Should You Give up on Genocea Biosciences Inc (GNCA), Axovant Sciences Ltd (AXON)? Analysts Dive In

A tale of two beaten biotech stocks: GNCA, AXON.


Genocea Suspends HSV2 Program; Cowen Slashes Price Target to $10

Yesterday was a rough day for Genocea Biosciences Inc (NASDAQ:GNCA) investors to say the least. Genocea shares fell 77% after the drug maker announced that the development of GEN-003 has been suspended and the company’s workforce was cut by 40%. Although efficacy of GEN-003 in HSV2 was established in a series of Phase 2 trials, Genocea was unable to obtain sufficient funding for initiation of Phase 3 development by YE17. The company will now focus exclusively on development of neoantigen cancer vaccines, led by GEN-009.

In reaction, Cowen’s healthcare analyst Phil Nadeau slashed his price target for GNCA to $10.00 (from $40.00), while reiterating an Outperform rating on the stock. (To watch Nadeau’s track record, click here)

Nadeau commented, “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.”

“Genocea believes that its ATLAS technology has unique capabilities in identifying antigens for personalized cancer vaccines. At Genocea’s 2016 R&D day, management presented comparative antigen identification data from a NSCLC patient […] Genocea anticipates filing an IND for lead neoantigen cancer vaccine GEN-009 by early 2018, and expects to report initial immunogenicity data from the Phase I in H1:19,” the analyst continued.

Where does the rest of the Street side on this beaten biotech stock? It appears mostly bullish, as TipRanks analytics demonstrate GNCA as a Buy. Out of 6 analysts polled in the last 12 months, 4 remain bullish on Genocea stock while 2 are sidelined. With a return potential of 1020%, the stock’s consensus target price stands at $14.67.

Axovant Sciences Ltd: “Skyfall” is Not the End

Axovant Sciences Ltd (NASDAQ:AXON) reported yesterday morning that the highly-anticipated pivotal phase 3 MINDSET trial of intepirdine in Alzheimer’s Disease (AD) failed to meet its co-primary endpoints of change in ADAS-Cog and ADCS-ADL. While investors are obviously disappointed by the trial results, H.C. Wainwright analyst Andrew Fein suggest to “look beyond the sea.”

Fein wrote, “With the “skyfall” of another highly anticipated (and hotly debated) Ph3 MINDSET trial in patients with mild to modest Alzheimer’s disease (AD), drug development for AD remains as elusive as ever. We noted before that intepirdine being in-licensed from GSK was a high-risk, high-reward asset in the AD indication, and in the end, a statistical power play did not save the day.”

“Now that the spotlight has been taken away from the front-runner in the pipeline, we encourage investors to look beyond MINDSET and survey the diverse storefront (4 compounds in the clinic). Specifically, several readouts in DLB and PDD trials are on the horizon by the end of the year, which we believe may comprise the main value drivers for Axovant moving forward. As we reiterate our “blank check” value proposition for Axovant, we believe that the core competence of the company resides in its ability to identify and in-license under-appreciated and under-valued assets. And with the addition of David Hung at the helm as ship captain (battle-tested from a similar situation), we remain confident that pivoting to the maturing pipeline and potential in-licensing of additional late-stage assets may suffice to steady the ship and steer the company to safe waters,” the analyst continued.

As such, Fein reiterates a Buy rating on Axovant shares, while lowering the price target to $11.00 (from $35.00), which represents a potential upside of 59% from where the stock is currently trading. (To watch Fein’s track record, click here)

Out of the 9 analysts polled in the past 12 months, 5 rate Axovant stock a Buy, 3 rate the stock a Hold and 1 recommends a Sell. With a return potential of 181%, the stock’s consensus target price stands at $19.78.