemnifications. The Company's exposure under these agreements is
unknown because it involves claims that may be made against the Company in the
future but have not yet been made. The Company accrues a liability for such
matters when it is probable that future expenditures will be made, and such
expenditures can be reasonably estimated.

Note 7. Equity

Guaranteed public offer

On March 31, 2022, the Company sold 40,000,000 shares of its common stock at a
public offering price of $0.25, and for certain investors, in lieu of common
stock, pre-funded warrants (the 2022 pre-funded warrants) to
purchase 20,000,000 shares of its common stock at a public offering price of
$0.24 per pre-funded warrant, which represents the per share public offering
price for the common stock less the $0.01 per share exercise price for each 2022
pre-funded warrant. The 2022 pre-funded warrants are immediately exercisable and
may be exercised at any time until all of the 2022 pre-funded warrants are
exercised in full. Each share of common stock or 2022 pre-funded warrant was
sold together with one, immediately exercisable, common warrant (the 2022 common
warrants) with a five-year term to purchase one share of common stock at an
exercise price of $0.30 per share. The net proceeds of the offering were
$13.8 million, after deducting the underwriting discount and other estimated
offering expenses. The Company is not required

                                       11
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under any circumstance to settle any of the 2022 pre-funded warrants or the 2022
common warrants for cash, and therefore classified both types of warrants as
permanent equity.

At the Market Offering

In July 2021, the Company entered into a Controlled Equity Offering Sales
Agreement under which the Company may sell shares of its common stock having an
aggregate offering price of up to $25.0 million from time to time in any method
permitted by law deemed to be an "at the market" Rule 415 under the Securities
Act of 1933, as amended. As of June 30, 2022, we have not sold any securities
pursuant to the at the market program.

Other Common Stock Warrants

As of June 30, 2022, the Company had 102,070 common stock warrants outstanding
from the 2010/2012 convertible notes, with an exercise price of $24.35 and a
term of 10 years expiring in November 2024. The Company also had 16,500 common
stock warrants issued to the underwriter in the Company's IPO, with an exercise
price of $35.70 and a term of 10 years, expiring in November 2024.

Equity incentive plans

2014 plan

The Company maintains the 2014 Equity Incentive Plan (the 2014 Plan). Under the
2014 Plan the Company may grant stock options, stock appreciation rights,
restricted stock, restricted stock units, performance units or performance
shares to employees, directors, advisors, and consultants. Options granted under
the 2014 Plan may be incentive stock options (ISOs) or nonqualified stock
options (NSOs). ISOs may be granted only to Company employees, including
officers and directors.

The Board has the authority to determine to whom stock options will be granted,
the number of options, the term, and the exercise price. Options are to be
granted at an exercise price not less than fair value. For individuals holding
more than 10% of the voting rights of all classes of stock, the exercise price
of an option will not be less than 110% of fair value. The vesting period for
service-based stock options is normally monthly over a period of 4 years from
the vesting date. Performance-based grants have vesting contingent upon the
achievement of certain performance criteria related to the Company's
commercialization of its therapeutics. The contractual term of an option is no
longer than five years for ISOs for which the grantee owns greater than 10% of
the voting power of all classes of stock and no longer than ten years for all
other options. The terms and conditions governing restricted stock units is at
the sole discretion of the Board. As of June 30, 2022, a total of 2,593,295
shares are available for future grant under the 2014 Plan.

Incentive scheme

The Company maintains the 2020 Inducement Equity Incentive Plan (the Inducement
Plan). The Inducement Plan provides for the grant of equity-based awards,
including non-statutory stock options, restricted stock units, restricted stock,
stock appreciation rights, performance shares and performance units, and its
terms are substantially similar to the 2014 Plan.

In accordance with Rule 5635(c)(4) and Rule 5635(c)(3) of the Nasdaq Listing
Rules, awards under the Inducement Plan may only be made to individuals not
previously employees or non-employee directors of the Company (or following such
individuals' bona fide period of non-employment with the Company), as an
inducement material to the individuals' entry into employment with the Company,
or, to the extent permitted by Rule 5635(c)(3) of the Nasdaq Listing Rules, in
connection with a merger or acquisition. As of June 30, 2022, a total of
1,285,000 shares are available for future grant under the Inducement Plan.

Stock-based compensation expense

The Company recognizes stock-based compensation expense related to options and
restricted stock units granted to employees, directors and consultants. The
compensation expense is allocated on a departmental basis, based on the
classification of the award holder. No income tax benefits have been recognized
in the condensed consolidated statements of operations and comprehensive loss
for stock-based compensation arrangements during any of the periods presented

Stock-based compensation expense has been recorded in the condensed consolidated statements of earnings and comprehensive income as follows (in thousands).

                                      Three Months Ended June 30,            Six Months Ended June 30,
                                      2022                  2021              2022               2021
Research and development          $         151         $         223     $        311       $        412
General and administrative                  420                   634              904              1,540
Total                             $         571         $         857     $      1,215       $      1,952


                                       12

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Stock Options The Company granted options to purchase 266,125 and 219,310 shares
of the Company's common stock during the three months ended June 30, 2022 and
2021, respectively, and granted options to purchase 1,893,875 and 3,387,810 of
the Company's common stock during the six months ended June 30, 2022 and 2021,
respectively. Of the total options granted during the three and six months ended
June 30, 2021, 708,750 were performance-based options. The fair value of each
award granted was estimated on the date of grant using the Black-Scholes option
pricing model with the following assumptions.

                                Three Months Ended June 30,                Six Months Ended June 30,
                                  2022                  2021                2022                    2021
Expected life (years)          5.5-6.0               5.5-6.0            5.5-6.0                 5.5-6.0
Risk-free interest rate         3.0%                0.9%-1.0%          1.7%-3.0%               0.6%-1.0%
Volatility                     90%-93%              91%-102%            88%-93%                91%-108%
Dividend rate                    - %                   - %                - %                     - %




The Black-Scholes option-pricing model requires the use of highly subjective
assumptions to estimate the fair value of stock-based awards. These assumptions
include the following estimates:

• Expected life: The expected life of stock options represents the period of

when the options should be outstanding. Due to the lack of

the exercise history, the expected life of the

service-based stock options were determined using the “simplified method

       method", based on the average of the contractual term of the options and
       the weighted-average vesting period. The expected life for the
       performance-based options was determined based on consideration of the
       contractual term of the stock options, an estimate of the date the

performance criteria would be met and expectations for employee behavior.

• Risk-free interest rate: the risk-free interest rate is based on the returns

of WE Treasury securities with maturities similar to the expected life

stock options.

• Volatility: The estimated volatility rate is based on the volatilities of the

ordinary shares of the Company for a historical period equal to the expected value

life of stock options.

• Dividend rate: the Company has never declared or paid cash dividends

       and does not presently plan to pay cash dividends in the foreseeable
       future. Consequently, the Company used an expected dividend yield of zero.

The following table summarizes stock option transactions for the six months ended June 30, 2022 issued under the 2014 Plan and the Incentive Plan:

                                                                              Weighted
                                                             Weighted-         Average
                                                              Average         Remaining         Aggregate
                                            Number of        Exercise        Contractual        Intrinsic
                                             Options         Price per          Term              Value
                                                                                                   (in
                                           Outstanding         Share         (in years)        thousands)

Balance at January 1, 2022                    6,125,549     $      3.09              7.94
Options granted                               1,893,875     $      0.32
Options exercised                                     -
Options canceled/forfeited                      (61,000 )   $      1.24
Balance at June 30, 2022                      7,958,424     $      2.44              7.94     $           -
Options vested at June 30, 2022               3,586,074     $      3.60              6.74     $           -
Options vested and expected to vest at
June 30, 2022                                 7,614,049     $      2.45              7.93     $           -




The weighted-average grant date fair value of options granted was $0.23 and
$1.73 per share for the six months ended June 30, 2022 and 2021, respectively.
At June 30, 2022 total unrecognized employee stock-based compensation related to
stock options that are likely to vest was $4.0 million, which is expected to be
recognized over the weighted-average remaining vesting period of 2.7 years.

                                       13
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Restricted stock units

There were zero and 21,810 restricted stock units granted by the Company during
the three months ended June 30, 2022 and 2021, respectively, and 134,507 and
61,273 restricted stock units granted during the six months ended June 30, 2022
and 2021, respectively, to employees and directors. The restricted stock units
granted to directors were 100% vested on the grant date and represent
compensation for past board services. The restricted stock units granted to
employees typically vest annually over a period of four years. The restricted
stock units were valued based on the Company's common stock price on the grant
date.

The following table summarizes restricted stock unit transactions for the six months ended June 30, 2022 as issued under the 2014 Plan:

                                                                                  Weighted-
                                                               Number of           Average
                                                               Restricted      Grant-Date Fair
                                                              Stock Units      Value per Share
Outstanding at January 1, 2022                                     435,750     $           3.85
Restricted stock units granted                                     134,507                 0.36
Restricted stock units vested                                     (279,757 )               0.37
Restricted stock units canceled/forfeited                           (4,500 )               3.85
Outstanding at June 30, 2022                                       286,000     $           3.85


The weighted-average grant-date fair value of all restricted stock units granted
during the six months ended June 30, 2022 and 2021 was $0.36 and $1.96,
respectively. The fair value of all restricted stock units vested during the six
months ended June 30, 2022 and 2021 was $0.1 million and approximately $0.6
million, respectively. At June 30, 2022, total unrecognized employee stock-based
compensation related to restricted stock units was $0.9 million, which is
expected to be recognized over the weighted-average remaining vesting period of
1.6 years.

