Humanigen stock forecast: what’s next for the biopharma stock?
The price of Humanigen stock collapsed in September following a refusal from the US Food and Drug Administration (FDA) to grant the company’s lenzilumab experimental drug emergency-use approval for treating the Covid-19 virus.
Shares collapsed 47% on the day that the news broke and they have extended the decline to nearly 58% thus far as the market had apparently priced in the imminent approval of the treatment.
With lenzilumab being the most important drug within the company’s pipeline, what can be expected from Humanigen stock price following the FDA’s refusal? Join us in this HGEN stock price forecast as we take a closer look at the price action and fundamentals of this California-based pharmaceutical company to outline plausible scenarios for the future.
HGEN news: FDA rejection for lenzilumab and Phase 1 studies for ifabotuzumab
According to a statement from the company, the FDA decided not to grant lenzilumab emergency-use approval for treating Covid-19 as it was “unable to conclude that the known and potential benefits of lenzilumab outweigh the known and potential risks of its use as a treatment for COVID-19”.
The management, however, assured investors that it will continue to work on its ACTIV-5/BET-B trial, which enrolled a total of 500 patients to obtain further data on lenzilumab's potential to treat hospitalised Covid-19 patients.
In other news, the firm announced on 22 October that further Phase 1 studies will be conducted for its ifabotuzumab drug. The study will be conducted in partnership with the European Association of Nuclear Medicine and should begin in the first few months of 2022.
Ifabotuzumab is the second drug in the firm’s pipeline. The drug seeks to treat malignancies in certain areas of the body, excluding the central nervous system.
Humanigen stock technical analysis
The early September drop experienced by Humanigen stock has led to stalled price action. Interestingly, momentum oscillators have been steadily going up as they emerged from neck-deep oversold levels with the relative strength index (RSI) climbing above the 30 threshold already.
Meanwhile, the moving average convergence divergence (MACD) has crossed above the signal line (typically a bullish signal) on the back of steadily rising positive histogram readings.
Currently, the price action is encountering a first area of resistance at the 20-day simple moving average – which closed last Friday (22 October) at $6.3 per share. Failing to move above this threshold could result in further weakness for the stock.
Trading volumes have also been quite low, which means that the selling spree that accompanied the 9 September decline may have already exhausted its influence in the price action.
For now, the fundamentals of the company are perhaps more important to predict the future of Humanigen stock as the price action is not exhibiting any kind of relevant signals that point to either a bullish or bearish outlook.
Humanigen fundamental analysis
With no marketable products in its portfolio, Humanigen is a pre-revenue company with only two drugs in its pipeline. The first of these treatments is lenzilumab, the one that recently failed to receive approval from the FDA for treating hospitalised Covid-19 patients.
The company sought approval from the FDA upon completing its LIVE-AIR study on lenzilumab. The study enrolled a total of 520 patients. Back in March this year, the study concluded that patients who received the drug had a higher chance to survive hospitalisation without the need for invasive mechanical ventilation.
However, the FDA concluded that the risks and side effects attributed to the drug outweighed its benefits.
A second Phase 2/3 trial is still ongoing (ACTIV-5/BET-B) and the company says it is committed to presenting the results as soon as convenient, with encouragement from the FDA. Only 60% of the 550 patients that need to be enrolled for the study have been on-boarded thus far.
It is important to note that Humanigen is also researching the potential use of lenzilumab for treating other diseases including acute GvHD and chronic myelomonocytic leukaemia (CMML). Studies involving the use of the drug for treating those illnesses are currently undergoing Phase 2/3 trials.
Aside from lenzilumab, the company is also testing a second drug called ifabotuzumab for treating solid tumors. However, this treatment is still undergoing Phase 1 trials and it is unlikely to generate revenue for the business in the foreseeable future.
The company’s net losses had been under control before last year, moving from $27m (£18.2m) back in 2016 to $10.3m in 2019. Last year, net losses accelerated to nearly $89.5m as the company invested heavily in research and development to accelerate the development of lenzilumab for treating Covid-19.
For the six months ended 30 June 2021, the firm’s cash burn has accelerated to $103.78m, up from the $22.61m spent for the same period in 2020. Meanwhile, its cash reserves currently stand at $120.5m. The company has a relatively small long-term debt of $24.63m on total assets of $121.73m.
At this point, Humanigen seems to be burning cash fast and that might be a concerning factor, considering that it is highly unlikely that the firm will receive emergency-use approval for lenzilumab soon.
With this in mind, the market capitalisation of $445m as of 26 October 2021 might be unjustifiably high.
This Humanigen stock outlook is being drafted upon performing a thorough analysis of the company’s fundamentals but it should not be considered a recommendation to buy or sell the stock.
Humanigen stock forecast
Analysts’ ratings compiled by the Wall Street Journal show that four out of eight analysts currently covering the stock are bullish about Humanigen’s future, rating it as ‘buy’. Only one analyst has a ‘sell’l rating on the stock, while three have rated HGEN stock a ‘hold’.
At the time of writing (26 October), the average Humanigen stock price target stands at $18.00 per share or 156% higher than the current price of $7.01 per share.
A possible explanation for why Wall Street is still bullish about the company’s outlook can be found in the commentary of Joseph Pantginis, an analyst for H.C. Wainwright & Co. On 11 October, he deemed the 9 September sell-off as a “gross overreaction” from market participants, as reported by TipRanks.
“The agency [FDA] remains quite engaged and was essentially asking for more data,” Pantginis stated.
He added: “Even if the company ends up going down the route of normal BLA submission, the impact on NPV (net present value) is nowhere near the impact the shares have seen.”
Meanwhile, algorithm-based Humanigen stock predictions from Wallet Investor are also bullish as it sees the price rising to a range between $11.85 to $12.63 by the end of 2021.
Additionally, the service has drafted a Humanigen stock forecast for 2021-2025 that sees the price rising to a range between $49.79 and $50.64 per share by the end of that period.
Bear in mind that analysts’ Humanigen stock predictions can be wrong. Analyst projections are based on making a fundamental and technical study of the company’s performance. Past performance never guarantees future results.
Given the conflicting opinion of Wall Street analysts and algorithm-based resources, do your own research and always remember your decision to trade depends on your attitude to risk, your expertise in this market, the spread of your investment portfolio and how comfortable you feel about losing money. And never invest more than you can afford to lose.
FAQs
Is Humanigen stock a good buy?
Humanigen is a pre-revenue company with no marketable product and only two drugs within its R&D pipeline. The fact that the company does not generate revenue and the fast pace at which it is burning through its cash reserves makes it a risky investment. Investors should proceed with caution and conduct a thorough research before making any trading decision.
Will HGEN stock price go up?
Nobody can foretell when the price of a stock will rise. However, algorithm-based projections from Wallet Investors see the price rising both in the short term (2021) and the long term (2025). These projections are drafted upon assessing Humanigen stock trend but should not be taken as a recommendation to invest in HGEN stock.
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