Trading Outlook for Repros Therapeutics (RPRX)

Posted by on Sep 16, 2009 | 3 comments

Repros Therapeutics (NASDAQ: RPRX)

Repros Therapeutics Inc. (RPRX) is a development-stage biopharmaceutical company focused on the development of oral small molecule drugs for unmet medical needs. The Company’s principal drug, Proellex, is a selective blocker of the progesterone receptor and is being developed for the treatment of uterine fibroids, anemia associated with excessive menstrual bleeding relating to uterine fibroids, or anemia associated with uterine fibroids and endometriosis. There is no currently approved effective long-term drug treatment for uterine fibroids or endometriosis. In the United States alone, approximately 300,000 women per year undergo a hysterectomy as a result of severe uterine fibroids. The second product candidate, Androxal, is a single isomer of clomiphene citrate and an orally active small molecule compound.

Share StatisticsSep-17-09 2007 2008 %Chg Q2 2008 Q2 2009 % Chg
Symbol RPRX Revenue, Mn 1.5M 433K 71.29% 359K 4K 98.89%
Current price $0.82 Gross margin N/A 100% N/A 100% 100% 0.0%
52wk Range: $0.65-$13.94 Oper. margin -908.5 -5,820.3 541% N/A -35,100 N/A
Avg Vol (3m): 994,755 Net margin N/A N/A N/A N/A N/A N/A
Market Cap. 12.45M
Dil. Shares Outst. 16.7M EPS, $ -1.09 -1.88 73% -0.47 -0.59 26%

Source: www.reprosrx.com/

http://www.nasdaq.com/MorningStarProfileReports/RPRX_USA.pdf https://research.scottrade.com/research/common/pdf.asp?docKey=24-A066F

Financial Summary

The Company reported a net loss for the second quarter ended June 30, 2009, of ($8.9) million or ($0.59) per share as compared to a net loss of ($6.1) million, or ($0.48) per share, for the same period in 2008. The net loss for the six-month period ended June 30, 2009, was ($15.6) million, or ($1.03) per share, as compared to a net loss of ($12.8) million, or ($1.00) per share, for the same period in 2008. The increase in loss for both the three and six-month periods ended June 30, 2009, as compared to the same period in 2008 was primarily due to an increase in the Company’s clinical development activities for Proellex® and general and administration expenses, partially offset by decreased expenses in clinical development activities for Androxal®.

R&D expenses increased 16% or approximately $1.8 million to $13.5 million for the six-month period ended June 30, 2009, as compared to $11.6 million for the same period in 2008. The increase in R&D expenses for the half year is due primarily to an increase in clinical activities in the development of Proellex, partially offset by decreased expenses in clinical development activities for Androxal, which is no longer being developed for the treatment of secondary hypogonadism.

Interest income decreased 99% to $1,000 for the second quarter of 2009 as compared to $91,000 for the same period in 2008 and decreased 99% to $4,000 for the six-month period ended June 30, 2009, as compared to $359,000 for the same period in the prior year. The decrease for both the three and six-month periods ended June 30, 2009, was primarily due to lower combined cash, cash equivalents and marketable securities balances and reduced interest rate yields that have occurred as the Company moved its cash investments solely into a money market mutual fund.

Estimates vs Actual Estimate Actual Difference Surprise %
SALES (in millions)
Quarter Ending Jun-09 0.01 0.00 0.01 93.33
Quarter Ending Mar-09 0.06 0.00 0.06 95.38
Quarter Ending Dec-08 0.18 0.03 0.15 84.36
Quarter Ending Sep-08 0.06 0.05 0.02 29.69
Quarter Ending Jun-08 0.21 0.09 0.12 57.08
Earnings (per share)
Quarter Ending Jun-09 -0.46 -0.59 0.13 -27.35
Quarter Ending Mar-09 -0.49 -0.45 0.04 -8.78
Quarter Ending Dec-08 -0.45 -0.39 0.06 -12.69
Quarter Ending Sep-08 -0.52 -0.51 0.01 -2.54
Quarter Ending Jun-08 -0.55 -0.48 0.07 -12.20

Source: Reuters.com

Analyst Consensus

This is the consensus forecast for RTK amongst two polled investment analysts:

Analyst Detail Buy Outperform Hold Underperform Sell No Opinion
Latest 0 0 1 0 1 0
4 weeks ago 0 0 1 0 1 0
2 months ago 2 0 2 0 0 0
3 months ago 4 1 0 0 0 0
Last year 4 0 0 0 0 0

Source: Financial Times.com

On August 17, 2009, RPRX reported second quarter 2009 losses of -0.59 per share. This result under-performed the -0.49 loss expectation of the two analysts following the Company but exceeded last year’s second-quarter results by 22.92%. The next earnings announcement is expected November 11, 2009.

