Last week was a wild ride for a number of companies in the biotech space, with the U.S election bringing with it an initial wave of uncertainty, followed by the realization that a Trump administration may well be beneficial for the sector from a legislative standpoint.
This sentiment shift translated to some pretty much across the board momentum into the week’s close, and for some, this momentum has continued into this week. For others, however, it’s been back to business as normal – data-driven catalysts dictating near-to-medium-term bias, and in turn, momentum.
Here are two companies that have moved considerably early this week, and what’s playing into the bias in each.
Let’s kick things off with Corbus Pharmaceuticals Holdings Inc (NASDAQ:CRBP).
Corbus Pharmaceuticals Holdings Inc (NASDAQ:CRBP) is up more than 70% on its weekly open, on the back of some mid stage data related to is systemic sclerosis asset, Resunab. The drug has taken some flak of late, and we’ve reiterated our opinion on a number of occasions – that this bearish sentiment is unfounded and misinformed, and that there’s potential not just for the asset to reach commercialization, but for it to quickly carve out a sizable chunk of its target market.
The latest data reinforces and validates this thesis, and shareholders are being rewarded as a result. For those not familiar with Corbus or Resunab, the company is a development stage entity with a focus on autoimmune indications, of which the above mentioned SS is one. SS affects just shy of 100K individuals in the US alone.
Resunab is a CB2 inhibitor. It binds to the CB2 receptor, which is a receptor in our system associated with inflammation (and it’s part of the periphery system, an important distinction here) and essentially tells the immune system not to induce inflammation. Inflammation is the root cause of SS, and so the theory is that by inhibiting inflammation, the company can cure, or at least improve, the disease.
We’re now looking for the company to establish a protocol for a pivotal, and we expect further upside on this development.
Now let’s move on to Galena Biopharma Inc (NASDAQ:GALE).
This one is a capital structure move, as opposed to a fundamental development move, but as we’ve seen on numerous occasions, these capital catalysts can have just as dramatic, if not a greater, impact on a company than anything else. In this instance, Galena executed a reverse stock split, which saw the company reduce its share count by a factor of 20. The split was actually announced back at the beginning of the month, and the company took a hit then as well, but a decline post-action is a very common thing in biotech, and we expected this move. More often than not, a company at this end of the market splits to avoid delisting. Traders know this, and shorts basically line up ready to sell short post-split, which forces the company back down and pretty much always results in a post-split price that doesn’t accurately reflect the degree to which the company reduced its count.
The important thing is, can Galena Biopharma Inc (NASDAQ:GALE) now stay above its minimum listing threshold?
Initial action suggests it shouldn’t have too high a difficulty doing so, but we’re going to be watching the company closely across the coming sessions before forming a solid bias.
Note: This article is written by Mark Collins and was originally published at Market Exclusive.