Stifel cuts Genocea to hold, price target to $2.50

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Stifel downgraded Genocea Biosciences (NASDAQ:GNCA) to “hold” from “buy” and slashed its price target to $2.50 from $15 after the company shifted its strategic focus. The stock closed at $5.33 on Sept. 25.

“We believe management’s decision to shelve any further internal development efforts on GEN-003 in order to focus its limited resource base to immuno-oncology and the development of neoantigen cancer vaccines represents a fundamental change to our investment thesis,” writes analyst Stephen Willey.

GEN-003 is a Phase 3-ready therapeutic vaccine intended to reduce the duration and severity of clinical symptoms associated with moderate-to-severe genital herpes and to control transmission of the infection.

“While acknowledging there still may be an opportunity for the company to eventually secure non-dilutive funding and collaboratively identify a development path forward for GEN-003, our visibility and confidence here remain admittedly low – particularly given this asset has likely been part of an ongoing strategic dialogue with potential partners for a while now,” he added. 

“And while we believe the company’s core ATLAS technology may prove better-suited to identify neoantigens capable of eliciting an immunological response, compared with other methodologies reliant on predictive algorithms, we note a lack of near-term clinical catalysts is likely to limit investor enthusiasm here,” Mr. Willey said.