In the current market environment, most sectors appear vulnerable to the macro whims, but whatever shade of red your portfolio might have taken on recently, spare a thought for BeyondSpring (BYSI) investors.
While the whole market was down on Wednesday, BYSI shares came out one of the worst performers although that had nothing to do with the market’s jitters around the first confirmed case of the Omicron variant in the US.
Rather, shares lost 61% of their value after the FDA informed the company its new drug application (NDA) for Plinabulin, the company’s chemotherapy-induced neutropenia (CIN) treatment, is not approvable in its current form as the data from the Phase 3 study is not convincing enough.
Evercore’s Josh Schimmer finds the rejection “somewhat surprising.”
While the analyst notes that the lack of a statistically significant benefit on febrile neutropenia was a “risk to approval,” based on the company’s “commentary regarding its prior discussions with the agency and approval of the P3 study design, along with the robust treatment effect and commentary of specialists,” Schimmer believed approval would be granted.
More details for the specific reasons of the rejection are expected to be provided when the FDA meets the company sometime in 1H22.
“Call me crazy,” says Schimmer, “But I still have hope.” The analyst sees various routes forward as “ways to win.”
First, as has happened before, based on a new analysis of the existing study, the company could persuade the FDA to “re-evaluate its decision.” Schimmer gives this option a 20% probability of success.
There’s also the chance the drug might get approved to treat NSCLC (non-small-cell lung carcinoma). “Rejecting a drug with a modest benefit on febrile neutropenia is one thing, rejecting a drug with a survival advantage is another,” says Schimmer who gives this “huge win” scenario a 35% chance of success. There’s also a 35% probability for a “valuable franchise in China.”
Most likely of all is that the company runs another CIN trial to gain US approval. Schimmer estimates there’s a 50% chance this could happen. “So, we’re not giving up, despite the temptation today to throw in the towel,” the 5-star analyst summed up.
Accordingly, Schimmer sticks with an Outperform (i.e, Buy) rating although the price target is slashed from $95 to $25. While that is a big readjustment, there’s still potential upside of 463% from current levels. (To watch Schimmer’s track record, click here)
Re-ratings appear to be the order of the day for this name, yet the Street’s $21.25 average price target still suggests shares could gain 379% in the year ahead. Overall, the analyst consensus rates the stock a Hold, based on 2 Buys, 3 Holds and 1 Sell. (See BeyondSpring 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.
