Idera Pharmaceuticals: On simmer

With friends like these, Idera Pharmaceuticals (Nasdaq:IDRA) doesn’t need enemies. People say the drug discovery company is interesting, promising, an intriguing trailblazer. But, like last night’s fish dinner, look how they push the plate away. Maybe later.

Just last week, analysts at Canaccord Adams downgraded Idera after it posted a second-quarter profit against projections for a loss. The Cambridge, Mass.-based biotechnology firm specializes in experimental drug therapies for cancer, and for infectious, auto-immune and respiratory diseases. Its focus is to modulate specific toll-like receptors (TLR), which direct immune system responses and recognize certain DNA and RNA patterns.

Here’s Canaccord’s compliment to the chef: “We continue to be impressed with Idera as the leader in the TLR space, which is also validated by three large partnerships (Novartis (NYSE:NVS), Merck (NYSE:MRK), and Merck KGaA) across multiple therapeutic indications,” wrote analyst Joseph Pantginis.

Here’s what was slipped under the table to the family beagle: “We are downgrading from ‘buy’ to ‘hold,’ based both on valuation and near-term headline risk in the stock.”

Picky, picky. After all, Idera has feted shareholders with a five-fold gain in the past two years, closing Wednesday at $14.82 per share from a low of $2.70 in early August 2006; it’s near the top of a 52-week range of $6.35 to $15.60.

The company’s revenues — all of which come from collaborative and license agreements —  advanced to $8 million in the year ended December 2007, from $2.5 million in fiscal 2005. Idera, with market capitalization of $320 million, lost $0.62 per share in fiscal 2007, paring a loss of $0.99 in both 2005 and in 2006.

Pantginis said he doesn’t see further upside to shares for the time being because the company lacks catalysts. He noted the recent series of new multi-year highs has come on limited volume, showing a lack of institutional interest.

His headline risk refers to a belief that investors will react negatively to an expected readout of a renal cell carcinoma monotherapy study in the third quarter. Pantiginis believes this will not show response rates that will compare positively to current market drugs Sutenta and Nexavar.

But Pantiginis says this is an older study that is no longer core to Idera’s oncology program now that Merck KGaA has become its global oncology partner. Merck KGaA — the German chemical and pharmaceutical company — partnered with Idera . . .

For access to the full article, you must be a registered member - it's FREE.

Already a member? Please log in below