Business Corpus: This Midcap Biotech Popped Nearly 20% On Hope In Cancer, InflammationXencor stock popped to a record high Tuesday on investor excitement for the biotech company's inflammation and cancer drugs, though it reported no revenue for the second quarter. The post This Midcap Biotech Popped Nearly 20% On Hope In Cancer, Inflammation appeared first on Investor's Business Daily.

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Xencor (XNCR) stock popped to a record high Tuesday on investor excitement for the biotech company's inflammation and cancer drugs, though it reported no revenue for the second quarter.

In midday trading on the stock market today, Xencor stock jumped 15.1%, near 43.50. Earlier, shares rose as much as 18.7%, touching an all-time high. At the same time, biotech stocks crept up a fraction. Shares of partner Novartis (NVS) were flat.

For its second quarter, Xencor reported a loss of 46 cents per share vs. the estimate of analysts polled by Zacks for a 55-cent loss. This widened from a loss of 17 cents in the year-ago period. Xencor had $555.4 million in cash and equivalents, which should be sufficient into 2023.

Upcoming Catalysts

Most of the excitement seemed to stem from upcoming catalysts. Xencor plans to have data from tests of lupus and leukemia drugs in the fourth quarter. It also plans to begin an inflammation study and file to begin studies of cancer drugs later this year.

But Instinet analyst Christopher Marai says the "meaningful catalysts (are) more than one year out." He reiterated his neutral rating and price target of 28 on Xencor stock.

"The next catalyst, systemic lupus erythematous data, is expected in the second half of 2018," he said in a note to clients. "However, a novel trial design and traditionally difficult pivotal paths set an incredibly high bar for positive data to move the needle — or the stock."

Inflammation Drugs

Lupus, known formally as systemic lupus erythematous, is an autoimmune disease. This means the immune system turns against parts of the body it's designed to protect. This can cause inflammation and affect many parts of the body.

Xencor expects to present data from a Phase 2 lupus study in the fourth quarter. Positive data could lead to a partnership for developing the drug, Marai said.

Also regarding inflammation, Xencor is working on treatments for IgG4-related diseases. Patients with these conditions tend to develop tissue-destructive lesions which can lead to organ dysfunction. A pivotal Phase 3 study is expected to begin in the second half of 2018.

"However, the enrollment period may take as long as two years, with an 18-month treatment period for the collective of natural history data," Marai said.

Cancer Drugs

In cancer research, Xencor is working on bispecific antibodies and checkpoint inhibitors. Bispecific antibodies are artificial proteins that can bind to two different molecules in the immune system. Checkpoint inhibitors block a specific interaction in the immune system to help identify cancer.

Xencor plans to ask the Food and Drug Administration to approve clinical studies for two of these drugs in 2018. If the FDA blesses its study designs, these tests could begin in 2019. The biotech also plans to ask the FDA to approve a study of another bispecific antibody in 2019.

Leerink analyst Jonathan Chang notes in a report, "Xencor's bispecific antibody technology is a key aspect of the company's growth strategy in oncology."

The firm also reiterated its plan to have Phase 1 data from a leukemia study in the fourth quarter. Novartis partners on the drug, which treats a form of cancer called acute myeloid leukemia. Initial Phase 1 data from a Novartis-partnered blood cancer drug is expected in 2019.

But Instinet's Marai noted, "Novartis failed to mention (its Xencor-partnered cancer drugs) on their earnings call or deck, suggesting first data may be preliminary at best — a year-end 2018 nonevent."

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The post This Midcap Biotech Popped Nearly 20% On Hope In Cancer, Inflammation appeared first on Investor's Business Daily.