Clinical-stage biopharmaceutical company Corvus Pharmaceuticals, Inc. (CRVS - Get Rating) in  Burlingame, Calif., develops drugs and antibodies that target the most critical cellular elements of the immune system. The company discontinued its Phase three study of mupadolimab for COVID-19 in July due to positive trends exhibited by COVID-19 vaccines in lowering severe infection and hospitalization. However, on September 22, it announced positive results whereby mupadolimab could become a “universal treatment for viral diseases.”

The stock has gained 226.9% in price over the past month to close Friday’s trading session at $6.80. In addition, CRVS hit its 52-week high of $9.54 on September 21.

However, the stock’s price has since plunged, due primarily to profit-taking. Also, on September 24, OrbiMed Advisors sold nearly 1 million CRVS’ shares. Moreover, it reported losses in the second quarter. So, its near-term prospects look uncertain.

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Here’s what could shape CRVS’ performance in the near term:

Consistent Developments

CRVS announced on September 22 that results from its Phase 3 clinical trial of mupadolimab for COVID-19, which was conducted before its voluntary discontinuation, suggests improvement in the primary and key secondary endpoints in patients treated with single doses of mupadolimab at 2mg/kg and 1mg/kg compared to a placebo. In addition, no drug-related adverse events were reported in the trial.

Last month, the company also announced that the IND application submitted by its partner in China, Angel Pharmaceuticals Ltd., for the initiation of a Phase 1/1b clinical trial of its small molecule ITK inhibitor CPI-818, was accepted by the Center for Drug Evaluation (CDE) of the China National Medical Products Administration (NMPA).

Weak Financials

For the second quarter, ended June 30, 2021, CRVS’ total operating expenses increased 4.9% year-over-year to $11.29 million. Its research and development expenses increased 15.9% from the same period last year to $9.11 million, due mainly to increased clinical trial costs for its mupadolimab Phase 3 COVID-19 clinical trial. Its loss from operations came in at $11.29 million, up 4.9% year-over-year. In addition, while its net loss increased 10.8% year-over-year to $11.75 million, its loss per share came in at $0.28, versus  $0.36 in the year-ago period.

Selling Shares to Fund Growth Activities

In May 2021, CRVS completed the sale of roughly $10 million of its common shares through its at-the-market (ATM) program, established on March 9, 2020. Also, in February 2021, the company announced the completion of an underwritten public offering of roughly nine million shares of its common stock for gross proceeds of approximately $34.20 million. It is believed that the proceeds were used to fund its Phase three clinical trial of CPI-006, development of its other product candidates, working capital, and general corporate purposes. However, the share issuance will cause share dilution.

POWR Ratings Don’t Indicate Enough Upside

CRVS has an overall C rating, which equates to Neutral in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. Among these categories, CRVS has a C grade for Stability, consistent with its 1.67 beta.

The stock has a C grade for Growth, which is in sync with analysts’ expectations that its EPS will decline 435% in the current year and remain negative in its fiscal years 2021 and 2022.

Also, CRVS has a D grade for Quality, which is consistent with its negative values for trailing-12-month ROCE, ROTC, and ROTA.

CRVS is ranked #173 of 505 stocks in the Biotech industry. Also, click here to see the additional POWR Ratings for CRVS (Value, Momentum, and Sentiment).

Bottom Line

Even though CRVS hit its 52-week price high recently, it has plunged since then. In addition, Wall Street analysts expect the stock to hit $4.83 in the near term, which indicates a potential 29% decline. Furthermore,  its EPS is expected to remain negative in the coming quarters. So, we think it could be wise to wait for a better entry point in the stock.

How Does Corvus Pharmaceuticals (CRVS) Stack Up Against its Peers?

While it could be better to wait before scooping up CRVS’ shares, one could consider investing in the following A-rated (Strong Buy) stocks in the Biotech industry: Sino Biopharmaceutical Limited (SBHMY - Get Rating), Corcept Therapeutics Incorporated (CORT - Get Rating), and Takeda Pharmaceutical Company Limited (TAK - Get Rating).

Click here to checkout our Healthcare Sector Report for 2021

CRVS shares rose $0.33 (+4.85%) in premarket trading Monday. Year-to-date, CRVS has gained 97.75%, versus a 19.58% rise in the benchmark S&P 500 index during the same period.

About the Author: Manisha Chatterjee

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...

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