Friday’s Biotech Roundup: Merrimack Pharmaceuticals Inc (MACK), Juno Therapeutics Inc (JUNO), Alimera Sciences Inc (ALIM), Relypsa Inc (RLYP)

Merrimack Pharmaceuticals Inc

Merrimack Pharmaceuticals Inc (NASDAQ:MACK) shares closed down over 6% Friday, after the cancer drug maker reported second-quarter results, with net Onivyde sales of $12.9 million missed consensus of $17 million. However, total revenue in 2Q16 was $33.7 million, meeting consensus of $33.4 million due to variations in collaboration revenue recognition.

Reacting was Cowen analyst Eric Schmidt, which downgraded Merrimack shares from Outperform to Market Perform. In addition, the analyst lowered his 2016-2020 Onivyde revenue projection from $100MM, $225MM, $300MM, $375MM and $400MM to $58MM, $90MM, $120MM, $145MM and $170MM.

Schmidt commented, “Although management maintains that it is pleased with the drug’s launch and remains confident in Onivyde’s peak market potential, we are disappointed by the early deceleration in sales growth. In our experience, oncology drugs ramp up quickly, and the Q2 sales miss suggests that either the gem-refractory pancreatic cancer market is smaller than we had modeled or that Merrimack’s commercial efforts are not having the desired impact. The company has taken action to reaccelerate Onivyde’s trajectory (see below), but until evidence of an improved trajectory become apparent, we think it prudent to cut our estimates.”

Schmidt has a very good TipRanks score with a 57% success rate and he stands at #42 out of 4,090 on the analyst leaderboard. Schmidt has a yearly average return of 23.6% and 22% average return when recommending MACK.

Out of the 7 analysts polled by TipRanks, 5 rate Merrimack stock a Buy, while 2 rate the stock a Hold. With a return potential of 130%, the stock’s consensus target price stands at $13.60.

Juno Therapeutics Inc

Maxim analyst Jason McCarthy reiterated a Buy rating on shares of Juno Therapeutics Inc (NASDAQ:JUNO), while slashing the price target to $50 (from $80), as he believes that the approval of JCAR015, the company’s CAR-T therapy for acute myeloid leukemia, has been delayed.

McCarthy wrote, “The approval of JCAR015 has been pushed back to 2018 (pivotal data late 2016), and we factor in slower uptake into “less sick” patients. In addition, we believe approval of additional CARs in larger indications like lymphoma will require more time. As such, we have pushed back potential commercialization to 2020 (from 2018).”

However, “We believe it is prudent to adjust our assumptions given a combination of the bearish biotech market environment, catalysts, and revisions to our therapeutic model, as well as other related assumptions. We then apply a modest discount rate of 15% to our free cash flow, discounted EPS and sum-of-the-parts models, which are equally weighted. The net result is a reduction in our price target to $50, from $80, which still supports a Buy rating given Juno’s valuation today.”

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, analyst Jason McCarthy has a yearly average return of -3.6% and a 39% success rate. McCarthy has a -16.7% average return when recommending JUNO, and is ranked #3642 out of 4090 analysts.

Out of the 12 analysts polled by TipRanks, 8 rate Juno Therapeutics stock a Buy, while 4 rate the stock a Hold. With a return potential of 73%, the stock’s consensus target price stands at $53.44.

Alimera Sciences Inc

Cowen analyst Boris Peaker reiterated a Market Perform rating on shares of Alimera Sciences Inc (NASDAQ:ALIM), with a $2.00 price target, after the eye drug company released it’s second-quarter financial results, posting revenue of $9.6 million, exceeding preannounced range of $9.3-9.5 million.

Peaker wrote, “Despite raising our 2016 estimates due to strong 2Q16 sales and management commentary relating to higher demand in 2Q16 over 1Q16, we currently model 4Q16 revenue of $13.0M, which is not sufficient to cover its ~$15-16M in operating expenses. Alimera expects to break cash flow even in December 2016 and we continue to see risk for the company to hit this guidance. We also note that although Alimera reported 2Q16 US sales of $7.2M and EU sales of $2.4M, EU operations disproportionately account for 35-40% of expenses.”

“Focus will continue to be on timing of cash flow break even as the company must maintain at least $20M in liquidity (accounts receivables and cash) to remain in good standing for its debt covenant with Hercules. As part of the agreement Hercules monitors Iluvien sales periodically with their next look expected on August 31. If July and August sales are below expectation, we believe a debt-related update is possible,” the analyst added.

According to TipRanks, analyst Boris Peaker has a yearly average return of 10.4% and a 47% success rate. Peaker has a -25.7% average return when recommending ALIM, and is ranked #310 out of 4085 analysts.

Out of the 2 analysts polled by TipRanks, 1 rates Alimera stock a Buy, while 1 rates the stock a Hold. With a return potential of 176%, the stock’s consensus target price stands at $5.00.

Relypsa Inc

In a research note issued this morning, Cantor analyst Mara Goldstein reiterated a Hold rating on shares of Relypsa Inc (NASDAQ:RLYP) with a price target of $32, after the drug maker filed its quarterly report on Form 10-Q for the second-quarter. RLYP reported EPS of $1.87 which was larger than Goldstein’s $1.59 forecast, largely due higher below the operating line expenses. Revenue of $5.2 million was slightly ahead of Goldstein’s $4.9 million forecast.

Goldstein noted, “We are adjusting our model for the quarter’s results. The company’s reporting of monthly prescription data has shown month over month increases in paid prescription growth, which is a factor in the higher numbers in the quarter.”

In addition, Galenica announced yesterday that its indirect wholly owned subsidiary, Vifor Pharma, is commencing its previously announced tender offer for any and all outstanding shares of common stock of Relypsa at a price of $32.00 per share in cash, without interest and less applicable withholding taxes.

Goldstein commented, “While the $32 takeout is lighter than we would like to have seen, we think that another suitor is not likely, and thus expect the transaction to close upon FTC clearance. There is a $49 million break-up fee that Relypsa would have to pay if such an event occurs, which is substantial but not insurmountable, in our view.”

According to TipRanks, analyst Mara Goldstein has a yearly average loss of 1.0% and a 44% success rate. Goldstein has a 71.8% average return when recommending RLYP, and is ranked #3133 out of 4090 analysts.

Out of the 13 analysts polled by TipRanks, 7 rate Relypsa stock a Hold, while 6 rate the stock a Buy. With a return potential of 7%, the stock’s consensus target price stands at $34.20.

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