Friday turned out to be a nightmare for shareholders of drug makers Peregrine Pharmaceuticals (NASDAQ:PPHM) and Cara Therapeutics Inc (NASDAQ:CARA), as the stocks price tumbled sharply in the wake of clinical setbacks. Brokerage firms Roth Capital and Needham chimed in on the news – let’s take a closer look.
Peregrine shares are collapsing, down around 65% at time of writing, following the news that the company’s SUNRISE Phase III study in NSCLC has failed following the IDMC interim analysis. In reaction, Roth Capital analyst Joseph Pantginis downgraded the stock from Buy to Neutral, while slashing the price target to $0.50 (from $3.00).
Pantginis commented, “Yesterday’s news was a major disappointment across the board, including our earlier projections based on the randomized Phase II and mechanistic data. Helping to bolster the company’s ongoing programs is the Avid Bioservices manufacturing unit, which has a backlog of $58 million in committed contracts. Looking forward, the AZN durvalumab NSCLC study is especially intriguing to us since it is open label and we may see data mid-2016 (potentially ASCO). We believe positive signals from this immunotherapy combination could potentially further push AZN into the partnering range instead of just a clinical collaborator. It remains to be seen, however, the potential negative impact from SUNRISE on business development activities.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Joseph Pantginis has a yearly average return of -13.2% and a 28.9% success rate. Pantginis has a -31.1% average return when recommending PPHM, and is ranked #3661 out of 3675 analysts.
Cara Therapeutics Inc
In a research report issued Friday, Needham analyst Alan Carr reiterated a Buy rating on shares of Cara Therapeutics, with a price target of $27, after the company announced that the Phase 2/3 trial of CR845 in postsurgical pain has been put on clinical hold by FDA, pending a safety review. Cara’s shares reacted to the news, falling 37% in early morning trading.
Carr wrote, “After the trial’s independent data monitoring committee completes a review of the data, we expect mgmt to request a Type A mtg w/ FDA and propose protocol amendments. Mgmt guided for a mtg in late Mar. The most extreme option includes eliminating the high dose arm. Although the clinical hold introduces a delay, based on the information available to us, we believe hypernatremia in the post-operative setting can be managed w/ more careful monitoring and fluid mgmt. In our opinion, the program is still viable.”
“As a reminder, Cara announced positive results from a Phase 2a trial of the oral formulation in Osteoarthritis in Dec 2015. No safety issues relating to electrolytes or hydration status were reportedly observed. We reiterate BUY and recommend investors take advantage of weakness in the stock,” the analyst added.
According to TipRanks.com, analyst Alan Carr has a yearly average return of 10.7% and a 43% success rate. Carr has a -46.6% average return when recommending CARA, and is ranked #178 out of 3675 analysts.
All the 5 analysts polled by TipRanks rate Cara Therapeutics stock a Buy. With a return potential of 319.7%, the stock’s consensus target price stands at $29.