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Investing Insights: August 21, Featuring Cerecor

|About: Cerecor Inc. (CERC), Includes: SYRS
Summary

$500 million AUM New York-based hedge fund Armistice Capital bought more common stock in Cerecor (CERC) worth about $750,000 and owns 10.4% of the stock.

$500 million AUM New York-based hedge fund Armistice Capital bought more common stock in Cerecor (CERC) worth about $750,000.  The common stock was acquired through the exercise of warrants. Armistice Capital owns 10.4% of the outstanding stock.

Recent news has been bullish on Cerecor. The company sold all commercial rights for CERC-501 to Janssen for $25 million upfront and potential $20 million of future milestone payment. Cash reserves are expected to be about $30 million after receiving an upfront payment from Janssen. Management guidance is that its cash reserves are enough till the end of 2018.

Balance Sheets - USD ($) Jun. 30, 2017 Dec. 31, 2016
Current assets:
Cash and cash equivalents  $ 5,460,699  $ 5,127,958
Grants receivable 75,242 132,472
Prepaid expenses and other current assets 402,294 391,253
Restricted cash, current portion 13,300 11,111
Total current assets 5,951,535 5,662,794
Property and equipment, net 33,355 43,243
Restricted cash, net of current portion 62,841 62,828
Total assets 6,047,731 5,768,865
Current liabilities:
Term debt, net of discount 607,598 2,353,667
Accounts payable 327,302 1,010,209
Accrued expenses and other current liabilities 720,134 942,435
Warrant liability 595 5,501
Unit purchase option liability 6,607 51
Total current liabilities 1,662,236 4,311,863
License obligations 1,250,000 1,250,000
Total liabilities 2,912,236 5,561,863
Stockholders’ equity:
Preferred stock—$0.001 par value; 5,000,000 shares authorized at June 30, 2017 and December 31, 2016; 4,179 and zero shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively 4 0
Common stock—$0.001 par value; 200,000,000 shares authorized at June 30, 2017 and December 31, 2016; 14,114,859 and 9,434,141 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively 14,115 9,434
Additional paid-in capital 76,915,611 70,232,651
Accumulated deficit (73,794,235) (70,035,083)
Total stockholders’ equity 3,135,495 207,002
Total liabilities and stockholders’ equity  $ 6,047,731  $ 5,768,865

(Cerecor: Balance sheet from Q2, 2017)

In its recent Q2 earnings call, the management mentioned its intent to focus on developing CERC-301 (NMDA antagonist) in orphan neurological indications. Two previous phase 2 trials of CERC-301 in major depressive disorder failed to show benefit. The company also has two preclinical stage molecules: CERC-611 (AMPA antagonist) which is planned to be developed in an adjunctive therapy for the treatment of partial-onset seizures and CERC-406 (COMT inhibitor) which is planned to be developed in the treatment of residual cognitive symptoms.

 (Cerecor: R&D pipeline)

Cerecor' CEO Uli Hacksell (who was previously CEO of Acadia Pharmaceuticals and played an important role in the development of Nuplazid, the first approved drug for Parkinson's disease psychosis, recently announced his retirement). A new CEO has not been selected yet. 

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Analyst coverage initiations:

  • Pacira Pharmaceuticals (PCRX): Needham (Buy, PT=$55, 3-star ranked analyst on Tipranks, 53% upside potential). 
  • Sienna Pharmaceuticals (SNNA): Cowen (Buy, PT=$50, 3-star ranked analyst on Tipranks, 144% upside potential), BMO Capital (Buy, PT=$30, 4-star ranked analyst on Tipranks, 46% upside potential).  Read more

(Sienna Pharmaceuticals: R&D pipeline)

  • Wave Lifesciences (WVE): Mizuho (Buy, PT=$34, 3-star ranked analyst on Tipranks, 104% upside potential). 

Other notable headlines:

Syros Pharmaceuticals (SYRS) received FDA Orphan drug designation for SY-1425 (oral, retinoic acid receptor antagonist) for the treatment of acute myeloid leukemia (in phase 2 trial). A 4-star (Tipranks) ranked analyst from Oppenheimer reiterated Buy rating on the stock today with price target=$20 (44% upside potential). Preliminary phase 2 data in this indication is due in fall 2017. 

Learn more by taking a no-obligation 2-weeks trial to Vasuda Healthcare Analytics, our premium research service. The trade alert can be accessed using the search feature of the premium service chat. 


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- Bhavneesh Sharma, MBBS, MD, MBA

Founder and Editor, Vasuda Healthcare Analytics

and the rest of Vasuda Healthcare Analytics Team

Disclosures: This article is published for information purpose only. This article represents my own opinion and is not a substitute for professional investment advice. It does not represent a solicitation to buy or sell any security. Investors should do their own research and consult their financial advisor.