Report for Trading Session: 5/23/22
Markets continued sliding, marking the longest losing streak since 1923 on the Dow as investors grew increasingly concerned over inflation and potential Federal Reserve responses. Inflation concerns flared up again following large retailer earnings from Walmart and Target which suggested consumers may have begun shifting their spending towards essentials as purchasing power sinks. Nearly nothing has been left untouched in this slide with the S&P 500 posting its seventh consecutive weekly loss and briefly entering bear market territory on Friday. Adding pressure to the negative sentiment, investors are weighing developments from lockdowns in China in response to covid-19, supply chain issues, war, and the headliners of inflation and the Feds potential hawkish response. In the week ahead, investors will be monitoring the S&P 500 after its brief bear market visit for further signs of weakness. Adding to the agenda, Amazon, Twitter, and Meta will all be holding their annual meetings this week, with FDA also slated for discussion around baby formula. Outside of these events, durable goods, Fed minutes, and weekly mortgage applications are slated for release during the week. In this evenings session, futures are slightly higher as investors look to break the 8th consecutive loss on the Dow and many equities.
| Biotech News | Economic Reports |
Biotech Highlights
- Monkeypox cases have taken the spotlight with cases now popping up in the US
- XBI shed some of its gains from Fridays session and hovers at ~ -20% for the month
- Retailers were quick to catch onto a story of Martin Shkreli being released early and placed into a halfway houseÂ
- Pfizer announced a $11.6B deal to acquire BioHaven for $148.5 per share, a 33% premium to BHVN’s volume weighted average selling price over the past 3 months.Â
- Over 20% of the Nasdaq’s 370 biotech companies are trading for less than their cash position
- With roughly $20B in cash, these companies are valued at ~$11B
- Biotech stocks in the Russell 2000 closed their worst April since 1997 (when returns were first tracked)
- Moderna crushed earnings and maintained guidance of $21B for year 2022
- Shares of Amgen slid 5% after beating on top and bottom lines due to a newly disclosed dispute with the IRS which is seeking billions in back taxes
Covid Updates:
- Officials have laid out a timeline to decide on new covid-19 vaccine design in early July
- With the U.K. serving as a leading indicator for previous waves, the U.S. appears to have confirmed this indicator with a BA.2 and BA.2.12.1 wave now seeing 20% increase in hospitalizations WoW. Click here for a discussion by Eric Topol surrounding the risks BA.2.12.1 pose
- Sub omicron variants are causing yet another set of record waves, click here for an overview of BA.2.12.1, BA.2 and BA.1 infectiousness
- First gen vaccine efficacy is now reported as low as 55% after 3 months as emerging variants continue to disprove the immunity theory with the U.K. breaking yet another record hospitalization peak for the year
- ARCT Covid-19 data saw 55% protection from infection and 95% overall efficacy
- Nature.com released an article focusing on the pan-covid vaccine race
- The U.K. has reached a previous peak of covid deaths as BA.2 causes a spike in cases
- Bloomberg released an article focusing on T-cells and highlighted Gritstone’s approach, future proofing for
OPK $3.09
| Ticker: OPK | Â Risk Est | Â Support | Â Resistance | Â Price Target |
| Â $3.09 | Yellow | $2.96, 2.85 | $3.19, 3.41 | Â $3.5-4+ (0-10 weeks) |
Background:
Hqd in Miami FL, Opko Health is commercial-stage biotech focused on diagnostics and pharmaceuticals- Has a wide array of assets including BioReference Laboratories which is one of the largest full-service laboratories in the U.S.
- Continues to generate significant revenue from COVID testing, although down ~43% YoY
- Has additional assets such as Rayaldee and more which are starting to generate meaningful revenue
- Pfizer is OPKO’s global commercial partner for NGENLA (Somatrogon)
- Has a history of significant insider buys i by the CEO Phillip Frost and other stakeholders
- Purchased 300K shares on 12/28/20 at an avg price of ~$4.0
- In Nov 21 he bought $2.1M worth of stock at ~$3.45
- Most recently, Mr. Frost bought 50K shares at $2.86
- In total, there has been 1.68M shares bought by insiders this monthÂ
 Relevant Developments:
- Sian capital which owns a 3% stake in OPK released research outlining how to unlock value for shareholders
- Management appears to be heading the report, appointing Dr. Roger Medel to their board
- 6/17/21Â sold its sterile fill and finish manufacturing facility in Ireland to Horizon Therapeutics for $65 millionÂ
- Signed a definitive agreement for Sema4 to acquire OPK’s subsidiary GeneDx; 1/18/22
- Projected to deliver $350 million in pro forma 2022 revenue
- $200 million private placement from leading biotech investors including PFE
- Acquisition was completed on 5/2/22
- The Japanese regulatory body approved OPK and PFE’s NGENLA; 1/20/22
- Received a CRL from the FDA for the BLA for for somatrogon; 1/21/22
- Interestingly, NGENLA was approved in the EU weeks later; 2/15/22
- VFMCRPÂ initiated the commercial launch of RAYALDEE in Germany;Â 2/3/22
- Pfizer’s NGENLA earned approval in the EU; 2/15/22
- OPK announced plans to acquire privately held ModeX Therapeutics for $300M in stock; 5/9/22
- ModeX Therapeutics develops innovative multi-specific immune therapies for cancer and infectious diseases
Highlights from 1Q22 earnings reported on 5/9/22
- Top brass from ModeX Therapeutics have joined the OPK BoD and leadership team
-  In addition to $150M in upfront cash, OPK received $322M in Sema4’s class A common stock in connection with the sale of GenDx.
