Ordinarily, investors – especially conservative buy-and-hold types – are much better off ignoring penny stocks. They’re too wild, too unpredictable, and far too many incur devastating losses. Still, biotechnology firm Chimerix (NASDAQ:CMRX) presents an intriguing case. Not only did it prove its clinical muscle with a commercially successful therapeutic, but analysts love the enterprise. For patient speculators, Chimerix deserves a closer examination because of underlying relative credibility. I am bullish on CMRX stock.
A Quick Look at the Compelling History of CMRX Stock
Unlike other speculative ideas in the biotech space, CMRX stock benefits from its prior clinical success. With its scientific acumen proven, the bullish narrative revolves around the underlying team facilitating lightning to strike twice. To be sure, it’s still a high-risk enterprise, given the hefty trailing 52-week loss. Nevertheless, by leveraging its acumen, it’s not an impossible prospect.
At its core, Chimerix specializes in developing medicines that meaningfully improve and extend the lives of patients facing deadly diseases, per its website. It first gained prominence with the research and development of Tembexa. Previously known as brincidofovir prior to commercialization, the oral nucleotide analog – representing a new class of anti-viral drugs – offered a promising therapeutic candidate against cytomegalovirus (CMV) disease.
Per information published by the National Library of Medicine, CMV is a widespread disease. However, one of the core issues centers on the vast 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, solid organ transplant, and bone marrow transplant.”
For full disclosure, brincidofovir failed to meet its primary endpoint for the prevention of CMV infection following a transplant 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 variola virus that causes smallpox may be used as a bioweapon. Therefore, it was vital to prepare a solution under the U.S. medical countermeasures response. Subsequently, Chimerix answered this call, leading to significant interest in CMRX stock during the early years of the COVID-19 pandemic.
Looking Ahead to a Possibly Brighter Future
To be sure, while achieving FDA approval is no small feat, investors have been all over the map regarding sentiment for CMRX stock. At its peak, shares traded hands at double-digit prices. As you can tell from the current price, Chimerix suffered a severe fall from grace. However, given the proven scientific acumen, speculators have some justification for believing in a resurgence.
In 2022, the company sold Tembexa to Emergent BioSolutions (NYSE:EBS). Per 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 firm “to accelerate the value of this product while still participating in its longer-term potential. As we look ahead, our balance sheet is enhanced significantly to support the ongoing development of our oncology franchise.”
With the cash infusion, Chimerix can focus on its current pipeline of four therapeutics across five indications. Among them, ONC201 for H3 K27M-mutant glioma may be the most promising. Per its website, ONC201, for the aforementioned indication, is in late-stage development, having passed its Phase 2 trial and is currently enrolling patients for a Phase 3 trial.
That by itself is a major accomplishment. According to a 2018 report published by the industry journal Clinical and Translational Science, only about 50% of therapeutic candidates reach Phase 3. Further, H3 K27M-mutant glioma represents an unmet clinical need. Given the rarity of the highly-invasive tumor, Chimerix could potentially benefit from an orphan drug classification.
To clarify, it’s a risky proposition because anything can happen during a clinical trial. However, with Chimerix’s history of getting into the red zone (and sometimes into the endzone with the smallpox indication), astute speculators are placing their bets on CMRX stock.
A Narrative Play, Not a Financial One
On a final note, if you’re interested in gambling in CMRX stock – because that’s what it is – you should be aware that you’re buying a narrative. And that narrative centers on Chimerix hitting out of the park with ONC201 for the previously mentioned indication. Needless to say, a 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 cash to play with, thanks to the Tembexa sale. Other than that, it’s likely a binary bet on the ultimate 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, implying a whopping 707.8% upside potential.
The Takeaway: CMRX Stock Offers a Compelling but Risky Wager
Biotech firm Chimerix, having proven success with a past therapeutic, aims to repeat with its promising pipeline, particularly 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.
