Here is a look at some of this week’s biggest mover so far with an analysis of what’s moving each and where we expect the company in question to go from here. The three companies in our crosshairs for today are Paratek Pharmaceuticals Inc (NASDAQ:PRTK), Intra-Cellular Therapies Inc (NASDAQ:ITCI) and CEL-SCI Corporation (NYSE: CVM).
One of the biggest midweek movers this week is Paratek Pharmaceuticals Inc (NASDAQ:PRTK), but the driver behind the action in the stock is somewhat unclear. Well, not unclear in the sense that we don’t know what’s causing it, but unclear in the sense that we are unable to validate the input. On Wednesday, Bloomberg reported that the company is seeking a buyout and is exploring a sale to a number of big-name drugmakers. The rumor has injected a large degree of speculative volume into the stock and Paratek closed out the session on Wednesday at a 27% premium to the price at which it opened.
Exactly who the company is in discussions with, or even whether it is in fact in discussions with anybody, remains unknown. The biotechnology space is infamous for the source of rumor driven moves and there is a good chance that the situation is all talk and we will look back on the close to 30% appreciation as an invalid spike. With that said, however, outlets like Bloomberg are on the more reputable end of the scale and this lends a certain degree of credibility to the suggestion.
As far as what comes next is concerned, it’s all about confirmation. If Paratek is seeking a sale, a 30% to 50% premium on open market price wouldn’t be unreasonable. This suggests that there might be some upside on current price for anybody looking to take a speculative punt on the rumor. If the rumors turn out to be misguided, however, the gains we have seen over the last 24 hours in Paratek’s stock are likely to be quickly negated.
Another big move on Wednesday was Intra-Cellular Therapies Inc (NASDAQ:ITCI).
The company reported a regulatory update associated with one of its lead development programs, an investigation into the efficacy of a drug called lumateperone in a schizophrenia indication. As per the press release that detailed the update, Intra-Cellular reported that the FDA believes that the company “has presented adequate data to support its position that the metabolic pathway in the animal species is distinctive from humans, which indicates that the toxicity observed in the animal species is not relevant to humans”.
Why is this important?
Because the program was set back earlier this year when certain safety concerns arose and the FDA requested that Intra-Cellular prove that the safety concerns were limited to primates and – by proxy – were not applicable to humans in this population that might be taking the drug.
The company collected the data and submitted it to the agency in the hope that it would alleviate the FDA’s issues and – as per the latest release – it has done exactly that.
At market close on Wednesday, Intra-Cellular went for a 28% premium to the price at which the company opened the session earlier that day. Premarket activity on Thursday has added a couple more percentage points to this advance and Intra-Cellular goes for $14.65 share and a market capitalization of $624 million right now.
The final noteworthy mover is CEL-SCI Corporation (NYSE:CVM). CEL-SCI closed down a little more than 15% on Wednesday having announced that it intends to carry out a registered direct offering. The company is set to raise around $3.5 million by issuing shares of common stock, with the capital designated for pipeline purposes.
When a company issues shares to raise money, the existing shareholder base ends up representing a smaller portion of the overall entity than it did prior to the issue. This dilution is often seen as a risk factor and especially as relates to the smaller end of the biotechnology sector, because these are companies that generally don’t generate revenue and have to rely on shareholder capital to advance their pipeline assets to towards commercialization.
If the capital is put to good use (i.e. if it funds the company through to a value driving catalyst) then these sorts of raise driven declines can be nice entry opportunities for the more risk tolerant trader.