Shares of BeyondSpring (BYSI) stock exploded ~19% higher in Thursday trading after the NYC-based cancer researcher announced that it has inked an “exclusive commercialization and co-development agreement” with local partner Jiangsu Hengrui Pharmaceuticals to manufacture and sell BeyondSpring’s plinabulin drug throughout Greater China (China, Hong Kong, Macau, and Taiwan).
Plinabulin is described as a “first-in-class, selective immunomodulating microtubule-binding agent” which will be used to prevent chemotherapy-induced neutropenia (i.e. low white blood cell count) in patients undergoing chemotherapy. The drug may also be used in the treatment of various forms of non-small cell lung cancer.
Under the terms of the agreement, BeyondSpring subsidiary Wanchunbulin will grant Hengrui exclusive rights to sell plinabulin in the region, while Wanchunbulin handles the manufacturing, and books all of the revenue from sale of the drug. Hengrui will pay Wanchunbulin $30 million up front, and an additional $170 million in milestone payments based on regulatory progress and volume of sales, and invest $15 million in Wanchunbulin. In return, Wanchunbulin will pay out to Hengrui a percentage of net sales of plinabulin.
Wanchunbulin will bear the costs of continuing to develop plinabulin for two “indications” (i.e. uses for the drug), as well as pay the regulatory costs of getting the drug approved in China. Hengrui will pay the costs of marketing the drug, and pay half the cost of developing and getting the drug approved for additional indications.
So… is this a good deal for BeyondSpring? H.C. Wainwright analyst Joseph Pantginis thinks it is. In a note out Thursday, Pantginis points out that Hengrui is “a leading pharma company with the largest oncology drug sales in China,” and says it’s “the ideal partner for BeyondSpring” in marketing this drug in China. At the same time, the terms of the deal leave BeyondSpring in possession of 100% of the rights to market plinabulin outside of Greater China.
In this regard, Pantginis observes that BeyondSpring is focusing on the U.S. market, where plinabulin has filed a New Drug Application (NDA) with the Food and Drug Administration and has received “priority review” status. The drug has a Prescription Drug User Fee Act date (PDUFA date — essentially the deadline for the FDA saying “yea” or “nay”) of November 30, 2021, and Pantginis says he expects the drug to receive “full approval” from the FDA.
Outside the U.S. (and outside China), Pantginis further expects BeyondSpring to seek permission to sell the drug in the European Union, a market that the analyst says is “ripe for the picking.”
So… what does all of the above mean in terms of dollars and cents for investors? Actually, not much — at least not immediately. According to Pantginis’s predictions, BeyondSpring’s revenues won’t exceed $300,000 this year, and rise only to $12.7 million next year (valuing the stock at about 92 times forward sales). Earnings, of course, are even farther off. Pantginis predicts BeyondSpring will lose $2.16 per share this year, and $1.91 per share next year.
Nevertheless, Pantginis rates BeyondSpring a “buy” and assigns a $100 price target to this $28 stock. (To watch Pantginis’ track record, click here)
Judging by the consensus breakdown, opinions are anything but mixed. With 3 Buys and no Holds or Sells assigned in the last three months, the word on the Street is that BYSI is a Strong Buy. At $97.50, the average price target implies a whopping 248% upside potential. (See BYSI stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
