Two Sides to Corbus Pharmaceutical (NASDAQ: CRBP) Phase II Study Results

Corbus Pharmaceuticals Holdings Inc (NASDAQ: CRBP) shares were down over 10% today, on heavy volume. At one point, the stock was down over 15%. Now, this significant drop may have been due to one senior columnist’s negative piece on on Corbus Pharma’s announcement of its Phase II study results. This study evaluated multiple doses of anabasum (fka JBT-101 or Resunab) compared to placebo for the treatment of cystic fibrosis patients. The study’s results were actually positive, and there are two conflicting opinions here.

Corbus is a clinical stage pharmaceutical company primarily focused on the development and commercialization of novel therapeutics in an attempt to treat rare, chronic, and serious inflammatory and fibrotic diseases. The company’s lead product candidate is anabasum, and it could potentially treat various illnesses.

CRBP Phase II Study Results

Corbus Pharmaceuticals Holdings Inc’s results for its mid-stage study were positive. The study was conducted for 16 weeks and dosed 85 adult cystic fibrosis patients with baseline forced expiratory volume in 1 second percent predicted. In other words, Corbus Pharma provided patients in the study with anabasum for 16 weeks, while escalating dosage over that period.

That said, according to the company, anabasum successfully reached the primary objective of its study through its demonstration of an acceptable safety and tolerable profile at various doses. There were no serious or severe adverse side-effects or events related to the drug.

Cystic fibrosis patients who received the highest dose or anabasum, which was 20 milligrams twice per day, experienced a 75% reduction in acute pulmonary exacerbations, at an annualized rate, in comparison to those who received the placebo. However, Corbus Pharmaceuticals Holdings did not provide any lung function data from its Phase II study.

The clinical stage trial drug development company is competing with Vertex Pharmaceuticals’ cystic fibrosis drugs. In addition to this study, some of the patients were already taking Orkambi. That in mind, Vertex Pharmaceuticals’ drugs could help to improve lung function in patients suffering from cystic fibrosis. Therefore, it might be difficult to discern which drug was actually the one that delivered these results. Vertex Pharmaceuticals (NASDAQ: VRTX) has been up over 20% since its positive data release. However, VRTX was, more or less, unchanged after CRBP released its results. .

What You Need to Know About CRBP

  • Corbus Pharmaceuticals just released some mixed Phase II results, and they might not have met investors’ expectations.
  • The company’s drug is in direct competition with Vertex Pharmaceuticals’ cystic fibrosis treatment. Vertex’s combination of Kalydeco and Orkambbi provided results that were well received by investors.
  • The stock has a 52-week range between $1.76 and $10.78. CRBP is over 350% above its 52-week low, but still over 25% below its 52-week high.
  • Over 10M shares exchanged hands today, while the stock’s average daily trading volume is just under 1M shares.
  • Over the past trading week, CRBP was down 11.67%. Moreover, over the past month its been down 12.15%. However, the stock has been up over 330% over the past year.
  • Corbus had an ROA of -113%, ROE of -172.80% and ROI of -217.20%.
  • The company’s valuation is well above its industry average. CRBP had a price-to-book ratio of 49.1, while the industry average was 5.9. Additionally, it had a trailing 12-month price-to-sales ratio of 193.7, while the industry average was 6.2.
  • Corbus has earnings on June 8, 2017.

 CRBP Performance

Source: Finviz

Bear Case

There are two sides to every story. Let’s start with the bear case first, then we’ll move on to the bull case. Corbus sold off after its announcement of positive top line Phase II data, and consequently, this could be a momentum play. Moreover,  if you look at the company’s financial ratios, in relation to the industry average, it seems to be overvalued. The company is also in direct competition with Vertex Pharmaceuticals, which also provided positive results for its study on its cystic fibrosis drug this week. There was also a bearish piece written by  TheStreet Senior Columnist Adam Feuerstein, and he noted that the drug shows no clinical benefit.

Bull Case

There’s also a bull case for CRBP. The company released positive top line results, and it’s drug could still achieve FDA approval status, if it continues to show positive results. Cantor Fitzgerald reiterated its overweight rating on CRBP after these results, with a price target of $24.00. Moreover, the Phase II results showed that its drug reduced pulmonary exacerbations. The stock sold off significantly, and it could be considered as a contrarian, or mean reversion, trade.

The Bottom Line

Corbus Pharmaceuticals released positive  Phase II data results for its cystic fibrosis treatment.  However, the stock fell over 10%. There were conflicting stories in CRBP, with one senior columnist stating the company’s drug showed no clinical benefits. On the other hand, the company showed positive Phase II results, and Cantor Fitzgerald reiterated its buy rating. The next development that you should keep an eye on would be whether it continues onto a Phase III study.

 

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