Low floats have been the name of the game for a number of biotech companies this week, with some seemingly inexplicable runs only explained by low float, high-volume spikes. Here is another one. The company is GenVec Inc (NASDAQ:GNVC), and it is currently trading at a 114% premium to its weekly open price. As has been the case with the other companies in this category, there has been no real fundamental development of note, and nothing is registering as freshly filed with the SEC. This hasn’t stopped us from taking interest in these sorts of runs in the past, however, so let’s do the same with GenVec, in an attempt to figure out what’s next.
This one is a development stage biotechnology company based out of Maryland. Its headline focus is on the development of therapies using what is called adenoviral-based technology. The company’s lead technology, a gene delivery platform, takes its name from this broad spectrum description, and is called AdenoVerse Technology. The science behind it is relatively simple in concept. Basically, the company is trying to undertake gene editing as a way to treat certain conditions, but these genes need a delivery vehicle through which they can reach their target cells. With the AdenoVerse technology, GenVec employs an adenovirus as its vector (with vector here just meaning the delivery vehicle). These types of vectors can be altered to deliver large or multigene payloads and – perhaps most importantly – avoid pre-existing immunity. In other words, our immune system won’t attack them on introduction.
Right now, the company’s lead application of this technology is a drug called CGF166, which is currently under investigation for the treatment of hearing loss. The drug is in a phase 1/2 study, but suffered a setback early last year, when GenVec’s partner on the study, biotech giant Novartis AG (ADR) (NYSE:NVS), informed the company that the FDA had placed a clinical hold on the investigation. After a review by the trial’s Data Safety Monitoring Board (DSMB), this clinical hold lifted in July, and the study got back underway. Since then, core focus has been rooted in an attempt to catch up on the lost time from an enrollment perspective, and – if the two companies’ latest releases are anything to go by – this has been achieved. The study is set to complete at some point during 2017 (likely later on this year, as opposed to earlier) and that is the next real impactful catalyst from a GenVec perspective.
The company undertook a reverse split early December, utilizing a 1 for 10 ratio, and while these sorts of maneuvers are generally regarded as negative at this end of the biotech space, it seems to have done GenVec some good. The company has managed to maintain its above bid price, and with the recent gains in place, is now trading above the magic $5 mark, putting it on the radar of a large number of institutional investors. We see any announcement related to smart money taking a 5% plus position over the coming quarter as a near-term, non-data related catalyst.
A just signed Washington University agreement has also served to buoy sentiment somewhat, and should help to establish a number of expanded therapeutic areas for GenVec’s AdenoVerse tech heading into the next couple of quarters.
As ever, cash on hand isn’t great, but it’s not terrible either. At September 30, 2016, the company reported cash at a little under $5 million and zero debt. Couple this with the potential for some near-term institutional capital injections, and there’s every chance that the gains seen over the last week or so will continue into the close of the first quarter and beyond.
A low float gainer for sure, but one that has drawn attention to an undervalued entity, and this attention could – in turn – draw some speculative near term buy volume.
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Disclosure: We have no position in GNVC and have not been compensated for this article.