Noted short-selling specialist Hindenburg Research published a critical report of Chamath Palihapitiya-backed Clover Health Investments Corp on Thursday, sending the insurance firm’s down more than 10%, its biggest daily percentage drop in four months.
Venture capital investor Palihapitiya, who held a 27% stake in Clover Health as of Jan. 7, was among the big financial names to support last week’s GameStop buying frenzy against institutional short-sellers, saying early in the slugfest that he had bought in to the video game retailer.
The Hindenburg report hindenburgresearch.com/clover, the title of which called Clover Health a "broken business," risks reheating the battle between hedge fund short-sellers and investors.
Clover Health said it would be issuing a statement in the next few hours to address the claims made by Hindenburg. Neither Palihapitiya nor his representative immediately responded to a Reuters request for comment.
Hindenburg said in the report that it had no investment position in Clover Health.
Citron, another of the financial world’s famous short-selling research houses, said last week it would no longer publish reports recommending shorts.
Clover, which sells Medicare-backed insurance plans, went public through a $3.7 billion deal with a special purpose acquisition company (SPAC) backed by Palihapitiya. Its other investors had included Alphabet Inc and Sequoia Capital.
Palihapitiya’s SPAC raised $720 million in April 2020 and six months later announced the tie-up with Clover.
In recent months, the popularity of using SPAC’s has exploded among startup companies who want to avoid the more traditional route of using an initial public offering to enter the market.
Clover shares closed down 12.33% at $12.23, the biggest daily percentage drop since Oct. 6. Volume in the session topped 68 million units, by far the most active trading day in the stock’s history and well above its 10-day average of about 14.4 million.
Shares of Clover had fallen 16.8% so far this year before Thursday’s tumble.
In September, Hindenburg issued a report on Nikola Corp calling it an “intricate fraud built on dozens of lies.” Shares of the electric truck maker have fallen about 35% since the report.
In a Dec. 15 report, Hindenburg said it remained short on Loop Industries with a $0 price target. Shares of Loop have climbed nearly 50% since.
Shares of gene-regulation startup Sana Biotechnology Inc surged 40% in their U.S. stock market debut on Thursday, giving the Seattle-based company a market capitalization of $6.38 billion.
It offered 23.5 million shares in its initial public offering (IPO) on Wednesday, raising about $587.5 million in what was the largest-ever IPO for a preclinical biotech company.
The company’s shares opened at $35, well above the IPO price of $25 per share.
Sana, founded in 2018, is led by several co-founders of another Seattle-based biopharmaceutical company, Juno Therapeutics, which is a unit of Bristol-Myers Squibb Co.
The biotech firm has raised a total of around $865 million in funding so far from investors including venture capital firm Arch Venture Partners and Canada Pension Plan Investment Board, according to data from PitchBook.
Morgan Stanley, Goldman Sachs, J.P. Morgan and BofA Securities were the lead underwriters for the offering.
Johnson & Johnsonapplied for an emergency use authorization from the Food and Drug Administration for itscoronavirusvaccine after releasing data last week showing it was about 66% effective in protecting against the virus.
If J&J’s application is approved, it would be the third Covid-19 vaccine authorized for emergency use in the U.S. behind those developed by Pfizer-BioNTech and Moderna. Pfizer’s vaccine was authorized by the FDA on Dec. 11, and Moderna’s was authorized a week later.
“Today’s submission for Emergency Use Authorization of our investigational single-shot COVID-19 vaccine is a pivotal step toward reducing the burden of disease for people globally and putting an end to the pandemic,” J&J’s chief scientific officer, Dr. Paul Stoffels, said in a statement.
“Upon authorization of our investigational COVID-19 vaccine for emergency use, we are ready to begin shipping,” he said. “With our submission to the FDA and our ongoing reviews with other health authorities around the world, we are working with great urgency to make our investigational vaccine available to the public as quickly as possible.”
U.S. officials and Wall Street analysts are eagerly anticipating the authorization of J&J’s vaccine, which could happen as early as this month. President Joe Biden is trying to pick up the pace of vaccinations in the U.S. and experts say his administration will need an array of drugs and vaccines to defeat the virus, which has killed more than 450,000 Americans over the last year, according to data compiled by Johns Hopkins University.
Unlike Pfizer’s and Moderna’s vaccines, which require two doses given about three to four weeks apart, J&J’s medication only requires one dose, easing logistics for health-care providers.
J&J said on Jan. 29 that its vaccine was 66% effective overall in protecting against Covid-19. The vaccine, however, appeared to be less potent against other variants. The level of protection was just 57% in South Africa, where a new, highly contagious strain called B.1.351 is rapidly spreading. South Carolina officials detected the first-known U.S. case of that strain last month.