2014 Employee Stock Purchase Plan

The Company's board of directors and stockholders have adopted the 2014 Employee
Stock Purchase Plan (ESPP). The ESPP has become effective, and the board of
directors will implement commencement of offers thereunder in its discretion. A
total of 27,967 shares of the Company's common stock has been made available for
sale under the ESPP. In addition, the ESPP provides for annual increases in the
number of shares available for issuance under the plan on the first day of each
year beginning in the year following the initial date that the board of
directors authorizes commencement, equal to the least of:

• 1.0% of the outstanding common shares of the Company on the first

       day of such year;


  • 55,936 shares; or


  • such amount as determined by the board of directors.

From June 30, 2022no purchases were made by employees under this plan.

Note 8. Net loss per share

Basic net loss per share is computed by dividing net loss by the
weighted-average number of common stock actually outstanding during the period.
Diluted net loss per share is computed by dividing net loss by the
weighted-average number of common stock outstanding and dilutive potential
common stock that would be issued upon the exercise or vesting of common stock
awards and exercise of common stock warrants. The Company applies the two-class
method to calculate basic and diluted net loss per share as its warrants issued
in March 2022 are participating securities. However, the two-class method does
not impact the net loss per share of common stock as the warrants issued in
March 2022 do not participate in losses. For the three and six months ended June
30, 2022 and 2021, the effect of issuing potential common stock is anti-dilutive
due to the net losses in those periods and therefore the number of shares used
to compute basic and diluted net loss per share are the same in each of those
periods.

                                       14
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The following potentially dilutive securities outstanding have been excluded
from the computations of diluted weighted-average shares outstanding for the
periods presented because such securities have an antidilutive impact due to
losses reported (in common stock equivalent shares).
                                                                 As of June 

30,

                                                              2022          

2021

Warrants issued on the 2010/2012 convertible bond

  holders to purchase common stock                             102,070      

102,070

Options to purchase common stock                             7,958,424      

6,225,549

Outstanding restricted stock units                             286,000      

435,750

Warrants issued to the underwriter to purchase common shares 16,500

     16,500
2018 PIPE warrants                                             513,617          513,617
2022 common warrants                                        60,000,000                -
2022 pre-funded warrants                                    20,000,000                -
Total                                                       88,876,611        7,293,486




Note 9. Subsequent Events

The Company has evaluated its subsequent events from June 30, 2022 through the
date these condensed consolidated financial statements were issued and has
determined that there are no subsequent events requiring disclosure in these
condensed consolidated financial statements.



                                       15
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Item 2. Discussion and analysis by management of the financial situation and results

Operating

The interim consolidated financial statements included in this Quarterly Report
on Form 10-Q and this Management's Discussion and Analysis of Financial
Condition and Results of Operations should be read in conjunction with the
financial statements and notes thereto for the year ended December 31, 2021, and
the related Management's Discussion and Analysis of Financial Condition and
Results of Operations, contained in the Company's Form 10-K for the year ended
December 31, 2021. In addition to historical information, this discussion and
analysis contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended (the Securities Act), and Section 21E
of the Securities Exchange Act of 1934, as amended (the Exchange Act). These
forward-looking statements are subject to risks and uncertainties, including
those set forth in Part II - Other Information, Item 1A. Risk Factors below and
elsewhere in this report that could cause actual results to differ materially
from historical results or anticipated results.

Insight

We are focused on the development and commercialization of novel therapeutics
for the treatment of rare diseases. Our lead candidate is Diazoxide Choline
Extended Release tablets (DCCR), a once-daily oral tablet for the treatment
of Prader-Willi Syndrome (PWS). DCCR has orphan designation for the treatment of
PWS in the United States (U.S.) as well as in the European Union (E.U.). DCCR
has been evaluated in a Phase 3 study (C601 or DESTINY PWS), a 3-month
randomized, double-blind placebo-controlled study, which completed enrollment in
January 2020, with 127 patients at 29 sites in the U.S. and U.K. Patients who
complete treatment in DESTINY PWS are eligible to receive DCCR in C602, an
open-label extension study. Top line results from DESTINY PWS were announced in
June 2020. Although the trial did not meet its primary endpoint of change from
baseline in hyperphagia, significant improvements were observed in two of three
key secondary endpoints.

In February 2021, we announced analysis limited to data collected before the
onset of the COVID-19 pandemic. The analysis of the data through March 1, 2020
showed statistical significance in the primary, all key secondary and several
other efficacy endpoints. In September 2021, we announced top line results from
C602 showing statistically significant reduction in hyperphagia and all other
PWS behavioral parameters and statistically significant improvements compared to
natural history of PWS from the PATH for PWS Study (PfPWS) over a one year
treatment period. The PfPWS study is an ongoing study sponsored by the
Foundation for Prader-Willi Research (FPWR) to advance the understanding of the
natural history in individuals with PWS. We submitted the data in the fourth
quarter 2021, and in January 2022 we announced we had received official meeting
minutes from a Type C meeting with the U.S. Food and Drug Administration (FDA).
The purpose of the meeting was to discuss the adequacy of the submitted data and
possible ways to generate additional controlled clinical data.

Earlier this year, we submitted a proposal to add a randomized withdrawal period
to Study C602 in order to obtain additional controlled data requested by the FDA
to support a New Drug Application (NDA) submission for DCCR. This randomized
withdrawal phase would consist only of participants currently enrolled in Study
C602 and not include any new patients. Subsequent to this submission, the FDA
acknowledged that data from the proposed randomized withdrawal phase of Study
C602 would have the potential to address its concerns regarding the adequacy of
the overall efficacy data supportive of an NDA.

The spread of the COVID-19 virus and the outbreak of war between Russia and
Ukraine caused supply chain problems, inflationary pressures and significant volatility in financial markets. However, we have not experienced any significant financial impact directly related to the COVID-19 pandemic or
Russia invasion of Ukraine.

As of June 30, 2022, we had an accumulated deficit of $225.8 million,
primarily as a result of research and development and general and administrative
expenses. We may never be successful in commercializing our novel
therapeutic-lead candidate DCCR. Accordingly, we expect to incur
significant losses from operations for the foreseeable future, and there can be
no assurance that we will ever generate significant revenue or profits. As
of June 30, 2022, we had cash and cash equivalents of $24.1 million. In March
2022, we completed a public offering of 40,000,000 shares of our common stock
and, for certain investors, in lieu of common stock, pre-funded warrants to
purchase 20,000,000 shares of our common stock at an exercise price of $0.01 per
share, and raised $13.8 million in net proceeds after deducting the underwriting
discount and other estimated offering expenses. Each share of common stock or
pre-funded warrant was sold together with one immediately exercisable common
warrant to purchase one share of common stock.

Critical Accounting Policies and Significant Judgments and Estimates

Our management's discussion and analysis of financial condition and results of
operations are based upon our unaudited condensed consolidated financial
statements, which have been prepared in accordance with GAAP. The preparation of
these consolidated financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses. On an on-going basis, we evaluate our critical accounting policies and
estimates. We base our estimates on historical experience and on various other
assumptions that we believe to be reasonable in the circumstances, the results
of which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources.

                                       16
--------------------------------------------------------------------------------


Actual results may differ from these estimates under different assumptions and
conditions. Our significant accounting policies are more fully described in Note
3 of our most recent Form 10-K.

Operating results

Comparison of the three months ended June 30, 2022 and 2021

                                               Three Months Ended June 30,               Increase (decrease)
                                               2022                 2021              Amount            Percentage
                                                     (in thousands)
Operating expenses
Research and development                   $       3,696       $         5,587     $      (1,891 )               34 %
General and administrative                 $       2,467       $         2,464                 3                  0 %
Change in fair value of contingent
consideration                              $         616       $         3,034            (2,418 )               80 %
Total operating expenses                           6,779                11,085            (4,306 )               39 %
Operating loss                                    (6,779 )             (11,085 )           4,306                 39 %
Other income
Change in fair value of warrants
liabilities                                $           2       $            56               (54 )               96 %
Interest income                            $          52       $            41                11                 27 %
Total other income                                    54                    97               (43 )               44 %
Net loss                                   $      (6,725 )     $       (10,988 )   $       4,263                 39 %


Revenue

To date, we have not derived any revenue from the commercial development and sale of new therapeutic products.

Research and development costs

Research and development expense of $3.7 million for the three months ended June
30, 2022 decreased by $1.9 million from the three months ended June 30, 2021.
The cadence of our research and development expenditures will fluctuate
depending upon the state of our clinical programs and the timing of CMC and
other projects necessary to support the submission of an NDA.

General and administrative costs

General and administrative expenses of $2.5 million for the three months ended
June 30, 2022 corresponded to the three months ended June 30, 2021.

Change in fair value of contingent consideration

We are obligated to make cash payments of up to a maximum of $21.2 million to
the former Essentialis stockholders upon the achievement of certain future
commercial milestones associated with the sales of DCCR in accordance with the
terms of our merger agreement with Essentialis. The fair value of the liability
for the contingent consideration payable by us achieving two commercial sales
milestones of $100 million and $200 million in revenue, respectively, in future
years was estimated to be $9.3 million as of June 30, 2022, a $0.6 million
increase from the estimate as of March 31, 2022. During the three months ended
June 30, 2021, the estimate increased $3.0 million from the $9.3 million
estimated at March 31, 2021.

                                       17
--------------------------------------------------------------------------------

Other income

We had other income of approximately $54,000 in the three months ended June 30,
2022, compared to $97,000 during the three months ended June 30, 2021. The
decrease was primarily due to a smaller decrease in the fair value of our
outstanding warrants during the three months ended June 30, 2022 compared to the
three months ended June 30, 2021.

Operating results

Comparison of the six months ended June 30, 2022 and 2021

                                             Six Months Ended June 30,              Increase (decrease)
                                               2022               2021           Amount           Percentage
                                                   (in thousands)
Operating expenses
Research and development                   $       7,684           12,751     $     (5,067 )               40 %
General and administrative                         5,110            5,443             (333 )                6 %
Change in fair value of contingent
consideration                                       (242 )          2,047           (2,289 )              112 %
Total operating expenses                          12,552           20,241           (7,689 )               38 %
Operating loss                                   (12,552 )        (20,241 )          7,689                 38 %
Other income
Change in fair value of warrants
liabilities                                           29              257             (228 )               89 %
Interest income                                       74               42               32                 76 %
Total other income                                   103              299             (196 )               66 %
Net loss                                   $     (12,449 )     $  (19,942 )   $      7,493                 38 %




Revenue

To date, we have not derived any revenue from the commercial development and sale of new therapeutic products.

