Harriet Lefton

About the Author Harriet Lefton

Harriet originates from the UK where she worked as a journalist specializing in the metal markets. She graduated from the University of Cambridge before becoming a qualified UK lawyer.

Tuesday’s Market Insights: DryShips Inc. (DRYS), Momenta Pharmaceuticals, Inc. (MNTA), Cidara Therapeutics Inc (CDTX)

DryShips Inc. (NASDAQ:DRYS) stock is sinking by 25% in Tuesday’s trading session, after the shipping company announced that it has entered into agreements to acquire two modern tanker vessels from “unaffiliated third parties” for about $102.5 million. Specifically, DRYS is purchasing a 113,644 DWT Aframax tanker currently under construction in South Korea and a 320,105 DWT Very Large Crude Carrier built in 2011. Both vessels are expected to be delivered in the second quarter of 2017. Share prices fell on the news due to fears over the controversial shipping company’s cash flow position. DRYS announced very poor operating cash flow for Q4 with adjusted EBITDA at negative $13.9 million.

In addition, DryShips entered into a $200 million share purchase agreement with the enigmatic offshore company Kalani Investments Limited. Kalani will receive $1.5 million worth of DRYS stock as a commitment fee. Although Kalani is not connected to DRYS it is very likely that the company is in some way connected to the infamous CEO George Economou. If you want to learn more about DRYS check out this article on why investors are angry at DRYS CEO George Economou.

Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA) shares are trading down 14% after the complex pharmaceutical company announced that a warning letter had been delivered from the FDA to Pfizer, Sandoz’s contracted manufacturer for Glatopa, a drug which is used to reduce the frequency of relapses in patients with multiple sclerosis (MS). Glatopa was developed by both Momenta and Sandoz but is commercialized under just the Sandoz brand.

On the announcement, Aegis Capital analyst Difei Yang reiterated her hold rating for the company with a $17 price target (14% upside from current share price). The FDA warning letter is not expected to restrict production or shipments of Glatopa 20mg. However, Yang points out that the situation is not so positive for Glatopa 40mg: “FDA policy states that compliance observations must be satisfactorily resolved before the ANDA can move forward. We anticipate this will translate into a 6-month delay for Glatopa 40 mg.”

The news came as part of the company’s release of its earnings results for the fourth quarter. Total revenues for the fourth quarter of 2016 were $34.2 million compared to $22.4 million for the same period in 2015. The $34.3 million included $15.8 million in product revenues from Sandoz’s sales of Glatopa.

Momenta has a moderate buy analyst consensus rating on TipRanks with an average analyst price target of $17.67 (12.55% upside).

Cidara Therapeutics Inc (NASDAQ:CDTX) stock is plunging 38% in Tuesday’s trading after the company reported unfavorable results from a Phase 2 RADIANT clinical trial of its gel and ointment formulations of CD101 which is designed to treat acute vulvovaginal candidiasis (VVC).  The trial found that the topical formulations were not as effective as oral medication. As a result, the topical formulation testing for CD101 in VVC will now be discontinued.

Cidara says it will now shift resources from CD101 to other pipeline products including CD101 IV which is a once-weekly therapy intended for the treatment and prevention of life-threatening invasive fungal infections. Results from the STRIVE Phase 2 trial of CD101 IV are expected during the fourth quarter of 2017.

TipRanks reveals that Cidara has a strong buy analyst consensus rating with an average analyst price target of $21.75 representing an incredible 222.22% upside from the now-fallen stock price.