ChemoCentryx Inc (NASDAQ:CCXI)
ChemoCentryx is having an incredible day in the market today. In fact, the stock has already more than doubled in value! The reason for the gain is simple, the company reported earnings and surprised investors with a collaboration. Today, we'll talk about the details of the earnings report, how investors are reacting to the news, and what we can expect to see from CCXI moving forward. So, let's get right to it...
CCXI Reports Earnings & Announces Agreement
As mentioned above, ChemoCentryx reported earnings for the first quarter. Unfortunately, the earnings report was a big miss. During the first quarter, analysts expected that the company would generate a loss of $0.27 per share. However, CCXI announced that it had lost $0.34 per share, missing estimates by $0.07. Nonetheless, the company had incredibly positive news to report as well....
While earnings were relatively negative, investors don't seem to care as positive news was released, outweighing the earnings report. According to an announcement earlier today, Vifor Pharma, a subsidiary of Galenica Group has contracted for the licensed rights to commercialize CCX168. CCX168 is a Complement 5a Receptor inhibitor that is heading toward Phase 3 development for orphan and rare renal diseases. Specifically, the company is targeting the European, Canadian, Mexican, Central and South Americal, and South Korean markets. It is expected that the Phase 3 study of the treatment will begin later this year, which will evenutally lead to strong gains fro CCXI.
According to the terms of the agreement, Vifor Pharma will pay ChemoCentryx a one time upfront payment of $60 million in cash and $25 million as an equity investment, purchasing CCXI at $7.50 per share. There are also the possibilities of regulatory and sales-based milestones on top of double-digit royalties on net sales. However, it's also important to consider that this agreement is likely the first step associated with a much larger kidney health alliance. In a statement, Thomas J. Schall, Ph.D., the president and CEI at CCXI had the following to offer...
“This unique kidney health alliance between Vifor Pharma and ChemoCentryx is an ideal partnership... Vifor Pharma, together with its nephrology partner company Vifor Fresenius Medical Care Renal Pharma, is a world leader in delivering quality care for patients with kidney disease. Their renal medicines specialization, including access to a vast patient database and nephrology-focused commercial expertise, will be a valuable resource as we develop and commercialize CCX168. We believe that this partnership further validates our approach to blocking chemoattractant receptors such as C5aR and CCR2 in the inflammatory process in several important diseases.”
How The Market Reacted To The News
As investors, we know that the news moves the market. In this particular case, earnings were relatively negative. However, the announcement that ChemoCentryx will be partnering with Vifor Pharma was overwhelmingly positive. As a result, we're seeing strong gains in the value of the stock today. Early on in pre-market trading, CCXI was up more than 100%. However, currently (9:35), the stock is trading at $3.75 per share after a gain of $1.65 per share or 78.57% thus far today.
What We Can Expect To See Moving Forward
Moving forward, I have an overwhelmingly bullish opinion of what we can expect to see from CCXI. The new alliance between Vifor Pharma and ChemoCentryx will likely set the company up with strong opportunities in the world of medical innovation moving forward, and given their work on CCX168, the company will likely capitalize on the opportunity. All in all, things are looking great for the stock moving forward.
What Do You Think?
Where do you think CCXI is headed moving forward and why? Let us know your opinion in the comments below!