The Only Firm That Was Bearish On Chimerix Before The Selloff

Shares of Chimerix Inc CMRX crashed on Monday. The stock fell more than 80 percent, from above $35 to under $7.50, after news transcended that its brincidofovir SUPPRESS study has fallen short of endpoint expectations in the prevention of cytomegalovirus (CMV) infection.

Ahead of the crash, most Wall Street research firms were bullish on the company – and, of course, most of the became bearish after the tumble. However, there was one firm that was bearish all along: Empire Asset Management.

Related Link: Here's What Wall Street Thinks Of Chimerix After The Crash

Before the selloff, Empire was the only firm that rated Chimerix’s stock as a Sell case – with a $12 price target. The plummet in the stock price trumped the experts’ target, nonetheless. Consequently, they decided to terminate their coverage on the stock.

The Rationale

Management had been consistently providing information about its commercial preparation for a potential brincidofovir launch in the United States, the note explicated. Notwithstanding, the analysts believe that the negative data on SUPPRESS “will cause a suspension of most (if not all) of these activities.”

Moreover, the company had started some commercialization efforts for the E.U. and ROW as well, but, as they seemed preliminary, the experts also assume “these efforts will be significantly diminished.”

Having said this, however, the primary thesis behind Empire’s Sell recommendation was “the competitive landscape and physician attitudes that brincidofovir would encounter if it gained marketing approval would be fierce and probably prevent it from reaching analysts’ lofty revenue estimates.” This trepidation was only increased by the bad news on SUPPRESS.

While the analysts recognized that brincidofovir could be potentially effective in other viral diseases like smallpox or adenovirus, they believe that “brincidofovir’s road to approval will be longer than most investors’ attention span and analysts’ estimates for potential brincidofovir revenues will be less attention grabbing.”

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.