On Friday, BMO (TSX:BMO) Capital adjusted its outlook for Xencor, Inc. (NASDAQ: NASDAQ:XNCR) shares, a biopharmaceutical company, by reducing its price target to $32.00 from the previous $34.00. The firm sustained its Outperform rating on the stock.
The adjustment was made following news that Xencor will regain the rights to plamotamab, a CD20 x CD3 bispecific antibody, from its partner Johnson & Johnson (JNJ).
The reacquisition of plamotamab rights by Xencor comes as the market has shown a growing appreciation for the potential of bispecific antibodies in treating solid tumors, which represent a significant portion of cancer cases.
This shift in the oncology landscape has made the highly competitive CD20 space for hematologic malignancies less attractive for JNJ, which has chosen to retain rights to CD28-targeted bispecifics under its collaboration with Xencor.
BMO Capital's analyst noted that although the recent datasets have underscored the value of bispecifics in solid tumors, they have updated their financial model to account for the anticipated loss of plamotamab royalties.
Despite this change, the firm believes that the current market valuation of Xencor does not fully recognize the potential of the company's pipeline, which justifies maintaining the Outperform rating even with the lowered price target.
The revision of the price target reflects the analyst's view on the immediate financial impact of the loss of royalties from plamotamab. However, the sustained positive outlook suggests confidence in Xencor's ability to capitalize on its remaining assets and the overall potential of its drug development pipeline.
Investors in Xencor, Inc. will be monitoring the company's progress closely as it navigates the challenges and opportunities following the return of plamotamab rights and the ongoing development of its other therapeutic candidates.
In other recent news, Xencor Inc ., a biopharmaceutical firm, has seen a series of significant developments. The company has regained full rights to its cancer treatment drug, plamotamab, after Janssen Biotech, Inc. decided to end its involvement in the product. This follows Janssen's decision to terminate its stake in the plamotamab project, despite the drug being Phase 2 ready.
Analyst firms RBC (TSX:RY) Capital and BTIG have adjusted their outlooks for Xencor. RBC Capital reduced its price target for Xencor from $32 to $31, maintaining an Outperform rating, while BTIG lowered its price target from $56 to $38, keeping a Buy rating.
These changes were influenced by recent developments in plamotamab's status and insights from industry discussions about the development landscape for metastatic castration-resistant prostate cancer (mCRPC).
In addition, Xencor has appointed Bart Cornelissen as its new Senior Vice President and Chief Financial Officer. Cornelissen, who played a key role in Seagen Inc.'s growth and its acquisition by Pfizer (NYSE:PFE), is expected to support Xencor's growth through strategic planning and capitalization as its internal pipeline progresses through clinical development. These are the recent developments at Xencor, shedding light on the company's ongoing evolution.
InvestingPro Insights
Investors considering Xencor, Inc. (NASDAQ: XNCR) will find additional context through InvestingPro metrics and tips. A notable highlight is that Xencor holds more cash than debt on its balance sheet, which may provide financial flexibility as it regains rights to plamotamab. Furthermore, while analysts have revised their earnings upwards for the upcoming period, they also anticipate a sales decline in the current year. This mixed outlook reflects the dynamic nature of the biopharmaceutical industry and the company's position within it.
From a financial standpoint, Xencor's market cap stands at $1.31 billion, with a negative P/E ratio of -9.77, reflecting investor sentiment about future earnings. Additionally, the company's significant revenue growth of 65.41% over the last twelve months as of Q1 2024 demonstrates its expanding business scale, despite the challenges indicated by a negative gross profit margin of -51.02% for the same period.
For those looking to delve deeper into Xencor's financial health and future prospects, InvestingPro offers additional tips and insights. For instance, with analysts expecting net income to drop this year and not anticipating profitability, it's crucial to consider these factors alongside the positive cash balance and upward earnings revisions. To access a comprehensive list of tips and a more detailed financial analysis, visit InvestingPro. Additionally, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, where you can find many more InvestingPro Tips to guide your investment decisions.
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