Research and development costs

Research and development expense of $7.7 million for the six months ended June
30, 2022 decreased by $5.1 million from the six months ended June 30, 2021. The
cadence of our research and development expenditures will fluctuate depending
upon the state of our clinical programs and the timing of CMC and other projects
necessary to support the submission of an NDA.

General and administrative costs

General and administrative expenses of $5.1 million for the six months ended June 30, 2022 decreases $0.3 million of the semester ended June 30, 2021primarily due to a decrease in stock-based compensation expense.

Change in fair value of contingent consideration

We are obligated to make cash payments of up to a maximum of $21.2 million to
the former Essentialis stockholders upon the achievement of certain future
commercial milestones associated with the sales of DCCR in accordance with the
terms of our merger agreement with Essentialis. The fair value of the liability
for the contingent consideration payable by us achieving two commercial sales
milestones of $100 million and $200 million in revenue, respectively, in future
years was estimated to be $9.3 million as of June 30, 2022, a $0.2 million
decrease from the estimate as of December 31, 2021. During the six months ended
June 30, 2021, the estimate increased $2.0 million from the $10.3 million
estimated at December 31, 2020.

Other income

We had other income of approximately $0.1 million in the six months ended June
30, 2022, compared to $0.3 million during the six months ended June 30, 2021.
The decrease of $0.2 million was primarily due to a smaller decrease in the fair
value of our outstanding warrants during the six months ended June 30, 2022
compared to the six months ended June 30, 2021. This decrease was slightly

                                       18
--------------------------------------------------------------------------------


offset by an increase in interest income during the six months ended June 30,
2022 as compared to the same period of the previous year as a result of cash and
cash equivalents earning higher interest rates.

Cash and capital resources

We had a net loss of $12.5 million during the six months ended June 30, 2022 and
an accumulated deficit of $225.8 million at June 30, 2022 as a result of having
incurred losses since our inception. We had $24.1 million in cash and cash
equivalents and $17.6 million of working capital at June 30, 2022, and used
$11.0 million of cash in operating activities during the six months ended June
30, 2022. As of June 30, 2022, we had lease obligations totaling $0.3 million to
be paid through 2023, consisting of an operating lease for office space in
Redwood City, California.

We have financed our operations principally through issuances of equity
securities. In March 2022, we completed a public offering of shares of our
common stock and pre-funded warrants and raised $13.8 million in net proceeds
after deducting the underwriting discount and other estimated offering expenses.
Each share of common stock or pre-funded warrant was sold together with one
immediately exercisable common warrant to purchase one share of common stock. We
have an "at-the-market" (ATM) offering for up to $25.0 million, but as of June
30, 2022, we have not sold any securities pursuant to the ATM.

We expect to continue incurring losses for the foreseeable future and will be
required to raise additional capital to complete our clinical trials, pursue
product development initiatives and penetrate markets for the sale of our
products. We believe that we will continue to have access to capital resources
through possible public or private equity offerings, debt financings, corporate
collaborations or other means, but the access to such capital resources is
uncertain and is not assured. If we are unable to secure additional capital, we
may be required to curtail our clinical trials and development of new products
and take additional measures to reduce costs in order to conserve our cash in
amounts sufficient to sustain operations and meet our obligations. These
measures could cause significant delays in our efforts to complete clinical
trials and commercialize our products, which is critical to the realization of
our business plan and our future operations. These matters raise substantial
doubt about our ability to continue as a going concern within one year from the
date of filing this quarterly report.

The accompanying condensed consolidated financial statements have been prepared
under the assumption we will continue to operate as a going concern, which
contemplates the realization of assets and the settlement of liabilities in the
normal course of business. The condensed consolidated financial statements do
not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts of liabilities that
may result from uncertainty related to our ability to continue as a going
concern.

Cash flow

The following table presents the main sources and uses of cash and cash equivalents for each of the periods presented below:

                                                         Six Months Ended June 30,
                                                           2022               2021
                                                               (in thousands)
Net cash used in operating activities                  $     (10,982 )     $  (15,501 )
Net cash used in investing activities                             (7 )             (4 )
Net cash provided by (used in) financing activities           13,750        

(123 ) Net increase (decrease) in cash and cash equivalents $2,761 ($15,628)

Cash flows used in operating activities

During the six months ended June 30, 2022, operating activities used net cash of
$11.0 million, which was primarily due to the net loss of $12.5 million adjusted
for non-cash income of $0.3 million related to the change in fair value of
common stock warrants and contingent consideration, non-cash expense of $1.0
million for depreciation and amortization, $1.2 million for stock-based
compensation, and approximately $0.1 million for non-cash lease expense.
Additionally, the usage of cash during the six months ended June 30, 2022 was
reduced by $0.6 million due to changes in operating assets and liabilities.

During the six months ended June 30, 2021, operating activities used net cash of
$15.5 million, which was primarily due to the net loss of $19.9 million adjusted
for non-cash loss of $1.8 million related to the change in fair value of common
stock warrants and contingent consideration, non-cash expense of $1.0 million
for depreciation and amortization, and $2.0 million for stock-based

                                       19
--------------------------------------------------------------------------------

compensation. In addition, the use of cash during the six months ended June 30, 2021 has been reduced by $0.4 million due to changes in operating assets and liabilities.

Cash used in investing activities

In the six months ended June 30, 2022 and 2021, little cash was used for the purchase of property, plant and equipment.

Cash provided by (used in) financing activities

During the six months ended June 30, 2022, we received $13.8 million of net cash
proceeds from the sale of 40,000,000 shares of our common stock, and for certain
investors, in lieu of common stock, pre-funded warrants to
purchase 20,000,000 shares of common stock. Each share of common stock or
pre-funded warrant was sold together with one, immediately exercisable common
warrant with an exercise price of $0.30 per share. As of June 30, 2022, all
offering costs have been paid by us. The net proceeds amount was slightly offset
by payments for the taxes from net share-settled vesting of restricted stock.

In the six months ended June 30, 2021we used species of $0.1 million to pay taxes on the net acquisition of restricted shares settled in shares.

Off-balance sheet arrangements

We have no off-balance sheet arrangements.

© Edgar Online, source Previews

FIGS, Inc. (NYSE:FIGS) missed earnings with its latest first-quarter results, disappointing overly optimistic forecasters. FIGS missed out on profit this time around, with revenue of US$110 million, 6.2% lower than analysts had modeled. Statutory earnings per share (EPS) of US$0.05 also came in below expectations of 17%. Following the result, analysts have updated their earnings model, and it would be good to know if they think there has been a strong change in the company’s outlook, or if business is as it is. habit. So we’ve collected the latest post-earnings statutory consensus estimates to see what might be in store for next year.

Following the latest results, the eleven analysts covering FIGS now forecast revenue of US$513.4 million in 2022. If achieved, it would reflect a notable 11% improvement in sales over the past 12 months. Statutory earnings per share are expected to fall 33% to US$0.14 over the same period. Prior to this earnings report, analysts were expecting revenue of US$513.4 million and earnings per share (EPS) of US$0.14 in 2022. So it looks like there was a slight dip in the general feeling after the recent results – there has been no major change. to earnings estimates, but analysts have slightly lowered their earnings per share forecasts.

The consensus price target held steady at US$14.59, with analysts apparently voting that their lower expected earnings shouldn’t drive the stock price lower for the foreseeable future. Fixing on a single price target, however, can be unwise because the consensus target is actually the average of the analysts’ price targets. As a result, some investors like to look at the range of estimates to see if there are any differing opinions on the company’s valuation. There are a few variations of perception on FIGS, with the most bullish analyst pricing it at $22.00 and the most bearish at $7.00 per share. With such a wide range of price targets, analysts are almost certainly betting on wildly divergent outcomes in the underlying business. With that in mind, we wouldn’t place too much reliance on the consensus price target, as it’s just an average and analysts clearly have deeply differing views on the company.

Looking now at the bigger picture, one way to understand these forecasts is to see how they compare to both past performance and industry growth estimates. It’s pretty clear that FIGS revenue growth is expected to slow significantly, with revenue through the end of 2022 expected to show 15% growth on an annualized basis. This is compared to an historic growth rate of 31% over the past year. By comparison, other companies in this sector covered by analysts are expected to grow their revenue by 7.8% per year. So it’s pretty clear that while FIGS revenue growth is expected to slow, it is still expected to grow faster than the industry itself.

The essential

The biggest concern is that analysts have cut their earnings per share estimates, suggesting headwinds may be in store for the FIGS. Fortunately, there have been no major changes to the revenue forecast, with the business still expected to grow faster than the industry as a whole. The consensus price target held steady at US$14.59 as the latest estimates were not enough to impact their price targets.

With that in mind, we still believe the longer-term trajectory of the company is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for FIGS out to 2024, and you can view them for free on our platform here.

You should always take note of the risks, for example – FIGS a 2 warning signs (and 1 which is a little obnoxious) that we think you should know about.

Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Select’s editorial team works independently to review financial products and write articles that we think our readers will find useful. We earn commission from affiliate partners on many offers, but not all offers on Select are from affiliate partners.

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Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff only and have not been reviewed, endorsed or otherwise endorsed by any third party.

• Flows reached $17 billion during the first semester of Canada¹
• Inflation poses a major risk, technology is under pressure and few places to hide for bond investors
• BMO’s equally weighted banks ETF among top 10 by flow¹

TORONTO, July 26, 2022 /CNW/ – BMO Global Asset Management (BMO GAM) today released its semi-annual report on exchange-traded funds (ETFs) highlighting the continued popularity and growth of ETFs in Canada. The report features experts from across BMO GMA’s ETF team sharing insights into the Canadian ETF market and ETF trends in volatile markets.

