Ordinarily, investors — especially conservative buy-and-hold types — are much better off ignoring penny stocks. They are too wild, too unpredictable, and far too many take devastating losses. However, biotechnology company Chimerix (NASDAQ:CMRX) presents an interesting case. Not only has it proven its clinical muscle with a commercially successful therapeutic, but analysts love the company. For patient speculators, Chimerix deserves closer examination due to underlying relative credibility. I am bullish on CMRX stock.
A Quick Look at CMRX Stock’s Compelling History
Unlike other speculative ideas in the biotech space, CMRX stock benefits from its previous clinical success. With its scientific acumen proven, the bullish story revolves around the underlying team making it easy for lightning to strike twice. Sure, it’s still a high-risk venture, given the big 52-week trailing loss. However, using its savvy, it is not an impossible prospect.
At its core, Chimerix specializes in developing medicines that meaningfully improve and extend the lives of patients facing life-threatening diseases, according to its website. It first gained prominence with the research and development of Tembexa. Formerly known as brincidofovir before commercialization, the oral nucleotide analog—representing a new class of antiviral drugs—offered a promising therapeutic candidate against cytomegalovirus (CMV) disease.
According to information published by the National Library of Medicine, CMV is a widespread disease. However, one of the core issues centers on the far-reaching consequences of infection. Manifestations range from asymptomatic profiles to severe end-organ dysfunction in immunocompromised patients. Indeed, the federal agency warns, “CMV is an important opportunistic pathogen in patients with a suppressed immune system, for example, from HIV, a solid organ transplant, and a bone marrow transplant.”
For full disclosure, brincidofovir failed to meet its primary endpoint for the prevention of CMV infection after transplantation in its Phase 3 trial. However, in June 2021, the Food and Drug Administration (FDA) approved the antiviral drug to treat smallpox.
While smallpox was eradicated in 1980, the FDA warned that the smallpox virus that causes smallpox can be used as a bioweapon. Therefore, it was essential to prepare a solution under the US medical countermeasures response. Later, Chimerix answered this call, driving significant interest in CMRX stock during the early years of the COVID-19 pandemic.
Looking Forward to a Possibly Brighter Future
Certainly, while achieving FDA approval is no small feat, investors have gone over the map on sentiment about CMRX stock. At its peak, shares traded hands at double-digit prices. As you can tell from the current price, Chimerix has suffered a severe fall from grace. However, due to the proven scientific acumen, speculators have some justification to believe in a revival.
In 2022, the company sold Tembexa to Emergent BioSolutions (NYSE:EBS). According to the accompanying press release, Emergent paid Chimerix $238 million at closing. At the time, former Chimerix CEO Mike Sherman stated that the sale allows the company to “accelerate the value of this product while continuing to participate in its longer-term potential. As we look forward, our balance sheet is significantly enhanced to support the continued development of our oncology franchise.”
With the cash infusion, Chimerix can focus on its current pipeline of four therapies across five indications. Among them, ONC201 for H3 K27M mutant glioma may be the most promising. According to its website, ONC201, for the aforementioned indication, is in late-stage development, having passed its Phase 2 trial and is currently recruiting patients for a Phase 3 trial.
That in itself is a major achievement. According to a 2018 report published by the industry journal Clinical and Translational Science, only approximately 50% of therapeutic candidates reach Phase 3. Furthermore, H3 K27M mutant glioma represents an unmet clinical need. Given the rarity of the highly invasive tumor, Chimerix could potentially benefit from orphan drug designation.
To clarify, it is a risky proposition because anything can happen during a clinical trial. However, with Chimerix’s history of entering the red zone (and sometimes into the end zone with the smallpox indication), savvy speculators are placing their bets on CMRX stock.
Narrative Play, Not Financial
Ultimately, if you’re interested in gambling on CMRX stock — because that’s what it is — you should be aware that you’re buying a story. And that story centers on Chimerix hitting it out of the park with ONC201 for the aforementioned indication. Needless to say, failure would likely be devastating.
So, if you’re looking for financial multiples, you probably shouldn’t bother. The only reliable statistic is that the company has money to play with, thanks to the sale of Tembexa. Other than that, it’s probably a binary bet on the final results for ONC201.
Is CMRX stock a buy, according to analysts?
Turning to Wall Street, CMRX stock has a Strong Buy consensus rating based on four Buys, zero Holds and no Sell ratings. The average CMRX stock price target is $7.75, which implies a whopping 707.8% upside potential.
The Takeaway: CMRX Stock Offers a Compelling But Risky Bet
Biotech company Chimerix, which has demonstrated success with past therapy, aims to repeat with its promising pipeline, notably ONC201 for a rare type of cancer. Analysts are bullish, but investors should be aware that it’s a high-risk gamble on the success of this late-stage drug candidate. CMRX is a speculative narrative play, not a guaranteed financial winner.
Disclosure
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.