Biotech stocks are often the most volatile in the market, and Harpoon Therapeutics Inc. (NASDAQ: HARP) provides a perfect example of that.
Shares hit an eight-month high on Monday, advancing as much as 191% intraday before settling on a 22.61% gain. The stock traded up $0.26 to close at $1.41 on Monday. On Tuesday, stocks closed lower after falling at the open.
Monday’s biggest reversal followed the company’s release of improved interim results for its myeloma drug, which is in Phase 1 clinical trials. The treatment is currently known as HPN217.
According to Harpoon’s press release“As of a data cut-off date of October 17, 2022, interim results demonstrate continued evidence of HPN217 clinical activity and a tolerable safety profile in heavily pre-treated patients”.
Relapsed/refractory multiple myeloma occurs when a patient receives treatment for a cancer called multiple myeloma, a rare cancer that affects the bone marrow. It is currently incurable, and the most common course is intermittent remission during periods when the disease becomes active. It is called relapsed/refractory multiple myeloma when the patient’s condition becomes more difficult to treat.
Meaningful medical benefits
“Encouraging early clinical activity with deep and durable responses observed in patients who have received multiple prior therapies, combined with a generally well-tolerated safety profile, suggests that the investigational T cell engager HPN217 may provide meaningful clinical benefits in patients with relapsed, refractory multiple myeloma,” said the University of Kansas Medical Center. said Dr. Al-Ola A. Abdullah, principal investigator of the study.
“I look forward to continuing to study this promising drug candidate in these patients with advanced disease who have a significant unmet need for new treatment options,” Abdullah added.
Such comments gave confidence to investors.
San Francisco-based Harpoon went public in February 2019 at a price of $14. The stock essentially went sideways until June of last year, when the stock started to slide.
On a week-to-date basis, Harpoon is up 95.67%, although shares closed lower on Tuesday.
That type of move suggests quick profit-taking in the face of clinical-trial news that doesn’t directly lead to a drug’s monetization.
This is especially true for a small company like Harpoon, which has a market cap of just $31.1 million. Consistent with a company of this size, Harpoon’s beta is 1.72, meaning it is 172% more volatile than the broader market as measured by the S&P 500 over a 12-month period.
Of course, a stock with a market cap of $31.1 million isn’t directly comparable to an index of the largest U.S. companies, but it still shows Harpoon’s propensity toward volatility.
There are many large, well-established companies in the biotech industry Amgen Inc. (NASDAQ: AMGN ), Gilead Sciences Inc. (NASDAQ: GILD ), Regeneron Pharmaceuticals Inc. (NASDAQ: REGN ), Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX ) And Moderna Inc. (NASDAQ: MRNA ). All are components of the S&P 500, and all outperform their index.
Many of the smaller companies in the industry also boast market-beating performance, with the group as a whole outperforming the rest. Drug wholesalers and medical device makers have also shown higher returns than the broader market in recent months.
Harpoon remains a speculative stock. Biotechs can become attractive acquisition targets if a large company has a treatment it wants to market. That may be the case with Harpoon, although buying a stock with that strategy in mind is risky because the investor faces a huge opportunity cost while waiting.
Harpoon has never turned a profit, and analysts don’t see that changing anytime soon, even though estimates have been revised higher recently as losses dwindle.
In November, the company announced a corporate restructuring designed to reduce operating costs and better focus on clinical programs including HPN217.
Revenue for the most recent quarter was $13.6 million, up 204% from the prior year. The company attributed the increase to research and development services performed under a joint contract with the company AbbVie Inc. (NYSE: ABBV).
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