Revisiting Corbus Pharmaceuticals

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Specializing in profiling high beta sectors, Bret Jensen founded and also manages The Biotech Forum, The Insiders Forum, and the Busted IPO Forum model portfolios. Finding “gems” in the biotech and small-cap stock sectors, these highly volatile spaces proven hugely successful have empowered Bret Jensen's own investing portfolio.

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People are almost always better than their neighbors think they are.”― George Eliot, Middlemarch

It has been a while since we took a look at Corbus Pharmaceuticals (CRBP).  With a recent secondary offering completed and some trial readouts on the horizon, it is time to revisit this interesting 'Tier 4' biopharma concern.  A full investment analysis follows in the paragraphs below.

Company Overview:

Corbus Pharmaceuticals is a developmental stage pharmaceutical company.  The company is focused on the development and commercialization of various therapeutic products to treat inflammatory and fibrotic diseases and is headquartered just outside of Boston. The stock trades just over $5.50 a share and has a market cap just north of $400 million.   The company's primary drug asset is Lenabasum which is in mid to late-stage studies to treat systemic sclerosis, systemic lupus erythematosus, dermatomyositis, and cystic fibrosis.  Corbus owns global commercial rights to lenabasum except in Japan where it has a partnership.

Upcoming Trial Milestones:

A couple of key trial readouts will be out this summer.  First, topline results from a Phase 3 study called “RESOLVE-1” study of lenabasum for treatment of systemic sclerosis will come out.   Systemic sclerosis is a rare autoimmune disease affecting ~200,000 people in the U.S., EU and Japan and has the highest mortality rate among the systemic autoimmune diseases.  In addition, topline results from a Phase 2b study of lenabasum for treatment of cystic fibrosis should come out around the same time.  Finally, topline results from a Phase 2 study for lenabasum for treating Systemic Lupus Erythematosus should be out sometime in 2020 as well.  

Analyst Commentary & Balance Sheet:

Insiders have not sold a share of stock in recent years and were small but frequent buyers of the stock in 2018 and 2018.  Analysts are other sanguine on Corbus.  There have been four analyst firms chiming in on Corbus over the past year including Oppenheimer and Cantor Fitzgerald.  Price targets proffered have ranged from $23 to $38 a share, multiples over the stock's current trading price.  Both RBC Capital ($23 price target) and H.C. Wainwright ($24 price target) reiterated Buy ratings on the stock late in 2019, but there has been no analyst activity on Corbus so far in 2020.

The company announced a secondary offering to raise approximately $40 million in additional capital earlier this month.  Corbus ended the third quarter with approximately $55 million in cash and marketable securities.  The capital raise should fund all operations through mid-year 2021.

Verdict:

The company has addressed its near term funding needs and enjoys strong analyst support.  In addition, positive results from upcoming trial readouts could boost the shares and the complete lack of insider selling is always encouraging. The company has some earlier stage pipeline assets that we did not touch on in this particular article.

Like all 'Tier 4' developmental concerns, Corbus is a high beta play but one which we continue to see as having an attractive risk/reward profile.  Finally, we leave you with a slide that projects some of the company's potential should developmental proof fruitful over the next few years that management provided in an investor presentation late in 2019.

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Thank You & Happy Hunting

Bret Jensen

Founder, The Biotech Forum, The Busted IPO Forum & The Insiders Forum

Disclosure: I am/we are long CRBP.

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