Tempest Therapeutics' shares experienced a remarkable surge in premarket trading on Wednesday, soaring sevenfold to $1.85. The sharp increase follows the company's announcement that its TPST-1120 drug candidate, used for treating primary liver cancer, demonstrated a 30% confirmed objective response rate in a global Phase 1b/2 study.
The response rate for TPST-1120 significantly outperformed the Avastin/Tecentriq control arm's 13.3% under a collaboration with Roche Holdings in 2021. Tempest has retained all rights to TPST-1120, a move that aligns with InvestingPro Tips suggesting that companies with consistently increasing earnings per share are worth considering.
However, the company's financial standing has seen some turbulence. According to InvestingPro data, the company has an adjusted market cap of $37.31 million and its price-to-earnings ratio stands at -0.83. The company's earnings per share for the last 12 months is -$2.41. This indicates that the company has been operating at a loss, aligning with InvestingPro Tips that point towards the company not being profitable over the last twelve months.
In response to the drastic fluctuation in share trading price and in the absence of specific takeover threats, Tempest's board took defensive measures. They activated a "poison pill" strategy with a 10% trigger. This move followed a record 52-week low share price for the company, which according to InvestingPro data, was 8.31% of the 52-week high.
The "poison pill" strategy is often employed by companies to prevent hostile takeovers by making their stock less appealing to potential acquirers. It involves flooding the market with additional shares, effectively diluting the value of the stock and making a takeover more expensive.
The impressive performance of Tempest's TPST-1120 in clinical trials and subsequent surge in share price marks an important milestone for the company. It also provides hope for advancements in primary liver cancer treatment options. This is a significant step for a company that, according to InvestingPro, has seen its price fall significantly over the last year.
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