“Investors have struggled with the markets this year,” said Marc Raes, Head of Product, BMO Global Asset Management Canada. “ETFs continue to prove their value both strategically and tactically as access vehicles for satellite positions and as the basic building blocks in portfolios. Even in an environment of increased inflation, ETFs that focus on specific areas of the market such as infrastructure can provide good coverage and offer protection for investors.”

Key themes

Inflation: Alfred Lee (Portfolio Manager)

• With aggressive assumptions for further rate hikes already priced in, inflation leveling would be the catalyst for markets to rally.
• ETFs exposed to certain sectors, such as financial services and infrastructure, can offer investors a hedge against inflation.

Growth and innovation: Marc Raes (Product manager)

• Rising inflation has hit growth stocks hard as companies valued on future cash flows now face a higher discount rate and lower growth estimates.
• In the long run, these ETFs will continue to influence our behaviors and routines and have the potential to propel stock markets into the future.

Environment, Social and Governance (ESG): Erin Allen (VP, Online ETF Distribution)

• Despite uncertain markets, geopolitical events and the pandemic, ESG ETFs continue to attract investors, driven by institutional flows.
• BMO’s range of leading ESG ETFs targets neutral sector exposure, which under normal circumstances helps keep performance in line with the broader market.

Sectors: Chris McHaney (Portfolio Manager)

• Canadian ETFs in the energy sector saw inflows of $730 million year to date.¹
• BMO’s Equal Weight Banks ETF was in the top 10 by flow.¹
• Utilities have posted a positive year-to-date performance, with the defensive sector having ties to the energy complex and high levels of current cash flow.

Dividend and low volatility: Chris Heakes (portfolio manager)

• Shift from growth factors to defensive factors due to market volatility.
• Investors have used ETFs to add strategic portfolio positions to capitalize on this market rotation: dividend ETFs have seen $1.3 billion new net flows since the beginning of the year.¹

Fixed income: Matt Montemurro (Portfolio Manager)

• A difficult first half for fixed income where the combination of negative performance drag from interest rate sensitivity and widening credit spreads left investors with very little safe haven.

To view the full report, please click here.

To learn more about BMO ETFs, visit: www.bmo.com/etfs.

About BMO Exchange Traded Funds (ETFs)

BMO Exchange Traded Funds has been a leading ETF provider in Canada for over 11 years, with over 100 strategies, over 25% market share in Canada.², and $80.6 billion in assets under management. BMO ETFs are designed to stay ahead of market trends and provide compelling solutions to help advisors and investors. This includes a full range of ETFs developed in Canada for Canadians, such as profitable core equity ETFs tracking major market indices, and a wide range of fixed income ETFs; solution-based ETFs that meet customer demand; and innovation with smart beta ETFs, as well as combining active and passive investing with active mutual fund ETF series.

About BMO Financial Group

Serving customers for 200 years and counting, BMO is a highly diversified financial services provider – the 8th largest bank, by assets, in North America. With total assets of $1.04 trillion of the April 30, 2022and a diverse and highly engaged team of employees, BMO offers a wide range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers and operates through the through three operating groups: Personal and Commercial Banking, BMO Wealth Management and BMO Capital Markets.

Disclaimer:

Commissions, management fees and expenses all may be associated with investments in exchange-traded funds. Please read the ETF Facts or BMO ETFs prospectus before investing. Exchange traded funds are not guaranteed, their values ​​change frequently and past performance may not be repeated.

For a summary of the risks of investing in BMO ETFs, please see the specific risks set out in the BMO ETFs’ prospectus. BMO ETFs trade like stocks, their market value fluctuates and may trade at a discount to their net asset value, which may increase the risk of loss. Distributions are not guaranteed and may be changed and/or eliminated.

BMO ETFs are managed by BMO Asset Management Inc., which is an investment fund manager and portfolio manager, and a separate legal entity from Bank of Montreal.

BMO Global Asset Management is a brand that includes BMO Asset Management Inc. and BMO Investments Inc.

®/™Registered Trademarks/Trademarks of Bank of Montrealused under license.

THE SOURCE BMO Financial Group

© Canada Newswire, source Canada Newswire English

Parking tickets issued to attendees at a charity fundraising event have prompted the council to review its paid parking rules for riverside parks and ask staff if relief can be given to people who attend fundraisers.

Tasked with creating a plan with exceptions for paid parking, staff returned to the July 18 council meeting with a pilot project proposal.

Staff recommended a case-by-case approach to parking relief and suggested the best way to handle approval was to use the city’s existing event permit process and the Recreation and next year’s community grants. Indeed, staff recommended treating free and discounted parking as an in-kind donation to the charity and fundraising event.

The Board gave its unanimous support to the project at the July 18 meeting.

Under the pilot, charities and fundraisers can apply for up to 10 free parking permits for event organizers for the period requested to set up, run the event and clean it up. .

The city could also provide a 50% discount code for the duration of the event up to one day, allowing people to pay for parking as usual with a smartphone and the HotSpot app, but at a discounted rate. .

A smartphone would be required to benefit from this reduction.

Staff said the 50% reduction recognizes that event parking takes away available parking for residents and reduces budget revenue for non-residents. A discount code could also be abused if shared with non-participating visitors who are not attending the event.

Collingwood residents can park for free at waterfront parks by getting an annual pass through the HotSpot app or through City Hall.

The July 18 staff report also noted that event organizers would be encouraged to use other park facilities like Harbourview Park where parking is free.

A reduced and/or free parking pass reduces the amount of revenue the city collects from its paid parking program, but staff could not estimate the impact this would have.

The staff, however, were supportive of the idea of ​​sacrificing revenue for a good cause.

“Local charities are an integral part of the community and requiring people who attend these events to pay for parking may place an undue financial burden on the fundraising activities and initiatives of these vital groups,” the report said. Staff.

© 2022 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

THE CREDIT RATINGS ISSUED BY MOODY’S CREDIT RATINGS AFFILIATES CONSTITUTE THEIR CURRENT OPINIONS ON THE RELATIVE FUTURE CREDIT RISK OF THE ENTITIES, CREDIT COMMITMENTS OR INDEBTEDNESS OR SECURITIES ASSOCIATED WITH INDEBTEDNESS, AND THE MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, THE “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY FAILURE TO MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS WHEN DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE THE APPLICABLE PUBLICATION OF MOODY’S RATINGS SYMBOLS AND DEFINITIONS FOR MORE INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS COVERED BY MOODY’S CREDIT RATINGS. THE CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“RATINGS”) AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACTS. MOODY’S PUBLICATIONS MAY ALSO INCLUDE MODEL-BASED QUANTITATIVE ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, RATINGS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, RATINGS, OTHER OPINIONS AND PUBLICATIONS ARE AND DO NOT PROVIDE ANY RECOMMENDATION TO BUY, SELL OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, RATINGS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF ANY INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE CONSIDERATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH ALL DUE CARE, HIS OWN REVIEW AND EVALUATION OF EACH SECURITY THAT IS CONSIDERED FOR PURCHASE, HOLDING OR SALE.

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Company Description

Founded in 1981, based in Andover, MA, Vicor Company (NASDAQ: VICR) designs, develops and manufactures power modules for electrical power conversion. Most electrical appliances are often plugged into a wall outlet; the stream from the outlet is known as alternating current (AC) voltage. Vicor products convert AC voltage to direct current (DC) voltage used by the device or a subsystem/application within the device. Vicor products can further convert DC voltage to a higher or lower form of DC voltage required by a subsystem/application within the device.

Vicor has two business segments: Advanced Products (47.4% of FY21 Rev); and Brick Products (historical activity, 52.6% of FY21 rev). Vicor’s products come in the form of a chipset. Some of the advanced products are Pre-Regulator Module (PRM), Modular Current Multiplier Driver (MCD), and Voltage Transformer Module (VTM).

Advanced Products has utilized Vicor’s unique factorized power architecture for a range of 48V applications in the data center, AI, HPC, and automotive space. While Brick products are standard and customizable chipsets i.e. AC-DC converter, DC-DC converter, Intermediate Bus Converter (IBC) with applications in aerospace, electronics defense and industrial automation.

Thesis

Vicor management, at the recent annual meeting of shareholders in June 2022, made a statement worth capturing here:

“In summary, the market opportunity in HPC is very large and growing, we have a clear technology advantage that we will grow, we also now have the manufacturing footprint and vertical integration to be successful, so no apologies.”

Vicor, in my view, is a cutting-edge company, poised to accelerate its technological advancement and embark on unprecedented growth. So the thesis here is that of technological innovation coming to market, the questions become: how good is the technology compared to the status quo; is the end user comfortable with the product; and how fast can the product enter the market. Nearly a decade ago, Vicor introduced an innovative 48V Power Factorized Architecture (FPA) chipset that still has no real competition in the market.

How is the quality of the product? Using high-performance computing as an example here (“HPC”; AI, data center, cloud computing, enterprise computing, and hyperscalers can be grouped under HPC), most data centers in the market run on conventional 12V, with the exception of Google’s data center. The 12V or intermediate conversion option in place, as you would expect, is inefficient compared to 48V. 48V increases voltage in systems by a factor of 4x, decreases current by a factor of 4x, and reduces dissipative power losses by a factor of 16x. The 48V FPA technology, according to Vicor, improves energy efficiency by 10%, which translates into greater computing density, thus saving electricity and enabling higher performance.

Is the end user comfortable with the product and what is the adoption rate? Google Data Center’s adoption of 48V demonstrates that the product works, however, the product faces 12V occupancy challenges, thus, the market has been slow to adopt 48V. That said, Vicor has established a relationship with the two largest CPUs, the three largest GPUs, the largest FGPA, and over a dozen AI accelerator vendors. Therefore, we expect Vicor’s topline to accelerate as next-generation CPU, GPU, FPGA and AI accelerators ramp up.

