Idera Pharmaceuticals Inc. (IDRA) is focused on cancer and rare diseases, and it could be a what traders refer to as a three-bagger or four-bagger, if two analysts who made key calls in recent days end up being correct here. As it has a market cap of just about $370 million, investors need to consider that they likely are taking far greater risk in Idera than with established biotech and pharmaceutical companies.
Idera's most recent quarterly announcement of financial results did not seem as full of losses as many other emerging companies. It reported net income of about $800,000 (or $0.01 per share), in part due to a $15 million upfront payment received during the quarter from Vivelix Pharmaceuticals. That was for an outlicensing agreement for TLR 7, 8 and 9 antagonist IMO-9200. Futhermore, Idera ended the most recent quarter with about $109 million in cash and equivalents.
Before investors automatically jump on board with the one or two very aggressive analyst calls, some serious considerations and a reality check need to be made. Just because an analyst says that a stock is cheap, has incredible value or is going to see its stock surge. it does not mean that it is an assured outcome. Many analysts sometimes have wrong assumptions. Sometimes their firms may be involved in or seek to be involved in helping these companies raise money. And sometimes there are just unforeseen events inside of a company or an industry (or even the market) that just wreck an upside thesis.
Now that you have been warned that Idera's exponential upside is not an assured outcome, here are some of the calls that drove more interest of late.
For the most aggressive analyst call: Idera was started as Market Outperform with an $8 price target at JMP Securities on March 22. This compared with a $2.09 prior closing price. Idera's shares were indicated up about 20% at $2.50 on Wednesday morning when the call was made.
JMP's Michael King noted that Idera recently has made a strategic pivot into immuno-oncology with its lead IO asset, IMO-2125. He noted that it has exhibited impressive clinical activity in combination with checkpoint inhibition in the setting of anti-PD-1 refractory metastatic melanoma. His note said:
We view Idera as a leading oligonucleotide discovery and development company with the capacity for generating novel product candidates using its innovative third-generation antisense and toll-like receptor technology platforms. A company characterized by its strong scientific underpinning, Idera counts as its founding scientist Dr. Sudhir Agrawal, a recognized pioneer in the field of nucleic acid therapeutics.
Idera Pharmaceuticals was reiterated as Outperform with a $6 price target at Wedbush Securities back on March 17. The firm's Robert Driscoll believes that the durable responses in the ongoing Phase 1/2 study of IMO-2125 in PD-1 refractory melanoma patients support Idera's aggressive development strategy. The firm sees IMO-2125's MOA and safety profile being well-suited for combination studies, and the firm also sees potential for partnerships around this program.
The Wedbush target of $6 was based on a sum-of-the-parts analysis of projected peak revenues for IMO-8400 in dermatomyositis, and IMO-2125 in refractory melanoma, discounted by 40% and 30%, respectively.
For a more "conservative" view of Idera: JPMorgan issued a report in March that was still with an Outperform rating. That being said, the firm withdrew an end-of-2017 target of $5 per share and now calculates a fair value range of $3.50 to $4.00 per share.
Also in mid-March, after earnings, Piper Jaffray's Edward Tentoff reiterated his Overweight rating and $4 price target.
On Friday, March 24, shares of Idera Pharma closed up 2.5% at $2.48 on Friday, in a 52-week trading range of $1.19 to $3.33. Its market cap was last seen at over $369 million, and its consensus analyst price target from Thomson Reuters was listed as $5.00.
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Friday's trading volume of more than 3.1 million shares was also more than double a normal day's volume. According to Nasdaq, Idera's short interest at the middle of March was 8.5 million shares.