Analysts weigh in on biotechnology stocks Juno Therapeutics Inc (NASDAQ:JUNO) and Cempra Inc (NASDAQ:CEMP). Both are bullish as Juno Therapeutics receives $50 million from collaboration partner Celgene, while Cempra receives positive feedback from the ECCMID (European Congress of Clinical Microbiology) on its pneumonia drug Solitaire-IV.
Juno Therapeutics Inc
Yesterday, Juno and its collaboration partner Celgene announced that Celgene exercised its opt-in rights to develop and commercialize Juno’s CD19 program outside of North American and China. Following the news, FBR & Co analyst Edward White reiterated an Outperform rating with a target price of $73.
Following the exercised option, Celgene will now pay Juno $50 million. Further, White believes that Celgene could exercise the second option to commercialize Juno’s CD22 program later this year, which could also trigger another $50 million payment to Juno. Both CD19 and CD22 target different forms of Leukemia and Lymphoma.
The decision caused White updated his projections for revenue in 2016. White’s 2Q16 revenue and non-GAAP EPS estimates increased from $3.7 million and ($0.71), respectively, to $53.7 million and ($0.22) to factor in the $50 million payment. White also updated his 4Q16 estimates, decreasing both revenue and non-GAAP EPS by the $50 million payment to $53.7M and ($0.38) from $103.7M and $0.10, respectively. However, White’s FY16 revenue and non-GAAP EPS estimates remain the same at $115 million and ($2.03).
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Edward White has a yearly average return of 0.9% and a 52% success rate. When recommending JUNO, White has an average loss of 4.7% and a 33% success rate.
Out of the 4 analysts polled by TipRanks, 4 rate JUNO stock a Buy, while 0 rate the stock a Hold, and 0 rate the stock a Sell. With a return potential of 63.73%, the stock’s consensus target price stands at $66.
Cowen and Company analyst Ritu Baral shares an update on biotechnology company Cempra following its Solitaire-IV presentation at ECCMID conference in Amsterdam. The analyst reiterated an Outperform rating and provided a target price of $39.
At the ECCMID conference, Cempra’s drug Solitaire-IV showed “solid efficacy and no real surprise on safety.” Solitaire-IV is an antibiotic used to treat bacterial pneumonia. Baral expects “LFT [Liver Function Tests] fluctuations present only in the IV study to be the only major point of FDA scrutiny (and AdComm discussion) for the upcoming NDA.” Further, the analyst sees a high likelihood that U.S. and EU agencies would approval the drug.
Following the medical trial, Baral expects liver safety to be the key discussion point, though notes that the drug’s “liver safety profile is far from a barrier to approval.” Key opinion leaders echo Baral’s views, believing that as long as liver enzyme fluctuations are “mild, reversible and transient, the safety concern would be addressable with monitoring.” Further, Baral writes that “liver enzymes for hospitalized patients already on IV drops are easily monitorable if nothing else.”
Lastly, Cempra shared that they will have a pre-NDA meeting before submission completion and have already had scientific meetings with EMA (European Medicines Agency) to discuss their Solithromycin Oral and Solitaire-IV, both treatments for bacterial pneumonia. Baral thinks both phase 3s have met their primary endpoint of non-inferiority and have acceptable risk/benefit safety profiles. Key opinion leaders, according to Baral, have “no concerns on efficacy, and are cautiously optimistic on safety.”
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Ritu Baral has a yearly average return of 5.9% and a 41% success rate. When recommending Cempra Inc, Baral has an average return of 3.7% and a 67% success rate.
Out of the 2 analysts polled by TipRanks, 1 rates CEMP stock a Buy while 1 remains neutral. The average 12-month price target for the stock is $31, marking a 74% upside from where shares last closed.