To all, "Stressgen Conference Call Comforts Investors"
Thursday October 24, 2:51 pm ET By Andy Georgiades, Of DOW JONES NEWSWIRES
TORONTO -(Dow Jones)- Shares of Stressgen Biotechnologies Corp. (Toronto:SSB.TO - News) are higher Thursday after the company addressed certain issues during its third- quarter conference call that had been weighing down the stock, an analyst said.
In Toronto Thursday, the stock is up 15 Canadian cents, or 9.7%, to C$1.70 on about 105,000 shares.
Raymond James analyst Brian Bapty said that, among other things, the company provided a better presentation of clinical trial data for its lead product, HspE7, a treatment for diseases caused by the human papillomavirus. Although the results were released earlier this month, their ambiguity knocked 40% off the share price in three sessions, and caused Bapty to downgrade the stock to " outperform" from "strong buy" and lower his target price to C$6 from C$10.50.
He said the results, as originally presented, looked at sub-groups of patient pools that were already quite small, making the data less relevant. However, the latest discussion of the data helped comfort investors, he said.
"What the drug will eventually treat, and what the Street believes the drug will treat, are often two different things," Bapty told Dow Jones.
He declined to say whether he'd change his target or rating as a result. Bapty doesn't own Stressgen shares; his firm has had an investment-banking relationship with the company in the past.
He said investors were also encouraged by the company's decreased cash burn rate, thanks to its partnership with Roche Holding AG , and news that Stressgen won't need to tap into the equity markets until 2005.
He said the company also had a "peek" at some data from its recurrent respiratory papillomatosis, or RRP, orphan drug study, and that the data were positive, albeit preliminary. This indication represents Stressgen's fastest route to market.
Finally, Bapty said the company asserted its confidence in its patent protection, which has recently been contested by rival Antigenics Inc. (NasdaqNM:AGEN - News) .
Another analyst noted that Stressgen's stock has been under pressure since the HspE7 data were released a couple of weeks ago, and that Roche's contribution to the company's research and development costs - which reduced its operating loss by more than 50% - is what investors are paying most attention to.
Company Web Site: stressgen.com
-Andy Georgiades, Dow Jones Newswires; 416-306-2031; andy.georgiades@dowjones.com
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