Newly public biotech company NewLink Genetics (NLNK) is developing treatments that help the immune system fight cancer. Its lead product candidate is an injected drug for pancreatic cancer, a very deadly disease with poor choices for treatment. The drug is being tested in the last of three phases of study usually needed for US approval but significant stock-moving events may be at least a year away.
After the company?s initial public offering last month, analysts from four firms Wednesday initiated coverage with buy recommendations. It should be noted all four firms (Canaccord Genuity, Cantor Fitzgerald, Robert W. Baird and Stifel Nicolaus) were involved in the company?s IPO.
In a little more than a month of trading, NewLink?s stock dropped about 1%, trading at $7 a share early afternoon Wednesday. The 12-month analyst target prices range from $10 to $16 a share.
?Given the high risk, high reward nature of this story, we would not necessarily advise a focused exposure here, but do think it makes a good addition to any aggressive growth-oriented portfolio,? Baird analyst Christopher Raymond says. He has a $10 target for the stock.
So-called immunotherapies are generating a lot of interest in the medical and financial communities and are at the center of two of the more interesting plot lines this year for biotech investors. Dendreon?s (DNDN) Provenge vaccine for prostate cancer was hailed as a revolutionary treatment but sales proved to be disappointing. (See Dendreon?s Stock Plunges on Low Provenge Sales.) On the other hand, Bristol-Myers Squibb (BMY) benefited from a strong sales launch of the melanoma treatment Yervoy.
NewLink?s therapy uses genetically modified human cells to help trigger the body?s immune system and fight cancer. In early studies, high doses of the treatment extended patients? lives by a year. But results of the larger study being conducted now (about 700 patients) will give investors a better sense of whether NewLink has a viable product.
Expect some study data in late 2012 or early 2013, says Chief Financial Officer Gordon Link.
?Their technology and approach is sound, but only time will tell,? says biotech industry analyst Michael Becker.
As for the company?s location amid the cornfields of Iowa, Link admits ?it?s not a hotbed for biotech.? And Raymond notes that some investors may be put off by the company?s location since it?s not based in either of the biotechnogly hubs of California or Massachusetts.
But, in the end, the data will determine the company?s fortunes.
Twitter: @brettchase
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No positions in stocks mentioned.
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