Cerulean Pharma Inc (NASDAQ:CERU) failed to meet its primary endpoints for the Phase 2 clinical trial of its lead candidate CRLX101 in combination with Avastin to treat patients with advanced renal cell cancer (RCC). In reaction, Canaccord analyst John Newman reiterates a Buy rating on CERU, but slashes the price target from $15 down to $6.
While the trial revealed no benefit from CRLX-101/Avastin against the comparison of standard care for RCC, Newman notes that CRLX-101 could prove to be efficacious in treatment of ovarian cancer. However, the analyst views the combination with Avastin as a definite risk, considering Avastin has not been granted FDA approval for the treatment of ovarian cancer.
Newman explains, “Cerluean’s lead drug CRLX101 may fail in any or all three currently ongoing clinical programs, resulting in downside to our price target and the current stock price. In addition, clinical studies may be successful but not meet investor expectations, also resulting in downside to our price target and the stock price. […] In addition, CRLX101 may be deemed efficacious, but could generate unexpected toxicity, resulting in reduced market share and lower revenues than expected, even if FDA approval is attained.”
As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, analyst John Newman is ranked #4,016 out of 4,124 analysts. Newman has a 37% success rate and faces a loss of 11.7% in his annual returns. When recommending CERU, Newman loses 28.3% in average profits on the stock.
TipRanks analytics exhibit CERU as a Buy. Based on 3 analysts polled by TipRanks in the last 3 months, 1 rates a Buy on CERU, while 2 maintain a Hold. The 12-month average price target is $8.25, marking a 611% upside from where the stock is currently trading.