- OPK is also eligible for sales based milestones which would bring the total deal value to $472M
- Pfizer launched NGENLA in Germany, Japan and additional markets
- This triggered $85M in milestones for OPK
- RAYALDEE launch in underway in Germany and Switzerland
- RAYALDEE is approved in 11 European countries. Product launches in additional markets are anticipated
- Diagnostic rev fell 43% to $286M from $507M due to lower COVID-19 testing volume.
- Offset partly by better genomic test reimbursement and an increase in clinical and genomic test volumes
- Operating income decreased primarily due to a decline in the volume of COVID-19 tests
- Pharmaceutical rev for the Q increased +8.82%Â to $37M
- Modest financials with $102M in cash + $64M credit line from JPM and $85M in milestone payments from Pfizer expected in 1Q22. Net loss for the Q was $55M
Upcoming Catalysts:
- Launching RAYLEE in additional ex-US markets (2022)
- Additional clarity on the CRL (1H22 expected)
- Top-line data from the P2 study of RAYALDEE in patients with COVID-19 (2022)
Technicals/Notes:
- Monitoring to enter sub $3 on weakness where we have seen significant insider purchases this year
- The 20-day SMA is significant support level we want to see hold for an indicator of strength
- The ModeX acquisition gives OPK access to a portfolio of broad and potent multi-specific antibodies for infectious diseases and cancer, as well as additional therapeutic areas
- This strategic move paired with rising RAYLEE ex-US rev and launches underway by Pfizer the EU of NGENLA, we are bullish on the long-term growth prospects for the company
- The modest cash position ($102M) relative to the burn rate is a bit unnerving even though its offset partially by the milestone payments from PFE and the JPM credit line
- This is especially true seeing that diagnostics rev has declined so much YoY and management has not yet provided guidance (to our knowledge) for RAYLEE or NGENLA
- We will therefore be following closely the commercial momentum of these assets in 2022
CRVS 1.04
| Ticker: CRVS | Â Risk Est | Â Support | Â Resistance | Â Price Target |
| Â $1.04 | Red | $1.0 | $1.10, 1.45 | $1.50-2.0+ (0-10 weeks) |
- Clinical-stage precision oncology company with a robust pipeline targeting difficult to treat cancers
- Discovered the Adenosine Gene Signature, which can potentially serve as a biomarker to ID patients likely to respond to treatment with ciforadenant
- Lead programs= Ciforadenant (CPI-444) in renal cancer (extremely hard indication) and Mupadolimab (CPI-006) in HPV+ Head and Neck cancer
- According to the CEO “Mupadolimab is one of the most studied anti-CD73 antibodies and is uniquely positioned with a potential dual mechanism, B cell activation and inhibition of immunosuppressive adenosine production“.