Source: http://www.reuters.com/finance/stocks/estimates?symbol=RPRX

Investment Highlights

So far this year RPRX revenues fell 71.29% from $1.51 million to $433,000. This along with an increase in selling, general and administrative costs has contributed to a reduction in net income from a loss of $13.70 million to a larger loss of $25.20 million.

On August 3, 2009, RPRX announced that it was suspending its drug Proellex’s clinical trials based in part on “the occurrence of clinically significant increases in liver enzymes.”

As a result of the voluntary suspension of Proellex trials, the Company announced it was at risk of bankruptcy unless it received new financing. As a result of this news, the price of RPRX stock declined sharply from the previous day’s closing price of $2.53, to close on August 3, 2009, at $1.31 per share or approximately 48% on extremely high trading volume of more than 7.4 million shares.

Law firm Feazell & Tighe L.L.P. subsequently announced that a securities class action lawsuit has been filed in the U.S. District Court for the Southern District of Texas by shareholders who purchased or otherwise acquired the common stock RPRX, between July 1, 2009, and August 3, 2009, who allege the Company misrepresented itself and news regarding the Proellex study results, ultimately affecting share prices.

However, shortly after this announcement, the Company reported a definitive agreement with a single institutional investor to sell 1.5 million shares of its common stock at $0.65 per share for gross proceeds of approximately $1.0 million.

This financing provides the Company with the needed financing to stay out of bankruptcy and will allow RPRX to continue its business activity for the near term and provide it with more flexibility to continue exploring various strategic alternatives. The offering is expected to close in or around September 2009, subject to the satisfaction of customary closing conditions.

Source: Scottrade.com, Reuters.com

Technical Analysis

rtk

Source: www.stockcharts.com

Moving Average Price Compare

RPRX is below its 50-day moving average. This bearish sign is even more significant because the moving average is also trending lower.

MACD

RPRX’s MACD is currently indicating a weak bullish signal. Although the MACD is trending above the signal line, the indicator is still below 0, which suggests that the underlying moving averages are bearish.

Comparative Analysis

Company Name Ticker Price per Mrkt. Cap. P/E P/S
Sep-17-2009 symbol Share, $ $ Mn 2009 2010 2009 2010
Gilead Sciences Inc. GILD 46.31 42,174 19.75 N/M N/A N/M
Biogen Idec Inc. BIIB 51.55 14,667 13.69 N/M N/A N/M
Genzyme Corp. GENZ 56.00 15,352 15.16 N/M N/A N/M
Life Technologies Corp. LIFE 48.29 8,356 16.09 N/M N/A N/M
Median 50.53 16,112 16.17
Repros Therapeutics Inc. RPRX 0.82 13.51 N/M N/M -0.55 -0.61

Source: Reuter.com, Nasdaq.com

Insider Trading Activity

Net Share Purchase Activity
Insider Purchases – Last 9 Months
Shares Trans
Purchases 4,400 2
Sales 0 0
Net Shares Purchased (Sold) 4,400 2
Total Insider Shares Held N/A N/A
% Net Shares Purchased (Sold) N/A N/A

Net Institutional Purchases – Prior Qtr to Latest Qtr
Shares
Net Shares Purchased (Sold) 9,482,572
% Change in Institutional Shares Held 56.85%
Data provided by Thomson Financial

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  • Peter

    From their latest 10-Q:

    Furthermore, as of August 14, 2009, we had approximately $2.7 million in cash and cash equivalents, and the amount of accounts payable and accrued expenses were significantly higher than $7.5 million.

    That means the $1 million from this offering doesn’t go far. It is notable that the offering contained no prohibition on the purchaser shorting – likely this was a “found” offering where the purchaser first shorted the shares and then approached the company to cover. (The alternative is worse, as there is no required holding period for the shares purchased in the offering and so they would be able to be freely sold this week assuming the offering closed on schedule last Friday, although there has been no PR to that effect yet).

    The company’s lead product Proellex is undoubtedly dead – no approved drug for a non-fatal condition causes liver damage that does not resolve immediately on withdrawal.

    The stock has speculative bumps, but in a few months will undoubtedly be bankrupt.

  • peter

    A small correction – their offering did indeed close on September 10th.

    For a recent full bearish analysis of this stock, check out:

    http://seekingalpha.com/article/159542-repros-therapeutics-circling-the-drain-to-zero

  • Bev

    Any insight as to what to make of the 17 million shares that changed hands yesterday with a significant rise in price? Or the inordinate amount of call options in November??

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