Although early stage biopharma companies do not make a profit, their pipeline study updates can send shares soaring… or crashing. Analysts weigh in on vaccine developer Novavax, Inc. (NASDAQ:NVAX) and diagnostic company Opko Health Inc. (NYSE:OPK) after both release earnings, explaining how vaccine and drug updates will affect shares.
Analyst Heather Behanna of Wedbush weighed in on Novavax after the company released its 4Q:15 earnings report on Monday. The company posted revenues of $5.9 million, compared to estimates of $5.9 million, and a loss per share of ($0.29), greater than the consensus estimates of ($0.14) per share. However, the analyst credits the greater than expected loss to an increase in R&D expenses related to 2 RSV (flu) studies, and anticipates a decline in these expenses in the next 2 quarters. She also comments that the company has enough cash on hand to fund its BLA application for its RSV-F vaccine.
The analyst points to the company completing enrollment for its RESOLVE study in November, where the endpoint of both Phase 2 and Phase 3 is the degree of RSV, or flu. She also notes that 83% those enrolled in the Phase 2 study returned for a second vaccination, which “suggests willingness of elderly individuals to get vaccinated;” a positive finding for the company. The company plans to both release a flue vaccine with BARDA in 2Q16 and commence another study in the first half of 2017.
Behanna reiterates her Outperform rating on the company with a price target of $14. Heather Behanna has a 31% success rate recommending stocks with an average return of 2.9% per recommendation. According to TipRanks’ statistics, all 3 analysts who have rated the company in the past 3 months gave a Buy rating. The average 12-month price target for the stock is $15.33, marking a 226% upside from where shares last closed.
Opko Health Inc.
Analyst Rohit Vanjani of Oppenheimer weighed in on OPK after the company released its 4Q:15 earnings on Monday. The company posted revenues of $276 million for the quarter, compared to consensus estimates of $271.8 million, and in line EPS of $0.00. Regarding revenue, the analyst notes that the November launch of Varubi, a drug which helps mitigate some effects of chemotherapy, contributed $15 million in the fourth quarter, while EPS had a $26 million tax benefit.
The analyst also comments on the company’s pipeline, specifically pointing to the March PDUFA, or expected FDA decision for an NDA, of Rayaldee, the company’s secondary hyperparathyroidism treatment associated with kidney disease. The analyst notes that recently, management discussed labeling with the FDA for this drug, a good indicator of approval. He explains, “We view the labeling conversations positively, as the FDA typically engages in those talks in the latter stages of an NDA.” The company also provided updates on Claros 1, the company’s finger-stick blood analyzer, with a launch expected in 2017, and plans to report top-line results from Lagova, the company’s growth hormone product, by the end of the year.
Regarding the 4k Score, the company’s test for prostate cancer, Vanjani expects notes revenues of $2 million for its base pathology business and around $220 million in Bio-Reference revenues, indicating 4k score sales around 3,500. Although the company experienced a q/q decline in its base pathology business in Q4, management stated “it again saw double-digit 4K score test growth Q/Q.” He also notes a “doubling of the ~100 tests/day it observed last quarter” in Q1. Management expects a CMS coverage decision for the 4k score by the middle of 2016.
The analyst reiterates a Perform rating on the stock without a price target as he anticipates more updates on the 4K score. He explains, “We note that the company will host an investor day in June where we hope to get more details on the ramp of the 4Kscore test.” Rohit Vanjani has a 52% success rate recommencing stocks wit h an average return of 10.6% per recommendation.