- Co-founded Angel Pharmaceuticals in China in Oct. 2020 and is partnered with them on developing three clinical assetsÂ
- Relatively low float with 18.54 million shares, 38.31 million total outstandingÂ
Relevant Developments:
- Completed a $10M bought deal financing @ $2.80/share;Â 5/5/21
- At the same time, the CEO made a significant open market purchase (35K shares) at the same priceÂ
- Terminated its P3 COVID-19 program citing slow enrollment and shifting market conditions due to high vaccine efficacy;Â 7/15/21
- Management expressed great excitement for its oncology programs and that additional data would be shared this year
- An IND application submitted by Angel Pharma to initiate a P1b study was accepted by the Chinese regulators; 8/16/21
- Provided an update on its development programs in oncology and infectious disease for mupadolimab (formerly CPI-006);Â 9/22/22
- Announced updated results from its Phase 1/1b clinical trial of mupadolimab (formerly CPI-006) in cancer patients;Â 11/12/22
- Saw tumor reductions in mupadolimab treated patients (mono and combination therapy)
- Continuing to enroll with additional data anticipated in 2022
- Presented new preclinical data highlights for CPI-818 at ASH;Â 12/13/21
- Hosted an R&D Symposium in New York City; 5/10/22
- Â Gave investors updates on its three clinical programs: mupadolimab (anti-CD73), ciforadenant (adenosine 2A receptor antagonist) and CPI-818 (ITK inhibitor)
- Highlighted new interim data from CPI-818 Pb study in patients with relapsed T cell lymphomas
- Click here for the webcast
- CRVS remains the leader in the modulation of CD73 and adenosine to affect tumor immunity
- Mid-to-late stage clinical trials for mupadolimab and ciforadenant on track to start this year
- 2022 Key Areas of Focus:Â
- Advancing its three programs across three cancer types and includes P1-P2 studies for each program
- Plans to initiate a randomized Phase 2 clinical trial evaluating mupadolimab as a front-line therapy for the treatment of patients with advanced NSCLC
- Plans to collaborate with the Kidney Cancer Clinical Trials Consortium to initiate an open-label P2 trial evaluating ciforadenant in 1L RCC
- Data from the P1b study being conducted by CRVS’s partner Angel Pharmaceuticals in China is expected later this year
- Modest financial position with $63M in cash and a relatively low burn of $8M for the Q
Next Catalysts:
- Present new P1/2 data in mupadolimab data in head and neck cancer (2H22)
- Additional P1/1b mupadolimab data (2022)
- Initiate a P2 study of mupadolimab (2022)
- Initiate the P2 trial in 1L RCC (3Q22)
- P1b data from Angel (2022)
- Update from the P2 study in 1L mRCC (2022)
Technicals/Notes
- Looking to establish a speculative position here near the bottom of the stock’s 3-yr trading range ($1.0-9.54)
- Data readouts this year across the company’s three core programs (mupadolimab, ciforadenant, and CPI-818) should give investors greater clarity on their trajectory
- In particular, we are eager to see results from the P2 study in 1L mRCC as its a notorious cancer type with huge unmet medical need
- Although the probability of success is not in the company’s favor, we feel the interest and collaboration from the Kidney Cancer Clinical Trials Consortium bodes well for the program
- Nonetheless, we like that the CRVS has other shots on goal on the oncology front
- Of note, major shareholders EcoR1 and Orbimed appear to have sold their position per the latest SEC filings
- With a $48M market cap and three novel clinical programs underway we like the prospects for shares of CRVS in the 2H22Â
Key
- Support: The share price we monitor to remain bullish on a position, this serves as our mental stop loss
- Resistance: The share price we monitor to indicate a potential breakout zone
- Time Frame: A rough estimate on the amount of time a stock will take to reach our price target
- Core Positions: For this evenings copy of our core position updates, click here
- Trade Updates: For stocks on previous emails or SMS alerts that aren’t on this evenings email, click here
- *Risk estimates are rough estimates we use to gauge the potential volatility of a stock
- Red: High risk, most speculative play.
Generally companies with market caps under
$100M and weak cash positions (under $20M) - Yellow: Medium risk. Decent cash position (over $20M),
present a decent trade-setup, and ideally have catalysts - Green:Â Lower risk relative to yellow and red rated trades.
These trades are supported by strong underlying
fundamentals and have upcoming catalysts. Ideally,
there is a nice technical setup too.
“Trade Insights” are updated twice weekly and include a market update and two tickers with relevant developments and items on the horizon which may impact share price. If you have questions, please navigate to the key and or contact us or pop into the group chat.Â
Disclaimer
Trading stocks is risky. Part or all of an investment may be lost. Our daily “Trade Insights” emails are meant to give you ideas for swing and day trades but do not serve as investment advice. We recommend users conduct their own independent research before making investment decisions and consult with a financial advisor.
Price targets, risk estimates and all other assumptions outlined in all of our content housed in our website, emails and SMS alerts are estimates designed to help you with your research efforts and are not exact predictions. These are not to be perceived as investment advice, independent research should always be conducted and consulting with a registered financial advisor is traditionally good practice. We may trade some of these companies based on the thesis outlined by the existing data, but are not compensated by these companies in any form.Â
For a full copy of our disclaimer please click here to read
We like to consider taking profits on stocks we are up on and buying puts/using a stop loss to mitigate risk, this is not advice but merely our personal strategy in many of the trades we execute.Â
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