Healthcare Review: Response Genetics, Celldex Therapeutics, Keryx Biopharmaceuticals, Merrimack Pharmaceuticals, Agenus Print E-mail
By Staff and Wire Reports   
Thursday, 07 November 2013 15:37
The stock market retreated from record levels Thursday as traders interpreted faster growth in the U.S. economy as a sign the Federal Reserve could soon slow its stimulus program. The economy expanded at an annual rate of 2.8 percent in the third quarter, up from 2.5 percent in the previous quarter, according to the government's initial growth estimate. That made investors think the Fed could start cutting back its stimulus next month, earlier than many anticipated. It "certainly raises the possibility of the Fed pulling back in December," said Peter Cardillo, chief market economist at Rockwell Global Capital. "The Fed is going to test the water."

Response Genetics ($RGDX) plunges after Q3 revenue comes in short of expectations at $4.1M.Pharmaceutical client revenue — which the company notes is "characteristically inconsistent" — falls 35% Y/Y and 30% sequentially. The company blames "one-time $500K milestone payments received in both Q2 and in Q3 2012."ResponseDX revenue: -16% Y/Y, -18% Q/Q. Here, the company says the culprit is "accelerated refocusing of sales efforts on larger new potential accounts." Gross margin: 33% versus 49% in Q3 2012 and 49% in Q2 2013.CEO Thomas Bologna calls the results "clearly disappointing."

The rally in Celldex Therapeutics ($CLDX) has held up, with the shares off their morning highs but still up sharply. Brean likes the CDX-1127 data, as analyst Jonathan Aschoff is "encouraged to see that the lymphocyte population did not drop as a whole," and says he "believes that auto immunelike toxicities that may emerge when combining CDX-1127 with another immune-stimulating agent can be managed." Buy rating maintained.Price target lifted to $35 from $25.

JPMorgan reiterates Keryx Biopharmaceuticals ($KERX) at Overweight on the strength of the latest Zerenex data (non-dialysis dependent chronic kidney disease patients with elevated serum phosphorus and iron deficiency anemia).  Here's analyst Cory Kasimov: "Based on the data and management's comments on the conference call, we are updating our model to 1) include a higher WAC at launch and 2) to include a NDD-CKD revenue model from an iron supplement perspective rather than a phosphate binder." Kasimov predicts approval (ESRD) next year. Price target raised to $22 from $14.

Merrimack Pharmaceuticals ($MACK) jumps after providing an update on its development program along with Q3 results. NAPOLI-1 (MM-398 in advanced pancreatic cancer) top-line data now expected in Q2 2014 versus Q4 2013/Q1 2014. MACK says a "blinded assessment of OS events across the entire trial ... are occurring later than forecasted." Confirmed: MM-121 Phase 2 in wild-type EGFR non-small cell lung cancer did not meet primary endpoint. Upcoming in Q4: Top-line data for MM-121 in second line hormone receptor positive breast cancer, neoadjuvant HER2 negative breast cancer; presentation of MM-302 Phase 1 in December. Financials: Q3 net loss of $0.39 versus consensus of a $0.31 loss.

Agenus ($AGEN) soars 28% after HerpV met its primary endpoint in a Phase 2 trial showing, in the words of the study's principal investigator, "that we can direct the immune system to fight [HSV-2]."Patients receiving HerpV "had a statistically significant reduction in viral shedding" after three initial injections, supporting "that vaccination with HerpV has a real, measurable biological effect lowering the active shedding of the virus." Final results are due in H1 2014.


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