Already a hot stock to watch based on an early-September move higher, AEterna Zentaris (AEZS) shares really caught fire late last week after Roth Capital Partners initiated coverage on the company with a rating of 'Buy' and a price target of $1.75, which values AEZS shares at more than double that of last Friday's close and more than triple the share price of just a few weeks ago. As previously discussed, AEZS took a dive earlier this year after the high-profile failure of AEterna's Perifsone - then partnered with Keryx Biopharmaceuticals (KERX) - in a Phase III trials testing its effectiveness in fighting metastatic colorectal cancer made headlines.
Although AEterna had numerous pipeline products still making their way through trials, including another Perfisone Phase III trial in multiple myeloma (MM), investors bailed en masse and shares hovered at fifty cents for the better part of the year. A few weeks ago shares began to rebound again for essentially the same reasons as to why Roth Capital initiated bullish coverage of the company - the developing pipeline that is moving into the later stages of development.
In addition to the Phase III Perifisone, AEterna is also preparing to advance AEZS-130 to market. AEZS-130 is a diagnostic test for Adult Growth Hormone Deficiency (AGHD), has already proven successful in Phase III trials and is slated for an NDA filing with the FDA in early 2013. Should the product be approved, it would be the first orally-administered diagnostic test and has the potential to dominate the majority of its market, according to an Oppenheimer report this summer that tagged AEZS with a rating of 'perform.' AEZS-130 has already received an Orphan Drug Designation in the United States and the company has also filed for a Fast Track Designation and rolling-NDA for the product. Additionally, the company announced in August that the first patient had been treated in a Phase IIa trial for AEZS-130 in patients with cancer cachexia, adding potential beyond just the pending NDA.
Another late-stage pipeline product, AEZS-108, has already proven successful in multiple Phase II trials and is being prepared for a Phase III trial in the treatment of endometrial cancer. Additional earlier-stage trials are also being planned for this product, providing the company with a fairly deep pipeline of potential which has attracted the attention of analysts, such as Roth Capital.
Volume was huge following the initiated coverage during this past Friday's trading session when shares pushed the one dollar mark, but tapered off at this week's open. Shares were down by nearly eight percent on Monday, but such action is routine in this speculative sector as the day/swing/momentum traders often like to take quick profits during speculative price spikes in order to go looking for another fast mover. While the average retail investor would also be wise to take some profit off the table when opportune price spikes allow one to do so, some may take the Roth Capital price target as a bullish enough sign to hang in there for the mid to long term as some of these near term catalysts play out.
What may benefit investors who took a stab at picking up half-dollar shares earlier this year after the Perifisone failure is that much of the market likely viewed AEZS as purely a Perifisone play, based on the fact that it was the most advanced pipeline product, had the moste immediate potential to rake in significant revenue and was the most high-profile product in the pipeline, in part due to the interest from Keryx shareholders, too. When the colorectal trial failed, many ultimately discarded Perifisone as a failed product, but as the analysts have recently outlined, Perifisone is far from dead and the AEterna has a number of 'Plan Bs' in the works, too.
With a number of developments expected unfold under the next couple of quarters, including interim Perifisone MM results, launch of a Phase III AEZS-108 trial and the NDA for AEZS-130, there's reason to believe that AEZS could once again reclaim the dollar mark. Based on the Roth Capital price target issued last week, the potential is also there for an even further rise.
Worth a look, although each investor should bear in mind the inherent risk of the sector and conduct his or her own DD.
Disclosure: No position.
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