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On Friday, Mizuho Securities adjusted its stance on shares of Atara Biotherapeutics (NASDAQ:ATRA), moving from a Neutral to an Outperform rating. However, the firm reduced the price target to $18 from the previous $25. The adjustment comes as Atara Biotherapeutics' stock price approaches a 52-week low, trading near the cash value at approximately $7 per share, which equates to a market capitalization around $40 million.
The firm's analyst maintains a positive outlook on the company's core T-cell technology but acknowledges the declining stock performance. Despite the market's lack of enthusiasm, particularly after the failure of ATA188 in multiple sclerosis, the analyst believes the stock's value does not reflect the potential of upcoming milestones.
These include the expected US PDUFA date for tab-cel on January 15, 2025, with a possible $60 million milestone payment from Pierre Fabre upon approval, and initial data from Phase 1 trials for ATA3219 in non-Hodgkin's lymphoma (NHL) and autoimmune diseases in 2025.
The revised model by Mizuho includes several conservative updates, such as lowering the probability of success in NHL from 15% to 10% due to slower site activations and reducing the projected peak sales for tab-cel in the US from $250 million to $200 million. These changes are made to add an extra layer of conservatism to the firm's projections.
The analyst's report also mentions a 1-for-25 reverse stock split, a move typically made by companies aiming to increase their stock price by reducing the number of shares outstanding. This could be a strategic effort by Atara Biotherapeutics to improve its stock's appeal to investors.
Atara Biotherapeutics is focused on developing treatments in areas such as oncology and autoimmune diseases. The company's pipeline includes tab-cel for Epstein-Barr virus-associated post-transplant lymphoproliferative disease and ATA3219 for B-cell malignancies.
In other recent news, Atara Biotherapeutics has been making significant strides in the biopharmaceutical field. The U.S. Food and Drug Administration (FDA) has accepted the company's Biologics License Application (BLA) for tabelecleucel (tab-cel®), a therapy designed to treat Epstein-Barr virus positive post-transplant lymphoproliferative disease. This acceptance may lead to a $20 million milestone payment to Atara from Pierre Fabre Laboratories, with an additional $60 million contingent upon FDA approval.
Atara Biotherapeutics has also executed a 1-for-25 reverse stock split, reducing the number of outstanding common shares from approximately 122.6 million to around 4.9 million. This action was taken to increase the market price of the company's common stock and meet the continued listing requirements on The Nasdaq Stock Market LLC.
Furthermore, Atara Biotherapeutics has reported encouraging preclinical data on its allogeneic anti-CD19 chimeric antigen receptor (CAR) T-cell therapy candidate, ATA3219. The therapy, designed for the treatment of B-cell driven autoimmune diseases, has shown potent B-cell depletion with a reduced inflammatory profile. Currently, ATA3219 is under investigation in a Phase 1 trial for relapsed/refractory B-cell non-Hodgkin’s lymphoma.
These recent developments underline Atara Biotherapeutics' ongoing commitment to advancing its portfolio of immunotherapies.
InvestingPro Insights
Amidst the recent rating adjustment by Mizuho Securities, Atara Biotherapeutics (NASDAQ:ATRA) presents a complex financial landscape. According to InvestingPro data, the company's market capitalization stands at approximately $34.43 million, underscoring the significant deviation from the analyst's valuation. This is particularly noteworthy as the company's stock trades near the cash value, highlighting the market's current valuation of the underlying technology and future prospects.
InvestingPro Tips reveal that while analysts anticipate sales growth in the current year, they do not expect the company to be profitable within the same timeframe. This aligns with the conservative updates in Mizuho's revised model and the challenges faced by Atara Biotherapeutics, including the failure of ATA188 in multiple sclerosis trials. Furthermore, two analysts have revised their earnings upwards for the upcoming period, suggesting a potential shift in expectations that may influence investor sentiment.
For those considering an investment in Atara Biotherapeutics, additional context is provided by a substantial revenue growth of 809.03% over the last twelve months as of Q1 2023, according to InvestingPro Data. However, this growth is juxtaposed against a backdrop of weak gross profit margins and a concerning cash burn rate, which could impact the company's financial stability and operational capacity. With over 13 additional InvestingPro Tips available, including insights on stock performance and liquidity concerns, investors can gain a more comprehensive understanding of Atara Biotherapeutics by visiting https://www.investing.com/pro/ATRA.
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