Analysts Weigh In on Two Small Biotech Stocks: Idera Pharmaceuticals Inc (IDRA), Sequenom, Inc. (SQNM)

Analysts have mixed sentiments on biotech companies as Cowen is bullish on Idera Pharmaceuticals Inc (NASDAQ:IDRA) due to a new collaboration and upcoming drug data while Wedbush is staying on the sidelines as Sequenom, Inc. (NASDAQ:SQNM) struggles to obtain strong sales.

Idera Pharmaceuticals Inc

Analyst Boris Peaker of Cowen reiterated an Outperform rating on Idera Pharmaceuticals, though he did not provide a price target. The rating comes after the company announced a collaboration with GlaxoSmithKline, or GSK, to develop a platform against renal disease.

According to the deal with GSK, Peaker explains, “Idera receives $2.5MM upfront and the potential for ~$100MM in development and regulatory milestones.” Although this is a “relatively small deal” for Idera, it supports the potential of the platform. The analyst continues, “We expect Idera to announce two additional targets for the antisense platform by YE15,” both of which are expected to be developed in-house with an Investigative New Drug application expected in early 2016. Peaker sees the new platform as “an engine of growth” and expects the company to “pursue orphan indications for in-house programs.”

Although the partnership deal is exciting, Peaker remains focused on IMO-8400. The pipeline cancer treatment will enter Phase 2 testing for patients with Waldenström’s macroglobulinemia and diffuse large B-cell lymphoma. Data from the Phase 1 trial will be presented in a few weeks. The analyst comments, “Detailed data were not included in the abstract, but it did note initial evidence of clinical activity in all dosing cohorts… and that all dose levels were generally well-tolerated.” Peaker is not surprised by the seemingly clean safety profile of the drug, but he does not “expect response rates to be overwhelming given that this was a dose-finding study.”

According to TipRanks, Boris Peaker has a 48% overall success rate recommending stocks with a +24.2% average return per rating.Peaker stat

Sequenom, Inc.

Wedbush analyst Zarak Khurshid maintained a Neutral rating on Sequenom shares, with a $1.50 price target.

The company is most known for being the pioneering force behind the first non-invasive pre-natal test, or NIPT. However, the analyst notes that the company’s primary competitor, Natera, is growing at a faster rate than Sequenom. He explains, “SQNM’s low risk NIPT volume appears to be at less than 4k annualized versus NTRA’s ~150k low risk test runrate.” Furthermore, the analyst remains skeptical on 2016 sales due to “underperforming NIPT volume and very limited penetration in the low risk market.” The company posted third quarter NIPT sales of 35.5k, below Khurshid’s estimate of 36.8k. This marks an 8% year-over-year decrease in NIPT sales.

Although the analyst pointed to “ok” levels of collection efficiency and improving gross margins and opex, he adds that the “Improving cost structure not enough to improve sentiment.” Khurshid concludes, “We believe the top line fundamentals are key to the SQNM story and competitive pressure on volumes, SQNM’s virtually nonexistent low risk NIPT presence and slow ramp of license pool royalties will make it difficult for the company to meet current expectations in 2016.”

According to the 4 analysts polled by TipRanks in the last 3 months, 1 is bearish on Sequenom and 3 remain on the sidelines. The average 12-month price target for the stock is $1.95, marking a 18% potential upside from where shares last closed.

SQNM stat


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