Business model and revenue accumulation

Vicor’s customers have traditionally been players in the aerospace, defense electronics, transportation, industrial equipment and industrial automation industries. For these players, Vicor designs, develops, manufactures and distributes standard and customizable power modules, ie 12V AC-DC converters (Brick Products). With the introduction of 48V (Advanced Products), Vicor is targeting 100 customers in high growth markets. Markets include HPC with SAM worth $3.5 billion, automotive with $5 billion SAM, aerospace and defense with $1 billion SAM, and industrial with $1.5 billion dollars SAM. Cumulatively, $11 billion SAM by 2026.

Vicor is expected to grow at a double-digit CAGR over the next five years, driven by Advanced Products revenues as Brick Products revenues decline steadily over time. Vicor intends to convert Brick Products customers to Advanced Products customers.

As of YE21, Advanced Products has accounted for 47% of Vicor’s sales, while Brick Products has 53%. By YE26, Vicor expects advanced products to account for 80% of total revenue. Vicor expects Advanced Product revenues to exceed Brick Product revenues in dollar value by YE22. Vicor’s total FY21 revenue was $359 million, representing a CAGR of 7.3% over the past four years. Advanced products in the same period grew around 18% CAGR, while brick products had a CAGR of less than 0.5% in the same period.

Vicor management is aiming for $1 billion in revenue by FYE26, driven by advanced products – I believe Vicor will grow double-digit CAGR over the next five years. For conservative calculation purposes, I modeled Vicor to reach $850-870 million by YE26.

Growth strategy

Vicor’s strategy is to reach $1 billion in revenue by FYE26. This revolves around five key areas: 1. The high growth markets highlighted earlier; 2. Applications with difficult power delivery challenges; 3. Vertically integrate the new manufacturing plant; 4. Achieve operational excellence; and 5. Focus on specific top 100 accounts.

Evaluation

Multiple EBITDA: I got a price target of $78 using a 17x multiple on 2026 EBITDA of $244 million discounted at 6%.

PES: The model assumes EPS growth at a CAGR of 23.7% over the next five years, discounted at 6%. For comparison, EPS increased by 76.2% CAGR between 2018 and 2021. Price target of $73.

Perpetuity method: The model assumes that revenue will grow at a CAGR of 19% over the next five years, driven by an acceleration in advanced product revenues. Gross and operating margins improved to 58% and 25%, respectively for FY26, and a discount rate of 6%. Price target $75.

Catalyst

• Successfully execute the vertical integration program which is expected to start in 2H22, furthermore, show some traction to achieve the 65% gross margin and 35% operating margin target.
• Accelerating adoption of AI servers in a data center within HPC, with design wins for Vicor.
• An increase in design gains in the automotive space as the electrification of automobiles accelerates.
• Licensing revenue could accelerate market adoption of 48V, especially for customers reluctant to rely on Vicor as a sole supplier.

Risks

• Political/commercial tension. In fiscal years 21, 20 and 2019, Vicor generated 67.0%, 64.4% and 53.7% of its total revenue, respectively, outside of the United States. In addition, net customer revenues in China and Hong Kong, Vicor’s largest international market, were approximately 27.5% in FY21, 31.4% in FY20 and 22, 1% in FY19, respectively, of total net revenue. Therefore, a trade tension or dispute would negatively impact Vicor’s topline.
• As of February 16, 2022, CEO and Founder Dr. Patrizio Vinciarelli owns 80% of the voting shares, which limits the space for shareholder defense.
• Slower adoption of 48V, continued decline in Brick Products sales.
• Global economic uncertainty/recession.
• Limited clientele.
• Interrupted operation of the Andover installation.
• Extensive global supply chain disruption

Conclusion

Based on the analysis of this report, I issue a buy recommendation on Vicor with a target price range of $73-$78. The completion of the Andover installation and the implementation of the vertical integration allow Vicor to increase the utilization rate of the order backlog (~$424 million, up 22.6% in T1FY22) and reduce customer waiting time (~ eight months for Advanced Products and Five for Bricks products). The vertical integration program is expected to start in 2H22, therefore Q3FY22 and Q4FY22 results should provide evidence that Vicor is gaining momentum to accelerate revenue and improve margins.

Finally, further design gains in the HPC and automotive space and headline acceleration beyond model projections would warrant a positive revaluation of the stock.

Next Earnings Call

Vicor Q2FY22 Earnings Conference Call: July 21, 2022. 5:00 p.m. EST.

Model

© 2022 Foley & Lardner LLPNational Law Review, Volume XII, Number 199

Home values ​​in Australia’s five major capital markets began falling shortly after the RBA’s initial 0.25% rate hike in May and have so far fallen around 2% from its peak, according to CoreLogic.

The decline at the five-city aggregate level was led by Sydney and Melbourne, where quarterly values ​​fell 3.5% and 2.3% respectively, more than offsetting growth in smaller markets:

AFR The latest survey of 31 economists revealed a median forecast for the official exchange rate (OCR) of 2.85% by the middle of next year. If true, Australia’s OCR would rise another 1.5% from its current level.

The futures market remains even more hawkish, tipping a peak OCR of 3.5% by May 2023.

If either interest rate forecast materializes, Australian mortgage rates would soar. Australia’s average discount variable mortgage rate would climb to 6.2% according to economists’ forecast (dotted red line below) and 6.8% according to market forecast (solid red line below) :

The market’s OCR forecast would mean that the variable discount mortgage rate would climb to roughly double its level (3.45%) before the start of the RBA’s tightening cycle.

Either way, Australian mortgage holders would face massive increases in repayments, putting many borrowers in serious financial trouble at the same time as their property values ​​plummeted.

In its latest Financial Stability Review, the RBA estimated “that a 200 basis point rise in interest rates from current levels would lower real house prices by around 15% over a two-month period. year “.

Therefore, the economists’ forecast of 2.85% OCR suggests a peak-to-trough fall in real Australian house prices of around 20%.

According to RBA modeling, the futures market forecast of 3.5% OCR would cause Australian house prices to fall by around 25% in real terms.

Sydney and Melbourne would likely face even bigger price drops than the national average, as they are the most expensive housing markets with the most indebted households.

As shown in the following chart, house price to income ratios for NSW (read: Sydney) and Victoria (read: Melbourne) are much higher than other Australian jurisdictions:

Sydney and Melbourne are also the most expensive housing markets in the country relative to rents, as illustrated by their anemic gross rental yields of 2.7% and 2.9% respectively, according to CoreLogic:

Their extreme valuations make Sydney and Melbourne more susceptible to RBA rate hikes, meaning their prices are likely to fall more than the national average according to economists’ or futures market’s OCR forecasts. The fact that these two markets are leading the current downturn is proof enough.

Mortgage holders in our two biggest cities are hoping that neither the economists nor the market are right, and that the RBA stops well before its monetary tightening.

Otherwise, Sydney and Melbourne are eyeing their biggest price corrections in living memory.

Leith van Onselen is Chief Economist at MB Fund and MB Super. Leith previously worked at Australian Treasury, Victorian Treasury and Goldman Sachs.

As we approach summer, many families will be hitting the road for summer vacation. For anyone who makes these long drives, or has done so before, this inevitable question will be familiar: Are we already there?

The current market turmoil is also causing investors to wonder: is the sell-off over? Are we already there?

The odds of an economic hard landing (and ultimately a recession) have increased dramatically. For market participants, the key questions are whether all the bad news is already priced in and the groundwork is laid for a potentially lasting bottom.

Where the U.S. stock market eventually bottoms out will depend on how resilient the economy is and where earnings go. At the beginning of the year, we expected a difficult period, but we did not expect the economic environment to deteriorate as quickly as it has over the past few months.

Our resulting shift in mindset can be described by this quote, which has been attributed to various people: “When the facts change, I change my mind. What are you doing, sir?”

History suggests that additional digestion may be required to maintain the rise later. So far, this bear market has lasted six months, with investors suffering a -23.6% drop in the S&P 500 index from January 3 to June 16. The pain may have been intense, but bear markets tend to last 16 months and go down 35 months. % decline, with recession periods being worse than non-recession periods.

Most bear markets have two components: multiple adjustment and earnings contraction.

Falling price-earnings (P/E) ratios typically trigger bear markets, followed by declining P/Es with each US Federal Reserve tightening cycle. This happened in 2022: the S&P 500 forward P/E contracted from 21.3x in January to 15.8x today. This devaluation rivals some of the steepest six-month declines in modern history.

Still, the multiples could drop further. Historically, the average P/E in bear markets was 11.9x. Over the past 20 years, major market lows have averaged 14.4x, partly due to falling interest (discount) rates.

Bear markets are also typically characterized by shrinking earnings. This bear market was driven by P/E compression, while forward earnings expectations rose 7.4% this year.

Earnings revisions have started to decline. There is a strong possibility of more significant downward revisions in the second half of 2022. Ultimately, the degree to which earnings expectations decline could determine the severity of the economic downturn.

To gauge this momentum, we follow the ISM Manufacturing PMI, which tends to lead S&P 500 earnings by six months. In bear markets after Fed tightening cycles, the ISM has often fallen below 43, a level consistent with double-digit earnings declines. If this relationship holds, the market could experience new lows.

With high inflation and a peak employment rate reached with an unemployment rate below 4%, the Fed is increasingly concerned that inflation expectations will become unanchored. His research supports the idea that the longer inflation remains high, the greater this risk.

For the Fed, the risks of doing too little to control inflation are much greater than the risks of doing too much.

This thinking has led to a dramatic shift in US monetary policy from expectations of three 25 basis point rate hikes to just over 13 today, implying a fed funds rate of 3.25% to 3 .5%. It would be the second-fastest monetary tightening in 65 years, after only 1980, when Fed Chairman Paul Volcker broke his back on double-digit inflation.

