This Biotech Name Could Be Best In Breed For 2017

The biotech sector has seen better times this year after the disappointing showing in 2016. Calithera Biosciences Inc CALA has been a stand-out performer in the sector, clocking gains in excess of 300 percent in the year-to-date period. But, does it qualify for the tag "best-in-breed?"

Best-in-breed, according to Investopedia, is a stock that is the most optimal investment choice in a sector or industry.

Outperforming The Sector

From Benzinga's research, the iShares NASDAQ Biotechnology Index (ETF) IBB has been up 10.55 per thus far this year, the NYSE ARCA BIOTECH INDEX has added 18.81 percent and the SPDR S&P Biotech (ETF) XBI has advanced 20.43 percent. In comparison, the S&P 500 has been up merely 8.37 percent. The year-to-date gains of NASDAQ Composite has been 14.54 percent.

If not for the uncertainty surrounding President Donald Trump's healthcare reforms and sustained jobs figures the gains would arguably have been even more.

High-Flier

From $3.25 at which it finished 2016, Calithera Biosciences shares have run up to $14.20, a 337-percent gain thus far this year. The stock hit an intra-day high of $17.70 on June 7 before ending the session off the high at $16.30.

The June 7 intra-day high marked the highest level since April 14, 2015, when the stock peaked at $19.89. On a closing basis, the stock was at a record high of $19.38 on April 15, 2015.

Catalysts Push Stock Higher

After trading under the $5 handle for most part of January this year, the stock rose above the level on Jan. 30. From a $4.60 close on Jan. 29, the stock rallied roughly 47 percent to $6.75 on Jan. 30.

The catalyst was a news release, which revealed that the company signed a collaboration and license agreement with Incyte Corporation INCY for the former's small molecule arginase inhibitor CB-1158 in hematology and oncology. Calithera was paid $45 million upfront, while Incyte also committed equity investment in the company to the tune of $8 million through the purchase of Calithera equity at $4.65 per share.

After moving back and forth in a narrow range around $9 for much of February, the stock took a big leg up on March 1, gaining 29 percent, following its announcement that it would present at the Cowen and Company 37th Annual Health Care Conference 2017. The presentation was scheduled at 10 a.m. ET on March 8.

After rising around the timeframe and peaking at $14.50 on March 13, the shares pulled back ahead of the fourth quarter results released on March 16. Notwithstanding an earnings the beat, the stock continued to move southward. The weakness continued amid the announcement of a public offering of $4.5 million shares on March 20.

The offering was priced at $10.25 per share. The announcement concerning the pricing of the offering on May 27 and another concerning the receipt of $12 million in milestone payment from Incyte offered support to the stock, helping it to reverse the down move.

Subsequently, the stock began moving sideways hugging the $11 level until May 8. A huge earnings beat announced on May 9 provided impetus to the stock, helping it move out of the trading range.

Source: Y Charts

With the company announcing on June 7 that the FDA has granted Fast Track designation to CB-839-everolimus combo, for treating metastatic renal cell carcinoma patients, who have received 2 or more prior lines of therapy, the momentum seen in the stock strengthened, taking it to a multi-year intra-day high.

Contending that returns are an important criterion in designating a sock as a best-in-breed, Calithera Biosciences is passing with flying colors.

Joel Elconin contributed to this article Related Links:

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