Wedbush: Trajectory For Stemline Therapeutics' Blood Cancer Drug Priced Into Stock

Stemline Therapeutics Inc STML reported a wider first-quarter net loss per share Friday, dragged by higher R&D expenses, which nearly tripled from a year ago.

The Analyst

Wedbush analyst David Nierengarten downgraded Stemline from Outperform to Neutral and maintained an $18 price target.

The Thesis

The positive launch trajectory of Elzonris and expectations for label expansion are priced into Stemline's stock, Nierengarten said in the Monday downgrade note. (See his track record here.) 

Elzonris, which is indicated for blastic plasmacytoid dendritic cell neoplasm — a rare, clinically aggressive form of blood cancer — was approved by the FDA in December and was made commercially available in January.

Elzonris sales in the first quarter were $5.05 million, ahead of Wedbush's estimate of $4.26 million.

Stemline said the treated patient pool included both recurring and treatment-naïve patients, with about 75 percent of them covered by Medicaid, the analyst said. 

Following the update, Wedbush modestly increased its 2019 sales estimate for Elzonris to $37.2 million.

Wedbush is looking ahead to additional Elzonris clinical updates in chronic myelomonocytic leukemia and myelofibrosis at the ASCO meeting scheduled for May 29-June 4, as well as a potential regulatory update regarding the indications following the company's planned registration discussions with the FDA in mid-2019.

With the MAA submitted in January, Elzonris could potentially be approved in Europe in the fourth quarter, Nierengarten said. 

Stemline is likely to have sufficient runway into 2021, with $86.1 million in net proceeds from the secondary offering in the first quarter as well as its existing cash and cash equivalent position of $124.4 million, according to Wedbush. 

The Price Action

Stemline shares have rallied by roughly 70 percent year-to-date. The stock was down 7.8 percent at $14.84 at the time of publication Monday. 

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