Bear markets are never happy, but it’s important to remember that they are both rare and usually offer great opportunities for patient long-term investors. The bottom of the market will only be determined with hindsight. By the time it becomes apparent, stocks may have climbed well past the lows, with possible false starts along the way.

Many questions remain unanswered regarding inflation, Fed policy, interest rates, recession risk, valuations and earnings. Despite the concern caused by these uncertainties and the difficult start to 2022, visibility should improve over the next two quarters.

Still, US equity investors may not be able to say “we’re there” for some time.

Jeffrey Schulze, CFA

CFA
, is a director and investment strategist at ClearBridge Investments, a subsidiary of Franklin Templeton. Its predictions are not intended to be considered predictions of actual future events or performance or investment advice.

Any information, statement or opinion set forth herein is general in nature, is not directed to or based on the financial condition or needs of any particular investor, and does not constitute, and should not be construed as, a investment advice, a prediction of future events, a guarantee of future results, or a recommendation regarding a particular security, investment strategy, or type of retirement account. Investors seeking financial advice regarding the advisability of investing in securities or investment strategies should consult their financial professional.

Past performance is not indicative of future returns. Performance Source: Internal. Reference source: Standard & Poor’s.

Franklin Distributors, LLC (“FD, LLC”), Member FINRA, SIPC. FD, LLC and Clearbridge Investments LLC are affiliates of Franklin Templeton.

CFA® and Chartered Financial Analyst® are registered trademarks of CFA Institute.

Hannon Armstrong Sustainable Infrastructure Capital, Inc. (“Hannon Armstrong”, “we”, “us” or the “Company”) (NYSE: HASI), a leading investor in climate solutions, today released the statement following in response to baseless allegations made in a short spurious attack report by Muddy Waters Capital LLC on July 12, 2022.

For more than 40 years, Hannon Armstrong has operated with the highest level of integrity, which includes providing audited, accurate and timely financial statements. The Muddy Waters report calls into question the integrity of these financial statements based on factual errors and inflammatory and misleading statements. Hannon Armstrong believes that its accounting is fully compliant with GAAP and SEC regulations and is an accurate representation of our financial performance. We supplement our GAAP financial statements with certain non-GAAP measures, including a measure we call distributable income. We believe these non-GAAP measures are a useful supplement to our GAAP earnings for our investors and we fully disclose our methodology and distributable earnings adjustments in our SEC filings. In addition to EY as our independent auditor, Hannon Armstrong works with another of the “big four” accounting firms on risk management and disclosure controls, including on our investments under the equity method. We believe this comprehensive approach and commitment to financial integrity stands in stark contrast to the false claims made in the report.

The report contains both a series of factual errors and numerous inflammatory and misleading statements demonstrating a fundamental lack of understanding of our financial statements and business. It insinuates that our non-cash earnings (a) indicate a lack of cash available to pay our dividend, (b) lead to inflated earnings, and (c) reflect struggling borrowers/projects. In fact, our non-cash earnings do not impact our ability to fund our dividend, are intentionally structured at the time of subscription and are not indicative of hardship.

While we do not engage in a tit-for-tat rebuttal of every lie in the report, it is important to set the record straight on the following key points:

• We have sufficient portfolio cash flow to pay our dividend. The report assumes that the non-cash earnings shown in our financial statements result in insufficient cash flow needed to fund our dividend each year. It is absolutely false. We have internal processes to rigorously model our liquidity and expected cash flows and our expectations consistently reflect that portfolio cash flows remain adequate to cover our dividend. In order to provide the most up-to-date information, we will introduce additional non-GAAP information to support this statement in our second quarter earnings report scheduled for August 4, 2022.

• Since HLBV accounting is complex and does not reflect our economic condition in a given period, we use distributable earnings as supplemental information. For certain equity method investments in renewable energy projects, GAAP permits the use of hypothetical liquidation at book value (“HLBV”). These investments also typically include a tax equity investor who is allocated tax credits. At the time of these tax credit allocations, the remaining investors (including Hannon Armstrong) are often allocated a large gain. The report suggests there is something inappropriate about our HLBV allocations since there is no matching money. However, this accounting is required when the HLBV methodology is used, and we fully disclose that we expect to recover the carrying amount of our investment over time. In addition, we perform an impairment analysis quarterly to substantiate the carrying value of these investments. We provide our non-GAAP distributable earnings measure in part to reverse our HLBV allocations and make an adjustment that reflects earnings that are consistent with our economic data for the period. The report also alleges that tax credits are attributed to us, that we inflate our profits inappropriately, that we move cash around with our investments under the equity method and that we do not disclose the related party transactions. All of these claims are false. The report lacks a basic understanding of revenues and cash flows associated with renewable energy projects and standard accounting practices for these projects.

• SunStrong’s cash flows come from residential solar portfolios, which are one of the best performing ABS asset classes. All transactions have commercial substance and are executed at arm’s length. As is customary in joint venture transactions, we do not exercise unilateral governance control and we do not exercise voting rights with respect to related party transactions. None of the revenue we have booked with SunStrong is unachievable. All related party transactions are disclosed as such. We don’t “round trip” cash from SunStrong to inflate our revenue.

• We have not incurred any losses on our securitization residuals over the past 20 years and our market-based discount rates reflect this. Although the report erroneously claims that we manipulate the discount rate of our securitizations and residuals, resulting in inflated gains and residual balances, the fact is that we use market-based assumptions to calculate the rates discount. These assumptions use interest rates and market risk premiums, and our residuals are fully supported by expected future cash flows. The report mentions that our discount rate is expected to be reasonably in the “high teens” for a subordinated interest in trade receivables, regardless of whether the receivables we securitize have a quality high credit ratings and in many cases are with government debtors or other debtors with low risk assets, as evidenced by our historical zero loss rate on residuals. A lower discount rate is therefore to be expected.
• The PIK of our loans is intentionally structured to match the cash flows of the underlying projects. The report alleges incorrect recording of payment-in-kind (“PIK”) interest. Our PIK interest is not indicative of distressed borrowers and has been fully considered in our underwriting. This PIK interest typically results from investors participating in the tax equity being allocated cash in the early years of the transaction, causing our cash flow allocation to be lower than our loan interest rate. Because there is enough cash to pay all of our interest, those loans that are classified as PIK in the early years have cash flows that exceed income in later years. This accounting is in accordance with GAAP and consistent with our economic results. We disclose our policies for recognizing our trade and government receivables, in which we assess the collectability of amounts we have recognized as revenue and will cease recognizing revenue if we believe there is substantial doubt about our ability to collect these amounts. We perform this analysis quarterly and have concluded that our PIK interest is fully achievable.

“We have a long history of adhering to the highest ethical and professional standards, and we will communicate proactively with our investors, customers and other stakeholders,” said Jeffrey W. Eckel, chairman and CEO of Hannon Armstrong. “We are committed to fiercely defending our business, while continuing to prove our investment thesis of achieving better risk-adjusted returns by investing on the right side of the climate change line.”

About Hannon Armstrong

Hannon Armstrong (NYSE: HASI) is the first U.S. public company dedicated exclusively to climate solutions investments, providing capital to assets developed by leading companies in energy efficiency, renewable energy and other energy markets. sustainable infrastructure. With $9 billion in assets under management, our primary focus is to make climate-positive investments with superior risk-adjusted returns. For more information, visit hannonarmstrong.com or follow us on Twitter and Linkedin.

Forward-looking statements

Certain of the information contained in this press release is forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to risks and uncertainties. . For these statements, we claim the protections of the safe harbor for forward-looking statements contained in these sections. These forward-looking statements include information about possible or suspected future results of our business, financial condition, liquidity, results of operations, plans and objectives. When we use the words “believe”, “expect”, “anticipate”, “estimate”, “plan”, “continue”, “intend”, “should”, “may” or similar expressions, we mean identify statements to search.

Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned not to place undue reliance on such statements. Actual results may differ materially from those set forth in the forward-looking statements. Factors that could cause actual results to differ materially from those described in the forward-looking statements include those discussed under “Risk Factors” included in our most recent Annual Report on Form 10-K as well as in other periodic reports. that we deposit. with the United States Securities and Exchange Commission

Forward-looking statements are based on beliefs, assumptions and expectations as of the date of this press release. We undertake no obligation to publish the results of any revisions to these forward-looking statements reflecting new estimates, events or circumstances after the date of this press release.

See the source version on businesswire.com: https://www.businesswire.com/news/home/20220713005883/en/

The Supervisory Board of Tryg today approved the interim report for the second quarter and first half of 2022. This is the first consolidated report for the extended group and therefore the comparison figures in brackets related to the Insurance business refers to second quarter 2021 pro forma figures which have been published on tryg. com before the release of the Q2 report.

Tryg recorded premium growth of 6.8% in Q2 in the first quarter of full consolidation of Codan Norway and Trygg-Hansa, growth was mainly driven by positive developments in the Private and Commercial segments. Technical result of DKK 1,902 million (DKK 1,567 million), supported by the positive development in turnover, the improvement in underlying profitability thanks to the realization of RSA Scandinavia synergies and an increase in the level interest rates (implying a higher discount rate for insurance liabilities). The underlying loss ratio improved by 0.8% for the Group. Tryg’s investment result for the second quarter was -878 million DKK (-757 million DKK), driven by highly volatile financial markets, with equity markets experiencing one of the most challenging quarters in recent memory, widening credit spreads and rising interest rates.

