Yet again, we’ve had a busy start to the week in biotech. A number of companies are moving on news or data reported at the close of last week, and others on fresh information this week. Here are two of this biggest movers early US session on Monday, and a look at what’s moving the companies. The two companies in focus are Cyclacel Pharmaceuticals Inc (NASDAQ:CYCC) and Corium International Inc (NASDAQ:CORI).
Let’s kick things off with Cyclacel. This one kicked off the US session at $6.93 a share. It currently trades for a little over $8.58 – a 23% gain across the short period. The thing is, there’s really nothing to drive these gains, and it’s almost certainly just a result of momentum trading on the low float. The company had to reverse split to maintain its NASDAQ listing earlier this year (it fell below the required $1 minimum bid price) and the split reduced its shares outstanding to a little over 3 million. Nobody expects to see much from the company by way of positive catalysts over the coming quarters, and despite a pending topline release from its lead trial in acute myeloid leukemia, sentiment is pretty weak. A well known hedge fund manager, Kevin Tang, just took a position in the company, but we’re not sure why. It’s cheap at current capitalization, but there’s plenty to justify the current discount, and a position based on the current fundamentals seems overly risky.
For those not familiar with the company, it’s a New Jersey based development stage biotech with an anticancer focus. It’s lead is the above mentioned AML candidate, and an interim report put out late last year suggests a near term readout is unlikely to serve up an endpoint hit.
We’re watching this one closely for a pullback. Gains of more than 20% on nothing other than the disclosure of a hedge fund position, especially in a company that looks as risky as Cyclacel does right now, aren’t fundamentally supportable. We expect things to settle as the session matures in the US, and a return to sensible pricing near term.
OK, let’s move on to Corium. This one put out earnings earlier this month, and remained relatively flat across the subsequent couple of weeks. Towards the end of last week, however, the company gained some strength, and topped out around $5.6 a share. Mid morning in the US on Monday, it is down close to 8%, currently trading for a little over $5.2. At the end of last week, the company held a conference call to discuss its earnings and business operations, and gained a few percentage points on the information disseminated. There were a few key points expressed during the call, and today’s correction is likely just a response to a bit of overzealous activity surrounding these key points.
Essentially, Corium is in a good position, and should continue to gain strength as its development pipeline matures. The company has just over $47 million cash on hand, which according to management is more than enough to carry it through to the end of its current development program, and beyond that it expects to partner with some big names to progress. As such, dilution doesn’t look like it’s going to be too much of an issue for the foreseeable future – a big deal at this end of the biotech space and something that investors will be looking to as a real buy signal.
There are a few milestones to keep an eye on near term, that could close the gap on today’s losses and retrospectively paint this morning’s action as a pullback opportunity. These include some FDA feedback on its Corplex Memantine development plan this month, slated for late August, and some confirmatory Phase 3 data on Agile’s Twirla product during the fourth quarter of the year.