Today’s pick is a biotech company with important alliances and a pipeline of drugs in clinical tests.
Curis, Inc. (CRIS)
from The Cheap Investor
Curis, Inc. (CRIS) Curis has focused most of its internal resources on developing novel, proprietary small molecule targeted cancer drug candidates.
Its principal product is its Hedgehog pathway inhibitor Erivedge® (vismodegib), which is being commercialized in collaboration with Genentech and Roche. Erivedge is currently approved for use in patients with advanced basal cell carcinoma in the United States, European Union, Australia, Canada, and is also being studied in patients with less severe forms of basal cell carcinoma.
Its second development candidate under collaboration is Debio 0932, an HSP90 inhibitor that Curis licensed to Debiopharm Group in August 2009, and is currently the subject of a Phase I/II trial in advanced non-small cell lung cancer.
Curis has a fair balance sheet with $63 million ($0.74 per share) in cash, a book value of $0.49 per share and debt of $31 million. Insiders own 23% of the 82.5 million total shares outstanding, and 94 institutions own 55% of the float (shares in public hands). Insiders have purchased 93,000 shares over the past several months and have purchased 1.5 million more shares than they sold for the quarter ended September 30, 2013. The stock recently moved from $2.45 to its current level as the biotech industry has heated up.
Like most biotech companies, Curis has little revenues and large losses. The increase in revenues for 2013 third quarter was primarily due to greater license revenue as the result of a $6 million milestone earned from Genentech/Roche upon the conditional approval of Erivedge by the European Commission in July 2013. Royalties received from Genentech/Roche’s net sales of Erivedge during the quarter also increased to $1.1 million, as compared to $446,000 during the same period in 2012.
The decrease in revenues for the nine-month period was primarily due to a decrease in Genentech license fee revenues, including a $10 million milestone payment upon FDA approval of Erivedge in January 2012. This was partially offset by royalty revenues of $2.5 million for the nine month ending September 30, 2013. During the nine months ended September 30, 2013, Curis also recorded $650,000 in milestone payments received from The Leukemia and Lymphoma Society.
Curis has several products in various stages of FDA approval. The Company has a large amount of cash and we think the stock has the potential to move 50% over the next year. If it announces positive news from the FDA, the stock could move substantially higher.
Bill Mathews, The Cheap Investor, www.thecheapinvestor.com, 847-697-5666, February 2014