Stocks in the biotech sector are notoriously volatile pending financial earnings results and new drug trials. Analysts weigh in on CytRx Corporation (NASDAQ:CYTR) and Regeneron Pharmaceuticals (NASDAQ:REGN) in light of new drug data and earnings release, respectively.
CytRx CorporationCytRx Corporation
Earlier this week, CytRx Corporation released 3Q15 results, ending the quarter with $70.8 million in cash. On the same day, Oppenheimer analyst Christopher Marai weighed in on the stock, reiterating his Outperform rating and price target of $10.00.
CytRx specializes in clinical stage oncology drugs, best known for its medication aldoxorubicin. The company has initiated a pivotal Phase 3 global trial of aldoxorubicin for patients with soft tissue sarcoma (STS), a cancer that develops in the fats, muscles, and other soft tissues of the body. Marai stated, “We continue to await P3 data from the aldoxorubicin trial in soft-tissue sarcoma, expected 2H16, which we believe will be the primary driver of CYTR shares.” He further added, “We anticipate if approved, aldox could be launched in 2017 and achieve peak sales of >$800M in STS alone.” He continued, “We believe the improved safety and the potential for improved efficacy with higher doses will make aldoxorubicin an approvable chemotherapeutic follow-on.”
Aldoxorubicin is also being tested for other indications including small cell lung cancer (SCLC), Kaposi’s sarcoma, and late-stage glioblastoma (brain cancer), which can provide upside potential in the future. Marai noted that aldoxorubicin demonstrating efficacy in combination with other chemo agents as well as faster than anticipated enrollment will have upside potential for CytRx.
According to TipRanks, Marai has a 56% success rate recommending stocks and a +19.1% average return per recommendation.
Yesterday, Cory Kasimov of J.P. Morgan reiterated a Neutral rating for Regeneron Pharma with a price target of $578, even as the company reported a third consecutive ‘beat and raise’ quarter.
REGN reported non-GAAP diluted EPS of $3.47, beating Kasimov’s estimates of $3.15. Eylea, the company’s treatment for several neovascular age related disorders, continued its strong run with US sales of $734 million, topping Kasimov’s estimates of $695 million. Total revenues broke the $ 1 billion barrier for the first time at $1.1 billion, slightly exceeding Kasimov’s estimate of $1.1. REGN ended the quarter with $1.6 billion in cash and cash equivalents.
The company raised its full year Eylea guidance to 50%-55% year-over-year growth from an earlier estimate of 45%-50%. Other elements of guidance were tweaked as well going into the final months of 2015. These included non-GAAP R&D estimates, raised to $540-$560 million from $510-$550 million; non-GAAP Selling, General and Administrative expense (SG&A) estimate revised to $630-$650 million from $610-$650 million; and capital expenditure lowered to $625-$675 million from $675-$750 million.
In his report, Kasimov also highlights Regeneron releasing information on some important catalysts in the coming year. A Biologics License Application (BLA) was recently submitted to the FDA for Sarilumab, a treatment for rheumatoid arthritis. Phase 3 pivotal trials of Dupilumab, a pipeline treatment for skin diseases, are fully enrolled; Phase 2 study in adolescents and children completed enrollment. REGN2222, an antibody targeting the respiratory syncytial virus (RSV), entered Phase 3 clinical development in the third quarter of 2015.
Kasimov, however, is keen to get more information from management around the early days of the Praluent launch (3Q15 revenues came in at $4 million), Eylea sales trends and market dynamics, and any other additional pipeline clarity.
Kasimov has an overall success rate of 57% and an average return per recommendation of +5%. According to TipRanks, out of 9 analysts who have recently rated Regeron’s stock, none of them have expressed any bearish sentiments with 4 rating the stock as a Buy, and 5 preferring to wait on the sidelines. The average consensus price target for the stock is $603.56, an upside of 7.01% from current levels.