Shares of Sesen Bio (SESN) have been volatile the past couple days after the Cambridge, Mass.-based cancer researcher relayed news that the U.S. Food and Drug Administration (FDA) "cannot approve" the company's Biologics License Application (BLA) for Vicineum (oportuzumab monatox-qqrs) for the treatment of BCG-unresponsive non-muscle invasive bladder cancer (NMIBC) "in its present form," and is recommending that the company provide "additional clinical/statistical data and analyses."

The company called this decision "unexpected," and investors certainly seem to have thought so. Sesen Bio shares tumbled 57% on the afternoon of the announcement (Friday), and fell a further 42% on Monday. On Tuesday, however, the stock finally bounced back a bit, gaining 24% on the day — but leaving Sesen Bio still worth barely 70% of what it was worth before all the excitement began.

Responding to the news, Canaccord analyst John Newman cut his price target on SESN by more than half, to just $3. But seeing as that price target is roughly double the $1.51 per share that the stock now costs, Newman insists the stock remains a "buy" for new investors.

As Newman explains, the primary import of the FDA's decision is a shift in the timeline for Sesen Bio — albeit a shift of significant size.

The FDA's request for more data, reasons the analyst, makes it likely that Sesen Bio will need to conduct "an additional clinical trial" of Vicineum, probably lasting 12 months and involving at least 90 to 100 participants — although all these details remain up in the air at present. Newman also believes that the FDA will want the company to run this trial utilizing commercial versions of Vicineum as manufactured by Fujifilm and Baxter International, rather than the version initially used in the company's BLA, which Sesen manufactured itself in its Winnipeg facility. In the analyst's opinion, moreover, running this one-year trial and then awaiting new approval will result in a delay in bringing the product to market of nearly three years — pushing commercial launch back from the previously expected date of Q3 2021, and into 2024 instead.

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If all of the above sounds sufficiently bad to you, that it might justify more than just a price target adjustment and a "buy" rating, though, well… you're not alone. In fact, in a separate report, H.C. Wainwright analyst Swayampakula Ramakanth took the next logical step and downgraded Sesen Bio stock to "neutral" — with no price target at all.

Ramakanth agrees with Newman that "an additional clinical study is likely needed for the resubmission," and that conducting such a trial will take so long that there is now only "low likelihood" of Vicineum receiving FDA approval within the next 12 months. Granted, Ramakanth doesn't come right out and predict a 2024 date for the drug coming to market, but even without that pessimistic projection, the analyst thinks it is prudent to move "to the sidelines" for the time being, and see how things shake out before making any further recommendations.

All in all, the market’s current view on SESN is a mixed bag. The stock has a Moderate Buy consensus based on the two ratings above. (See SESN stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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