Q2 2022 Financial Highlights

• Premium growth of 6.8% in local currencies
• Technical result of DKK 1,902 million (DKK 1,567 million)
• Combined ratio of 79.7 (81.9)
• Underlying loss ratio (Group) improved by 0.8
• Large claims at 3.1% (1.4%) and climatic claims at 0.9% (2.3%)
• Expense ratio of 13.9 (14.7)
• Free portfolio ROI of -944 million DKK (312 million DKK)
• Total return on investment of -878 million DKK (-757 million DKK)
• Synergies linked to the RSA of DKK 92 million
• Profit before tax of DKK 508 million (DKK 274 million)
• Quarterly dividend of DKK 1.56 and solvency ratio of 195

Financial highlights H1 2022

• Premium growth of 5.3% in local currencies
• Technical result of DKK 2,656 million (DKK 1,895 million)
• Combined ratio of 83.0 (84.0)
• Large claims at 2.9% (1.9%) and climatic claims at 1.9% (1.6%)
• Expense ratio of 14.0 (14.1)
• Return on investment of the free portfolio of -916 million DKK (505 million)
• Total return on investment of -1,162 million DKK (-414 million DKK)
• Synergies linked to the RSA of DKK 142 million
• Profit before tax of DKK 711 million (DKK 1,296 million)
• Dividend per share of DKK 3.11 (DKK 1.55 paid in April and DKK 1.56 to be paid on July 15)

Q2 2022 Customer Highlights

• Customer satisfaction score of 85 (84 in Q2 2021)
• For the seventh consecutive year, TryghedsGruppen has decided to pay a bonus to members. For 2021, this equates to 8% of premiums paid in the fall

Statement from Group CEO Morten Hübbe:

In the second quarter, we present for the first time the financial performance of the enlarged Group after the recent acquisitions of Trygg-Hansa and Codan Norway. I am delighted to see that we continue to deliver profitable growth in all Nordic markets, a strong technical result of DKK 1,902m and a combined ratio of 79.7. The performance in the second quarter of the year was supported by continued positive developments in the core insurance business supported by the delivery of RSA Scandinavia synergies. At the same time, we saw that inflation continued to develop negatively and therefore began targeted price adjustments to offset this development.

In a difficult macroeconomic environment with accelerating inflationary pressure, this strong set of numbers reflects a healthy core business, and it is very positive to see that we are able to win new customers and grow our turnover while realizing synergies. upon acquisition.

Financial markets are experiencing almost unprecedented volatility due to geopolitical tensions and a sharp rise in interest rates. Our ROI of -878 million DKK reflects these uncertainties after a quarter where virtually all asset classes produced negative returns.

Finally, we are pleased to announce a quarterly dividend per share of DKK 1.56, which represents an increase of around 45% compared to the same quarter last year. The dividend is supported by a healthy solvency ratio of 195 which provides a solid foundation at the start of the new adventure and ensures a solid return on capital for our shareholders.

Conference call
Tryg is hosting a conference call today at 10:00 CET. CEO Morten Hübbe, CFO Barbara Plucnar Jensen and Commercial Director Johan Kirstein Brammer will briefly present the results followed by Q&A.

The conference call will be conducted in English. An on-demand version will be available shortly after the conference call ends.

Conference call details:
Danish participants: +45 78 15 01 07
UK participants: +44 333 300 9271
US participants: +1 631 913 1422 (PIN: 94357481#)

All Q2 and H1 material can be downloaded from tryg.com/ shortly after release.

• 20_TRYG_Interim report Q2 and H1 2022

Does July’s Gartner, Inc. (NYSE: IT) Stock Price Reflect What It’s Really Worth? Today we are going to estimate the intrinsic value of the stock by estimating the future cash flows of the company and discounting them to their present value. The Discounted Cash Flow (DCF) model is the tool we will apply to do this. Don’t be put off by the jargon, the underlying calculations are actually quite simple.

Businesses can be valued in many ways, which is why we emphasize that a DCF is not perfect for all situations. If you want to know more about discounted cash flow, the rationale for this calculation can be read in detail in the Simply Wall St analysis template.

Discover our latest analysis for Gartner

Is Gartner correctly valued?

We will use a two-stage DCF model which, as the name suggests, takes into account two stages of growth. The first stage is usually a period of higher growth which stabilizes towards the terminal value, captured in the second period of “sustained growth”. In the first step, we need to estimate the company’s cash flow over the next ten years. Wherever possible, we use analysts’ estimates, but where these are not available, we extrapolate the previous free cash flow (FCF) from the latest estimate or reported value. We assume that companies with decreasing free cash flow will slow their rate of contraction and companies with increasing free cash flow will see their growth rate slow during this period. We do this to reflect the fact that growth tends to slow more in early years than in later years.

Generally, we assume that a dollar today is worth more than a dollar in the future, and so the sum of these future cash flows is then discounted to today’s value:

Estimated free cash flow (FCF) over 10 years

(“East” = FCF growth rate estimated by Simply Wall St)
10-year discounted cash flow (PVCF) = $8.6 billion

We now need to calculate the terminal value, which represents all future cash flows after this ten-year period. For a number of reasons, a very conservative growth rate is used which cannot exceed that of a country’s GDP growth. In this case, we used the 5-year average of the 10-year government bond yield (1.9%) to estimate future growth. Similar to the 10-year “growth” period, we discount future cash flows to present value, using a cost of equity of 6.5%.

Terminal value (TV)= FCF₂₀₃₂ × (1 + g) ÷ (r – g) = $1.3 billion × (1 + 1.9%) ÷ (6.5%–1.9%) = $30 billion

Present value of terminal value (PVTV)= TV / (1 + r)^ten= $30 billion ÷ (1 + 6.5%)^ten= $16 billion

The total value is the sum of the cash flows for the next ten years plus the present terminal value, which gives the total equity value, which in this case is $24 billion. In the last step, we divide the equity value by the number of shares outstanding. Compared to the current share price of $243, the company appears to be about fair value at a 20% discount to the current share price. Remember though that this is only a rough estimate, and like any complex formula – trash in, trash out.

Important assumptions

Now, the most important inputs to a discounted cash flow are the discount rate and, of course, the actual cash flows. You don’t have to agree with these entries, I recommend that you redo the calculations yourself and play around with them. The DCF also does not take into account the possible cyclicality of an industry or the future capital needs of a company, so it does not give a complete picture of a company’s potential performance. Since we consider Gartner as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which takes debt into account. In this calculation, we used 6.5%, which is based on a leveraged beta of 1.079. Beta is a measure of a stock’s volatility relative to the market as a whole. We derive our beta from the average industry beta of broadly comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable company.

Next steps:

Although a business valuation is important, it is only one of many factors you need to assess for a business. It is not possible to obtain an infallible valuation with a DCF model. Instead, the best use of a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. If a company grows at a different rate, or if its cost of equity or risk-free rate changes sharply, output may be very different. For Gartner, we’ve rounded up three essentials you should dig into:

1. Risks: For example, we have identified 4 warning signs for Gartner (1 is a little worrying) you should be aware.
2. Future earnings: How does the growth rate of IT compare to its peers and the broader market? Dive deeper into the analyst consensus figure for the coming years by interacting with our free analyst growth forecast chart.
3. Other strong companies: Low debt, high returns on equity and good past performance are essential to a strong business. Why not explore our interactive list of stocks with strong trading fundamentals to see if there are any other companies you may not have considered!

PS. The Simply Wall St app performs a discounted cash flow valuation for every stock on the NYSE every day. If you want to find the calculation for other stocks, search here.

Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

Section 8.01 Other Events.

As previously disclosed and reported in the Current Report on Form 8-K filed on
February 28, 2022 with the U.S. Securities and Exchange Commission (the "SEC"),
Healthcare Realty Trust Incorporated, a Maryland corporation (the "Company" or
"HR"), entered into a definitive Agreement and Plan of Merger (the "Merger
Agreement"), dated as of February 28, 2022, with Healthcare Trust of America,
Inc., a Maryland corporation ("HTA"), Healthcare Trust of America Holdings, LP,
a Delaware limited partnership ("HTA OP"), and HR Acquisition 2, LLC, a Maryland
limited liability company ("Merger Sub"), to effect a strategic business
combination of the two companies to be led by the HR management team.

On June 10, 2022, the Company filed with the SEC a definitive proxy statement in
connection with the Merger (the "Definitive Proxy Statement"). As disclosed in
the Definitive Proxy Statement, as of June 10, 2022, three purported
stockholders of HR had filed actions in the United States District Court for the
Eastern District of New York (the "Preliminary HR Proxy Complaints"), captioned
Irvin v. Healthcare Realty Trust Incorporated, Case No. 1:22CV02806 (E.D.N.Y.),
Hopkins v. Healthcare Realty Trust, Inc., Case No. 1:22cv-02916 (E.D.N.Y.) and
Justice v. Healthcare Realty Trust Incorporated, Case No. 1:22-cv-03041
(E.D.N.Y.), alleging that a preliminary version of the proxy statement filed
with the SEC as part of HTA's Registration Statement on Form S-4 filed on May 2,
2022 (the "Preliminary Proxy Statement") was materially incomplete, false or
misleading in certain respects, thereby allegedly violating Sections 14(a) and
20(a) of the Exchange Act (15 U.S.C. § § 78n(a), 78t(a)), and SEC Rule 14a-9 (17
C.F.R. § 240.14a-9) or 17 C.F.R. § 244.100 promulgated thereunder.

In addition, as disclosed in the Definitive Proxy Statement, as of June 10,
2022, two purported stockholders of HTA had filed actions in the United States
District Court for the Southern District of New York (the "Preliminary HTA Proxy
Complaints," and together with the Preliminary HR Proxy Complaints, the
"Preliminary Proxy Complaints"), captioned Stein v. Healthcare Trust of America,
Inc., Case No. No. 1:22cv-03703 (S.D.N.Y.), and Tiso v. Healthcare Trust of
America, Inc., Case No. 1:22CV03804 (S.D.N.Y.), alleging that the Registration
Statement on Form S-4 filed by HTA with the SEC on May 2, 2022, and which
included the Preliminary Proxy Statement, was materially incomplete, false or
misleading in certain respects, thereby allegedly violating Sections 14(a) and
20(a) of the Exchange Act (15 U.S.C. § § 78n(a), 78t(a)), and SEC Rule 14a-9 (17
C.F.R. § 240.14a-9) or 17 C.F.R. § 244.100 promulgated thereunder.