Infectious disease experts point out that J&J’s numbers can’t be used as a direct comparison with Pfizer’s and Moderna’s vaccines, which were found to be 95% and 94% effective, respectively. That’s because J&J’s vaccine is a single dose and the company’s trial was conducted when there were more infections and new, more contagious variants, they said.
Dr. Anthony Fauci, the nation’s leading infectious disease expert, said the most crucial finding of the J&J data was the vaccine appeared to be 85% effective in preventing severe disease.
“The most important thing, more important than whether you prevent someone from getting aches and a sore throat, is preventing people” from getting severe disease, the director of the National Institute of Allergy and Infectious Diseases said on a call with reporters on Jan. 29. “That will alleviate so much of the stress and human suffering and death in this epidemic.”
The FDA has indicated it would authorize a vaccine that’s safe and at least 50% effective. The flu vaccine, by comparison, generally reduces people’s risk of getting influenza by 40% to 60% compared with people who aren’t inoculated, according to the Centers for Disease Control and Prevention.
J&J has said it plans to ship the vaccine at 36 to 46 degrees Fahrenheit. By comparison, Pfizer’s vaccine needs to be stored in ultra-cold freezers that keep it between negative 112 and negative 76 degrees Fahrenheit. Moderna’s vaccine needs to be shipped at between negative 13 and 5 degrees Fahrenheit.
The Department of Health and Human Services announced in August that it reached a deal with Janssen, J&J’s pharmaceutical subsidiary, worth approximately $1 billion for 100 million doses of its vaccine. The deal gives the federal government the option to order an additional 200 million doses, according to the announcement.
Let’s talk about risk and the big picture. It’s an appropriate time, as the big risk – presented by the COVID-19 pandemic – is finally receding thanks to the ongoing vaccination program. COVID is leaving behind an economy that was forced into shutdown one year ago while in the midst of a great expansion, boosted by the deregulation policies. While the new Biden Administration is busy reversing many Trump policies, at least for now the economy is rebounding.
And this brings us to risk. A time of economic growth and rebound is a forgiving time to move toward risk investments, as general economic growth tends to lift everything. Two strategists from JPMorgan have recently chimed in, promoting the view that the market’s fundamentals are still sound, and that small- to mid-cap sector is going to keep rising.
First, on the general conditions, quant strategist Dubravko Lakos-Bujas wrote, “Although the recent technical selloff and short squeeze is receiving a lot of attention, we believe the positive macro setup, improving fundamentals and COVID-19 outlook, strength of the US consumer, as well as the reflation theme remain the bigger forces at play. Not only should this drive further equity upside, but it remains favorable for continued rotation into economic reopening…”
Building on this, Eduardo Lecubarr, chief of the Small/Mid-Cap Strategy team, sees opportunity for investors now, especially in the smaller value stocks.
“We stick to our view that 2021 will be a stockpicker’s paradise with big money-making opportunities if you are willing to go against the grain… Many macro indicators did fall in January but SMid-Caps and equities in general continued to edge higher,” Lecubarr noted.
And if you are prone to look at high-risk, small- to mid-cap stocks, you’ll find yourself drawn to penny stocks. The risk involved with these plays scares off the faint hearted as very real problems like weak fundamentals or overwhelming headwinds could be masked by the low share prices.
So, how should investors approach a potential penny stock investment? By taking a cue from the analyst community. These experts bring in-depth knowledge of the industries they cover and substantial experience to the table.
Bearing this in mind, we used TipRanks’ database to find two compelling penny stocks, according to Wall Street analysts. Both tickers boast a Strong Buy consensus rating and could climb over 200% higher in the year ahead.
We will start with CNS Pharmaceuticals, a biotechnology company with a focus on the treatment of glioblastomas, a class of aggressive tumors that attack the braid and spinal cord. These cancers, while rare, are almost always terminal, and CNS is working a new therapy designed to more effectively cross the blood-brain barrier to attack glioblastoma.
Berubicin, CNS’s flagship drug candidate, is an anthracycline, a potent class of chemotherapy drugs derived from the Streptomyces bacteria strains, and used in the treatment of a wide variety of cancers. Berubicin is the first drug in this class to show promise against glioblastoma cancers.
The drug candidate has completed its Phase 1 clinical trial, in which 44% of patients showed a clinical response. This number included one patient who showed a ‘Durable Complete Response,’ defined as a demonstrated lack of detectable cancer.
Following the success of the Phase 1 study, CNS applied for, and received, FDA approval of its Investigational New Drug application. This gives the company the go-ahead to conduct a Phase 2 study on adult patients, an important next step in the development of the drug. CNS plans to start the mid-stage trial in 1Q21.
Based on the potential of the company’s asset in glioblastoma, and with its share price at $2.22, several analysts believe that now is the time to buy.
Among the bulls is Brookline’s 5-star analyst Kumaraguru Raja who takes a bullish stance on CNSP shares.
