Stock Analysis & Ideas

Here’s Why Athenex Shares Surged 70%

Story Highlights

Athenex shares are surging as the company continues to take key strategic steps. Analysts are seeing further massive gains in the stock.

After rising 26% over the past five days, Athenex Inc. (ATNX) shares surged a further 70% during yesterday’s after-hours trading as major healthcare names are contending to acquire the company.

Athenex is a biopharmaceutical company with a focus on developing novel therapies targeted towards cancer and associated conditions. Its second-quarter numbers last month failed to surpass expectations on both the revenue and bottom line fronts. At $25.8 million, revenue grew 17.7% year-over-year. Its pharmaceutical division presently markets 31 products, and the Pharma Solutions division markets six products.

Recently, Athenex has monetized non-core assets, pared down debt, and created a cash runway of $37.1 million at the end of Q2. It is working towards advancing its NKT cell therapy platform. Athenex has collaborated with Merck (MRK) to expand its phase 1 trial evaluating Oral Paclitaxel and Keytruda for non-small cell lung cancer (NSCLC).

Furthermore, Athenex’s KUR-501 (for relapsed high-risk neuroblastoma), KUR-502 (for non-Hodgkin’s lymphoma), and KUR-503 (CAR-NKT cell therapy) are key pipeline products to keep an eye on.

According to reports from Indis’s The Economic Times, Athenex has roped in Cowen Inc to find a potential buyer. Additionally, first offers have been made and Dr. Reddy’s (RDY) and Intas Pharmaceuticals are key contenders. Athenex is looking to offload a controlling stake, and a deal could take place in the current quarter itself. Additionally, some healthcare-focused private equity names remain in the fray to bag the deal.

Street Remains Positive

In the meantime, the Street is seeing over 3x gains in the stock with an average price target of $3, implying a 376.27% potential upside over yesterday’s close. The consensus rating for the stock remains a Moderate Buy at present.

Hedge Fund Actions

Hedge funds, on the other hand, have decreased holdings in the stock by 20,500 shares in the last quarter, indicating a neutral confidence signal.

Closing Note

Athenex has a promising product lineup, and suitors are lining up. Yesterday’s price rise indicates the healthcare space is shedding away macro jitters to seize promising opportunities.

Furthermore, data indicates the number of retail portfolios on Tipranks that hold Athenex has also ticked upwards by 0.3% in the past 30 days.

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