Is It Time to Panic About Axovant Sciences Ltd (AXON) and Genocea Biosciences Inc (GNCA)? Analysts Weigh in

Healthcare analysts share two cents on two falling biotech stocks.


Axovant Sciences Ltd Shares Worth Only $3, Says Chardan

Tuesday turned out to be a nightmare for shareholders of Axovant Sciences Ltd (NASDAQ:AXON) after their shares fell nearly 70%. The reason? The drug maker announced negative top-line results from the phase III MINDSET trial of intepirdine in patients with MTM AD, as the trial did not meet the co-primary efficacy endpoints. Axovant is working with investigators to conclude the open-label extension study for MINDSET but acknowledged it would not continue development of intepirdine in MTM AD.

Adding salt to the wound, long-time Axovant bear Chardan analyst Gbola Amusa wrote a note this morning, and basically said, I told you so.

“The MINDSET failure is consistent with our bearish and counter-consensus (i.e. all other houses had “Buy” or “Outperform” ratings) thesis that intepirdine “is likely to be the next of many failures in the Alzheimer’s disease (AD) market”,” Amusa commented. The analyst continued, “We do not yet see value in other intepirdine or nelotanserin programs and would caution strongly against any investment views that argue for a limited read-across from MINDSET to other upcoming datasets.”

As such, Amusa reiterates a Sell rating on AXON, while slashing his price target to $3.00 (from $8.00), based on valuing the company at a small premium to cash of $2.67. (To watch Amusa’s track record, click here)

Out of the 8 analysts polled in the past 3 months, 7 rate Axovant stock a Buy, while 1 (Amusa) rates the stock a Sell. With a return potential of 310%, the stock’s consensus target price stands at $32.75.

Genocea Biosciences Inc: Cowen Cuts Estimates as GEN-003 Is Out of the Game

Genocea Biosciences Inc (NASDAQ:GNCA) shares plunged by nearly 70% this morning as Wall Street came down hard on the company. The reason? The drug maker said it was ceasing all spending and development activities related to its genital herpes treatment GEN-003, which the company previously viewed as a potential blockbuster.

In reaction, Cowen analyst Phil Nadeau slashed his price target for GNCA to $10.00 (from $40.00), while reiterating an Outperform rating on the stock.

Nadeau commented, “We estimate that GEN-003’s Phase III program will cost approximately $150MM, and given GNCA’s stock price, we suspect that it could not identify a sufficiently attractive way to fund the Phase III program. Therefore, Genocea will no longer try to develop GEN-003 itself, and GEN-003 will advance further only if a partner can be found.”

“We have adjusted our estimates to be consistent. We continue to project that GEN-003 will be successfully developed, but now we assume that GNCA will receive a 17.5% royalty on sales, rather than capturing all economics. This has reduced our DCF-based price target from $40 to $10,” the analyst added.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Phil Nadeau has a yearly average return of 18.5% and a 61% success rate. Nadeau is ranked #128 out of 4660 analysts.

Where does the rest of the Street side on this volatile biotech player? It appears mostly bullish, as TipRanks analytics demonstrate GNCA as a Buy. Out of 6 analysts polled by TipRanks in the last 12 months, 5 are bullish on Genocea stock while one moved to the sidelines. With a potential upside of nearly 720%, the stock’s consensus target price stands at $14.