From Bret Jensen's Biotech Forum today:
Our spotlight feature to end the week is on a small biotech stock called Genocea Biosciences (NASDAQ:GNCA).
Company Overview:
Genocea is focused on developing vaccines and immunotherapies to treat infectious diseases. The company has created a pipeline of novel vaccine and immunotherapy programs that stimulate the T cell arm of the immune system using its ATLAS™ proprietary technology platform. The company is based in Cambridge MA and came public just over two years ago. The company has a market capitalization of approximately $120 million and the stock currently goes for just over $4.00 a share.
Pipeline:
The company has several vaccines and compounds in discovery or pre-clinical stage. It has two compounds in Phase II development. The first is GEN-003, a first-in-class, protein subunit T cell-enabled therapeutic vaccine, or immunotherapy, designed to reduce the duration and severity of clinical symptoms associated with moderate-to-severe genital herpes, and to control transmission of the infection. Nationwide, 45 million people ages 12 and older, or one out of five of the total adolescent and adult population, is infected with HSV-2. Woman have a slightly higher chance (1 in 4) of carrying the disease than men (1 in 5). Most individuals do not know they have the disease. The company expects to report virologic efficacy data from their recently initiated Phase 2b trial in the third quarter. At the end of the year, Genocea projects it will deliver six-month clinical efficacy data from this Phase 2b study
The second developmental compound is GEN-004 which is a novel T cell vaccine. It is aimed at preventing colonization of the upper airway by all serotypes of pneumococcus, the underlying cause of pneumonia. GEN-004 is designed to provide protection against each of the more than 90 serotypes of pneumococcus, thereby offering potentially universal protection against pneumococcal disease.
Analyst Commentary & Outlook:
The analyst community is overwhelmingly positive on the stock. The medium price target by the six analysts that cover the stock is $14 a share. Price targets range from $7 to $40. The last analyst comments were early in May when FBR Capital reiterated its Buy rating and $17 price target. The analyst firm noted that the company has several trial milestones over the next nine months. Cowen & Co. is the biggest bull on the stock with a $40 price target on GNA. Its analyst believes GEN-003 could have $700 million in peak annual sale potential.
The company had over $95 million in net cash (over 75% of market capitalization) at the end of the first quarter which management has stated should take it to the second half of 2017. Genocea seems like it has boom or bust potential but is years away from any commercialized success. Its cash on hand should get to the end of Phase II trials for its two main compounds. After that, it is highly likely the company will have to raise additional capital to continue development which could involve significant dilution.
The stock has declined some 75% from its 52 week highs so for aggressive investors, the risk/reward profile certainly looks better than it did this summer. If Cowen is anywhere to close to right on GEN-003 peak sales potential, the stock seems to substantial upside if development leads to commercial approval. I am on neutral on this one as I think there are better opportunities in the small cap space right now with nearer term catalyst
All I say is IMHO and not to be construed as investment advice. I know nothing, as informed frequently by my wife.
