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NewLink Genetics' Potential Catalysts Not Enough To Justify A Bullish Stance, Baird Says In Downgrade

NewLink Genetics' Potential Catalysts Not Enough To Justify A Bullish Stance, Baird Says In Downgrade

NewLink Genetics Corp (NASDAQ: NLNK) said Friday it will review the clinical programs for its indoximod therapy after rival Incyte Corporation (NASDAQ: INCY) announced disappointing results from a study of the similar therapy epacadostat. 

The Analyst

Baird Equity Research's Michael Ulz downgraded NewLink Genetics' stock rating from Outperform to Neutral with a price target slashed from $22 to $5.

The Thesis

NewLink's indoximod has a different mechanism than Incyte's epacadostat, but that doesn't negate the uncertainty and changes ahead for NewLink, Ulz said in the downgrade note.

NewLink's own company-specific catalysts aren't compelling enough to offset these concerns, the analyst said. They are:

  • Phase 1 data for indoximod in pediatric patients with malignant brain tumors.
  • Phase 2 data from indoximod studies in combination with PD-1 in melanoma and gem/Abraxane.

The analyst's new $5 price target is based on the following:

  • A sum-of-the-parts net present value analysis with a "modest" value assigned to indoximod.
  • A standard 10-percent weighted average cost of capital for development-stage biotechs.
  • The company's net cash.

Price Action

Shares of NewLink Genetics were trading lower by 6.43 percent at the time of publication Monday. 

Related Links:

Analyst: NewLink Shares Have Doubled This Month And There's Still Room For More Upside

Cantor Fitzgerald Double Downgrades NewLink Genetics After Incyte's Disappointing Trial

Latest Ratings for NLNK

Feb 2019MaintainsNeutralNeutral
Jan 2019DowngradesNeutralUnderperform
Nov 2018MaintainsNeutralNeutral

View More Analyst Ratings for NLNK
View the Latest Analyst Ratings

Posted-In: Baird Equity Research cancer epacadostat indoximodAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga


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