Feb. 24, 2021
Introduction
I like to take value investing approach, buy stocks when it is huge discount. But I have to learn what is going on with CRTX. I waited for less than a week, and then I had chance to look into the following detail. I just made $380 dollars gains on my two purchases, each time 100 share.
CRTX stock
Today, we’re looking at two small-cap biotech firms whose stocks have struck a rut. Each company has hit a recent clinical setback that sent the share price falling, erasing previous gains and sending it back down to low levels.
Setbacks of this sort are not uncommon in the biotech industry, and in fact highlight the risk and speculative nature of the industry.
So what should investors do, when a stock collapses? Is this a matter of poor fundamentals? And has the stock’s price found its low point yet? That’s where the Wall Street pros come in.
Noting that each is set to take back off on an upward trajectory, some 5-star analysts see an attractive entry point for both.
Using TipRanks’ database, we found out that these two tickers have earned Moderate or Strong Buy consensus ratings from the analyst community, and boast strong upside potential.
Cortexyme, Inc. (CRTX)
The first beaten-down name we're looking at is Cortexyme, a clinical-stage biopharma company focused on degenerative diseases, especially Alzheimer’s. The company's lead candidate is COR388, also called atuzaginstat.
Atuzaginstat is currently under investigation in the GAIN trial, a study of its efficacy against Alzheimer’s disease. The trial is fully enrolled, with 643 patients, and the company was moving toward an open label enrollment (OLE) section of the Phase 2/3 study. During a routine regulatory update, Cortexyme announced that the OLE phase would be halted, although the primary GAIN study will continue, with results due to be released in Q4 2021. The announcement of the partial halt triggered a 35% drop in share price.
The partial hold was prompted by adverse events on the liver during the atuzaginstat trial. The hepatic symptoms were reversible and showed no long-term lasting effects. The FDA reviewed these records, and in collaboration with Cortexyme the decision was made to hold the OLE while continuing with GAIN. This decision allows the main thrust of the program to continue, while working out a new protocol for the OLE. The purpose of the OLE is to test long-term efficacy and tolerability of the drug.
In a review of Cortexyme after the announcement, HC Wainwright’s 5-star analyst Andrew Fein noted, “Cortexyme's announcement of a partial clinical hold on the OLE study of atuzaginstat is disappointing, but the reversible nature of the liver toxicity might provide some ray of hope for Cortexyme. We believe that the pivotal trial's continuation suggests that the drug-induced liver injury might not be severe enough to halt the program.”
Turning to the near-term, Fein adds, “Continuation of the GAIN trial is encouraging despite the partial hold on OLE. It suggests that FDA plans to wait for the additional data from the pivotal trial before coming to any conclusion. Management shared that nearly one-third of the GAIN patients have completed the study and way past the 12-week time point, suggesting that they are out of risk.”
To this end, Fein rates CRTX a Buy, and his $76 price target indicates confidence in a 147% growth potential. (To watch Fein’s track record, click here)
Overall, Cortexyme has a Moderate Buy rating from the analyst consensus, with 6 recent reviews breaking down 4 to 1 to 1, Buy-Hold-Sell. The stock’s $83.60 average price target suggests that Wall Street sees a high potential here, on the order of ~170% upside from the trading price of $30.74. (See CRTX stock analysis on TipRanks)
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