Following the filing of the Definitive Proxy Statement and prior to the filing
of this Current Report on Form 8-K, two additional complaints have been filed as
individual actions in United States District Courts (the "Definitive Proxy
Complaints" and, collectively, with the Preliminary Proxy Complaints, the
"Complaints"). One Definitive Proxy Complaint has been filed in the United
States District Court for the Southern District of New York, captioned Carlisle
v. Healthcare Realty Trust Incorporated, Case No. 1:22-cv-05313 (S.D.N.Y.).
Another Definitive Proxy Complaint has been filed in the United States District
Court for the Eastern District of New York, captioned Johnson v. Healthcare
Trust of America, Inc., Case No. 1:22-cv-03692 (E.D.N.Y.).

The Definitive Proxy Complaints generally allege that the Definitive Proxy
Statement failed to disclose material information in connection with the Merger
and that, as a result, the Definitive Proxy Statement is materially misleading
in violation of Section 14(a) and Section 20(a) of the Exchange Act.

Each of the Complaints seeks, among other things, to enjoin HTA or the Company,
as applicable, from consummating the Merger or, in the alternative, rescission
of the Merger or damages. Additional lawsuits arising out of the Merger may also
be filed in the future.

HTA and the Company believe that the claims asserted in the Complaints are
without merit and that no supplemental disclosure is required under applicable
law. However, in order to avoid the risk of the above captioned actions delaying
or adversely affecting the Merger, to alleviate the costs, risks and
uncertainties inherent in litigation, to provide additional information to its
stockholders, and without admitting any liability or wrongdoing, HTA has
determined voluntarily to supplement the Definitive Proxy Statement as described
in this supplemental disclosure. Nothing in this Current Report on Form 8-K
shall be deemed an admission of the legal necessity or materiality under
applicable laws of any of the disclosures set forth herein.

These supplemental disclosures will not affect the merger consideration to be
paid to stockholders of HTA in connection with the Merger or the timing of the
special meeting of HTA's stockholders, which will be held in a virtual-only
format on July 15, 2022, at 10:00 a.m., Pacific Time.

--------------------------------------------------------------------------------

Additional Disclosures

The additional disclosures herein supplement the disclosures contained in, and
should be read in conjunction with, the Definitive Proxy Statement, which should
be read in its entirety. To the extent that information in this supplemental
disclosure differs from, or updates information contained in, the Definitive
Proxy Statement, the information in this supplemental disclosure shall supersede
or supplement the information in the Definitive Proxy Statement. All page
references used herein refer to pages in the Definitive Proxy Statement before
any additions or deletions resulting from the supplemental disclosures.
Capitalized terms used herein, but not otherwise defined, shall have the
meanings ascribed to such terms in the Definitive Proxy Statement. Underlined
and bolded text shows text being added to a referenced disclosure in the
Definitive Proxy Statement.

The section of the definitive proxy statement entitled “The Merger-Opinion of the Company Financial Advisor-Public Trading Multiples” is amended and supplemented as follows:

The Definitive Proxy Statement is hereby revised to include the following table between the third and fourth paragraphs on page 61:

The P/2022E FFO and Implied Capitalization Rate for each selected company are as
follows:

                                        P/2022E FFO    Implied Capitalization Rate
Healthcare Trust of America, Inc.          16.2x                  5.5%
Healthcare Trust of America, Inc.(1)       15.5x                  5.6%
Healthcare Realty Trust Incorporated       16.6x                  5.6%
Physicians Realty Trust                    15.1x                  5.8%
MOB-focused Average(2)                     15.9x                  5.7%

(1) From August 3, 2021the trading day immediately preceding the date of the public announcement of the resignation of the Chief Executive Officer of the Company.

(2) Includes Healthcare Realty Trust Incorporated and the Physicians Building Trust.

The section of the Definitive Proxy Statement entitled "The Merger-Opinion of
the Company Financial Advisor- Selected Transaction Analysis" is amended and
supplemented as follows:

The Definitive Proxy Statement is hereby revised to include the following as the
last paragraph on Page 61 and the first, second, third and fourth paragraphs on
Page 62:

Using publicly available information, J.P. Morgan examined selected transactions
involving businesses which J.P. Morgan judged to be sufficiently analogous to
the Company's business (or aspects thereof).

None of the selected transactions reviewed was identical to the proposed Merger.
However, the selected transactions were chosen because certain aspects of the
transactions, for purposes of J.P. Morgan's analysis, may be considered similar
to the proposed Merger. This analysis necessarily involves complex
considerations and judgments concerning differences in financial and operational
characteristics of the companies involved and other factors that could affect
the transactions differently than they would affect the proposed Merger.

Using publicly available information, J.P. Morgan calculated, for each selected
transaction, the ratio of the target portfolio's net operating income for the
forward twelve month period to the implied real estate value of the target
portfolio (the "Implied Acquisition Capitalization Rate"). The transactions
selected by J.P. Morgan for its analysis, and the Implied Acquisition
Capitalization Rate for each transaction, were as follows:

                                                                                                              Implied Acquisition
Announcement Date              Target                                  Acquiror                               Capitalization Rate
October 2021                   Landmark (MOB Portfolio)                Physicians Realty Trust                          4.9%
November 2019                  Hammes Partners (MOB Portfolio)         Welltower                                        5.3%
January 2019                   CNL (MOB Portfolio)                     Welltower                                        5.6%
May 2017                       Duke Realty (MOB Portfolio)             Healthcare Trust of America                      5.3%

--------------------------------------------------------------------------------

Based on the results of this analysis, J.P. Morgan selected an Implied
Acquisition Capitalization Rate reference range for the Company of 4.9% - 5.6%.
After applying such range to the Company's projected same store net operating
income, the analysis indicated the following range of implied per share equity
value (rounded to the nearest $0.25) for Company Common Stock:
                                                                      

Implied value of equity per share

                                                               Low                                      High
Company Implied Acquisition Capitalization Rate               $29.75                                   $35.50



The range of implied per share equity value for Company Common Stock was
compared to (i) the closing price of Company Common Stock of $28.30 as of August
3, 2021, the trading day immediately preceding the date of the public
announcement of the resignation of the Company's chief executive officer, and
(ii) the closing price of Company Common Stock of $29.69 as of February 24,
2022, the trading day immediately preceding the date of The Wall Street Journal
article regarding the potential Merger.

The section of the Definitive Proxy Statement entitled "The Merger-Opinion of HR
Financial Advisor-Financial Analyses-Discounted Cash Flow Analysis" appearing on
page 69 is amended and restated as follows:

Updated cash flow analyses. Citi performed separate HR and Company discounted cash flow analyzes as described below.

HR. Citi performed a discounted cash flow analysis of HR by calculating the
estimated present value (as of December 31, 2021) of the standalone unlevered
free cash flows that HR was forecasted to generate during the fiscal years
ending December 31, 2022 through December 31, 2026 based on the HR Forecasts.
For purposes of this analysis, stock-based compensation was treated as a cash
expense. Citi calculated implied terminal values for HR by applying exit cap
rates ranging from 4.75% to 5.50% (selected based on Citi's professional
judgment and experience) to an estimated NOI (as approved by HR management) for
HR's terminal year (derived by applying a 3.0% growth rate to 2026E NOI as
reflected in the HR Forecasts and accounting for certain assumptions
attributable to acquisitions, dispositions and developments). The present values
(as of December 31, 2021) of the cash flows and terminal values were then
calculated using a selected range of discount rates of 7.21% to 8.02% (derived
from a weighted average cost of capital calculation for HR by Citi based on its
professional judgment and experience). This analysis indicated an approximate
implied per share equity value reference range for HR of $27.86 to $37.63.

The Company. Citi performed a discounted cash flow analysis of the Company by
calculating the estimated present value (as of December 31, 2021) of the
standalone unlevered free cash flows that the Company was forecasted to generate
during the fiscal years ending December 31, 2022 through December 31, 2026 based
on the Company Forecasts. For purposes of this analysis, stock-based
compensation was treated as a cash expense. Citi calculated implied terminal
values for the Company by applying exit cap rates ranging from 4.75% to 5.50%
(selected based on Citi's professional judgment and experience) to an estimated
NOI (as approved by HR management) for the Company's terminal year (derived by
applying a 3.0% growth rate to 2026E NOI as reflected in the Company Forecasts
and accounting for certain assumptions attributable to acquisitions,
dispositions and developments). The present values (as of December 31, 2021) of
the cash flows and terminal values were then calculated using a selected range
of discount rates of 7.00% to 7.78% (derived from a weighted average cost of
capital calculation for the Company by Citi based on its professional judgment
and experience). This analysis indicated an approximate implied per share equity
value reference range for the Company of $28.51 to $36.49.

After adjusting implied values for the Company to account for the Special
Distribution, Citi utilized the implied per share equity value reference ranges
derived for HR and the Company to derive the following approximate implied
exchange ratio reference range, as compared to the exchange ratio provided in
the Merger pursuant to the Merger Agreement:

             Implied Exchange Ratio Reference Range       Exchange Ratio
             0.880x - 1.589x                                        1.0000x

Some additional information

Citi also observed certain additional information that was not considered part of its financial analyzes with respect to its opinion, but was noted for informational purposes, including the following:

————————————————– ——————————

•historical closing prices of HR Common Stock and Company Common Stock during
the 52-week period ended February 25, 2022, which (a) reflected a closing sale
price of HR Common Stock on February 24, 2022 (the last trading day prior to
public media speculation about a potential transaction) of $30.26 and indicated
. . .


Item 9.01   Financial Statements and Exhibits.

(d) Exhibits. 104 Cover page interactive data file (embedded in Inline XBRL document)

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