Investing Insights: August 21, Featuring Cerecor
Money manager, Biotech, Contrarian
Contributor Since 2012
Money Manager. Registered Investment Advisor.
M.B.B.S., M.D., MBA Finance (NYU-Stern).
Founder of Vasuda Healthcare Analytics, a catalyst-driven biotechnology/pharmaceuticals-focused service. Ranked 5-star on Tipranks. SumZero contributor.
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' 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.
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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.