As a small capital biotechnology, it is not much riskier than ChemoCentryx, Inc. (NASDAQ: 211). Not many companies see their stock price rise from $ 10 to $ 70 just to drop from $ 10, all in less than 24 months.
Highly volatile stocks returned last week. Following its first-quarter earnings report, ChemoCentryx was up 25% on Friday as the broader market fell. The move could mark a major turning point for a stock that had fallen sharply since October.
Why did ChemoCentryx shares double in October 2021?
On October 8, ChemoCentryx rose from $ 19.60 to $ 40.90 before closing 96% of the day at $ 38.41. The increase was the result of the biopharmaceutical company receiving FDA approval for avacopan. Also known by its brand name Tavneos, the drug was approved as a treatment for a rare autoimmune disease known as ANCA-associated vasculitis.
The approval was good news for the nearly 10,000 people in the United States who are diagnosed with the disease each year. From a financial standpoint, it was also good news for ChemoCentryx, with the treatment expected to be priced at up to $ 200,000 a year. So with Tavneos on the verge of becoming a billion-dollar drug in the long run, the market quickly rose in the shares of a $ 32 million company in 2021.
The trading volume that day was more than 30 times the daily average of the shares. While this led to a later rally the next day, this is as high as the stock would go. Excitement over the FDA news quickly faded, as did the stock price, which dropped to $ 15.28 before Friday’s resurgence.
Why did ChemoCentryx stocks increase on May 8?
ChemoCentryx released first quarter results after the market closed on May 7th. While $ 5.4 million in quarterly revenue was more than the same, positive developments around Tavneos sparked renewed interest in the shares.
Management reported that during the period, 248 new patient initiation forms (PSFs) were received for Tavneos and that the number of doctors prescribing the drug increased to 281. By the end of the quarter, about 277 patients were taking Tavneos, which confirmed a rapid adoption for the recently. approved treatment.
As expected, all of the company’s revenue was derived from Tavneos, but that’s what’s most encouraging to us. The drug is also gaining traction outside the U.S. after receiving European and Canadian regulatory approvals earlier this year. With marketing efforts underway in both regions, sales should only improve from here.
Meanwhile, ChemoCentryx is developing Tavneos for additional indications, including severe hydradenitis (HS). A phase III clinical trial is expected to begin in the second half of the year.
Finally, investors liked what they heard about the company’s cancer treatment programs. Its CCX559 candidate product is advancing as a potential treatment for several cancers, and management noted plans to submit additional data at this year’s oncology conferences.
Are ChemoCentryx shares a buy?
Last week’s high-volume investment could be the start of an uptrend for a stock that has had its share of wild changes. As with other relatively newcomers to biotechnology, the growth path is long and uncertainty about success is high. But that’s part of the appeal of a company like ChemoCentryx: high risk equals high reward potential.
Wall Street certainly has high hopes for ChemoCentryx. Following the first quarter update, HC Wainright reiterated its purchase rating and gave the shares a $ 101 price target. As of Friday’s close, that means the sales research firm sees a path to a nearly 500% return for patient investors willing to take the risk. The rest of the street has remained mostly bullish on the stock market through its dramatic ups and downs.
The long-term growth prospects around the other candidate drugs from Tavneos and ChemoCentryx have strengthened over the past six months, while stocks have weakened. It has fallen victim to the recent market crash with high-growth stocks (and especially biotechnology) facing the weight of sales.
Finally, the market will once again become familiar with the progress of the company’s Tavneos. What caused the impressive October of 2021 has not disappeared. It has only stopped until market conditions improve.
As ChemoCentryx offers more updates around its pipeline, look for the next major stock price move to be on the rise.