Here’s What’s Moving Agenus Inc (NASDAQ:AGEN) and Cerus Corporation (NASDAQ:CERS)

biotechnology

So we have come to the end of anther week in the biotechnology space, and it has been an interesting one of a number of fronts. Specifically, a large number of companies have put out earnings releases, peaking yesterday; the first day of May is notoriously a busy earnings day in this sector. With financial reports come business updates, and with business updates come catalyst confirmations. With catalyst confirmations come volatility, and it is this volatility across a number of companies that we’re going to focus on for the purpose of today’s discussion.

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So, the two companies in our crosshairs today are Agenus Inc (NASDAQ:AGEN) and Cerus Corporation (NASDAQ:CERS).

Let’s kick things off with Agenus.

As opposed to operational catalysts, this one is more of a numbers-driven move. The company put its latest earnings out at market open on Thursday, and investors seem to be happy with the current state of its financial situation – specifically, the balance sheet. As many reading will know, the balance sheet is one of the key components of any company, but in the development stage biotechnology space, it is all the more important. Why? Because these companies don’t generally generate revenue (and if they do, they have to use large portions of it to fund the research and development arms of their respective operations). This will generally necessitate equity raise to fund operations, and equity raises are dilutive to shareholders’ positions. If a company can convince markets that it is in a strong enough cash position to avoid dilution, therefore, it is generally seen as a decent buy.

This is exactly what has happened here.

Agenus announced on Thursday that it has a little over $124 million in cash, which comes as a close to $50 million improvement on the cash figure that the company reported at the end of 2016.

Additionally, and outside of cash holdings, Agenus reported that a long-awaited immuno-oncology element of its development pipeline is ready to make its way into the clinic, and that this operation will likely be spun out into a separate company so as to attract outside funding (although the separate company will still be majority-owned by Agenus).

Again, markets saw this as a strong development, and Agenus has moved accordingly. The company gained close to 20% on its Thursday open by the day’s close and currently trades for a little over $4.08 a share, or a market capitalization of $402 million.

Next up, Cerus.

Unfortunately for this company and its shareholders, the day went in the opposite direction as to that of Agenus. At market open, Cerus traded for a little over $4.2 a share. By market close, this had dipped just shy of $3.50 a piece – a more than 17% decline across the session. For those new to this company, it is a medical device company based out of California, and – just as with the company discussed above – Cerus put out its latest earnings report on Thursday. Unlike Agenus, however, the numbers did not impress markets. A few sales extension deadlines were missed (specifically those in South Africa and France) and we’re talking sales targets put in place by the company itself (which makes the misses all the more frustrating), while product revenue dipped on a year-over-year basis from first quarter 2016 to first quarter 2017. Total revenue increased slightly, but this was driven primarily by an infusion of government revenue as opposed to product push expansion – something that isn’t necessarily an indication of long-term expansion potential and more a one off. Net loss widened slightly, from $16.8 million during the first quarter of 2016 to $18.6 million during the first quarter of 2017, while operating expenses increased from $18.7 million in 2016 to $22.8 million in 2017.

Things aren’t all bad, however. Fresh government regulation in the US points towards a potential growth market for the company and its products, specifically with relation to bacterial safety in blood in health facilities like hospitals and surgeries. Cerus has a strong operational footing in this area, and if the company can latch onto the added revenue from government initiatives, 2017 might not turn out to be as bad a year as these initial numbers suggest.

Recent action, however, shows that markets are applying more weight to the first quarter than to their expectations for the remaining three, and that is why Cerus is down as things stand.

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