“Until now, the inability of anthracyclines to cross the blood brain barrier prevented its use for treatment of brain cancers. Berubicin is the first anthracycline to cross the blood-brain barrier in adults and access brain tumors… Berubicin has promising clinical data in a Phase 1 trial in recurrent glioblastoma (rGBM) and has Orphan drug designation for treatment of malignant gliomas from the FDA. We model approval of Berubicin for treatment of recurrent glioblastoma in 2025 based on the Phase 2 data with 55% probability of success for approval. We model peak sales of $533 million in 2032,” Raja opined.
“CNS pipeline also includes WP1244 (novel DNA binding agent) that is 500x more potent than daunorubicin in inhibiting tumor cell proliferation is expected to enter the clinic in 2021… In vivo testing in orthotopic models of brain cancer showed high uptake of WP1244 by brain and subsequent antitumor activity,” the analyst added.
To this end, Raja rates CNSP a Buy, and his $10 price target implies room for a stunning 350% upside potential in the next 12 months. (To watch Raja’s track record, click here)
What does the rest of the Street have to say? 3 Buys and 1 Hold add up to a Strong Buy consensus rating. Given the $8.33 average price target, shares could climb ~275% in the year ahead. (See CNSP stock analysis on TipRanks)
The next stock we’re looking at, aTyr Pharma, has a focus on inflammatory disease. Its leading drug candidate, ATYR1923, is a Neuropilin-2 (NRP2) agonist, working through the receptor proteins expressed by the NRP2 gene. These pathways are important for cardiovascular development and disease, and play a role in the inflammatory lung disease pulmonary sarcoidosis.
In December, the company reported that the drug candidate had completed enrollment of 36 patients in a Phase 1b/2a clinical trial, testing the drug in the treatment of pulmonary sarcoidosis. Results of the current study are expected in 3Q21, and will inform further trials of ATYR1923, including against other forms of inflammatory lung disease.
On a more immediate note, in early January the company announced top-line results of another Phase 2 clinical involving ATRY1923 – this time in the treatment of patients hospitalized with severe respiratory complications from COVID-19. The results were positive, showing that a single dose of ATYR1923 (at 3 mg/kg) resulted in a 5.5-day median recovery time. Overall, of the patients dosed in this manner, 83% saw recovery in less than one week.
Covering LIFE for Roth Capital, 5-star analyst Zegbeh Jallah noted, “We like the risk profile here, with two shots on goal, and updated data details from the COVID study is expected in the coming months. Also announced recently, is that data from aTyr's Pulmonary Sarcoidosis program, will be reported in 3Q21… the success of either of these studies could result in a doubling or more of the market cap as these opportunities appear to barely be accounted for by investors.”
In line with his optimistic approach, Jallah gives LIFE shares a Buy rating and his $15 price target suggests an impressive 277% potential upside for the coming year. (To watch Jallah’s track record, click here)
Other analysts are on the same page. With 2 additional Buy ratings, the word on the Street is that LIFE is a Strong Buy. On top of this, the average price target is $13.33, suggesting robust growth of ~236% from the current price of $3.97. (See LIFE stock analysis on TipRanks)
To find good ideas for penny stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Merck & Co. Inc. on Thursday logged an adjusted profit in the latest quarter as growth in its oncology and vaccine sales drove higher revenue despite the negative effect of the Covid-19 pandemic on sales.
The Kenilworth, N.J.-based pharmaceutical company logged a fourth-quarter loss of 83 cents a share, compared with earnings of 92 cents a share in the year-ago quarter. The company's net loss was $2.09 billion, a swing from a profit of $2.36 billion in the prior year's fourth quarter.
On an adjusted basis, Merck posted a profit of $1.32 a share. Analysts surveyed by FactSet were forecasting adjusted earnings of $1.38 a share.
Merck's revenue was $12.51 billion, up 5% from $11.87 billion in the fourth quarter of 2019. Analysts were expecting revenue of $12.67 billion.
The pandemic negatively impacted Merck's pharmaceutical revenue by $400 million in the latest quarter, the company said. Social distancing and reduced health-care visits particularly affected sales of vaccines for other diseases, according to the company. The full-year impact to Merck's revenue from the pandemic was about $2.5 billion, the company said.
Overall, pharmaceutical revenue in the quarter grew 8% to $11.4 billion, with growth driven primarily by oncology and vaccine sales.
Animal-health sales grew 4% to $1.2 billion.
The company forecast full-year revenue for 2021 of $51.8 billion to $53.8 billion and adjusted earnings of $6.48 to $6.68 a share.
Analysts had been forecasting revenue of $51.66 million and an adjusted profit of $6.30 a share.
Merck said Thursday that Chief Executive Kenneth C. Frazier will retire at the end of June. He will be succeeded by Robert M. Davis, the current chief financial officer.
