Why NewLink Is Poised to Underperform

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, biotechnology company NewLink Genetics (NASDAQ: NLNK  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at NewLink and see what CAPS investors are saying about the stock right now.

NewLink facts

Headquarters (founded)

Ames, Iowa (1999)

Market Cap

$259.8 million

Industry

Biotechnology

Trailing-12-Month Revenue

$1.7 million

Management

Founder/Chairman/CEO Charles Link
President/COO/Chief Medical Officer Nicholas Vahanian

Return on Capital (average, past 3 years)

(79.6%)

Cash/Debt

$28.3 million / $1.5 million

Competitors

Astellas Pharma
Eli Lilly
Teva Pharmaceutical

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 41% of the 22 members who have rated NewLink believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those bears, All-Star zzlangerhans, listed a few reasons to remain cautious about the opportunity:

NewLink's most advanced clinical program is HyperAcute Pancreas, but virtually their entire clinical pipeline is dependent on the principle of HyperAcute Immunotherapy. ...

1. The progression to a phase III trial of HyperAcute Pancreas followed flawed phase I and phase II trials that were controlled and failed to adequately establish dose optimization. Further details about this argument can be found at this link. ...

2. NewLink raised [$49M] in a dilutive financing earlier this month three weeks ago. While it is not uncommon for a developmental biopharma to dilute in advance of phase III trial results, it is unusual for one to do so to such a marked degree just a month before an interim futility analysis.

3. Feuerstein-Ratain rule. I can already hear the shrieks. The rule is not applicable! The market cap has to be less than [$300M] four months before the topline data, not interim data! Once again, the point isn't the rule itself but the foundation of the rule. There is no large pharmaceutical partner for HyperAcute Immunotherapy and institutional ownership is only 16%. That demonstrates a lack of interest from the true experts who depend on their ability to evaluate phase III candidates to maintain employment. ...

4. HyperAcute Immunotherapy is facile. This is the hardest plank to defend, but it is what made me skeptical of NewLink even before I looked at the early trials and they diluted. ... Scientists have been struggling with cancer immunotherapies for at least thirty years and aside from rare and limited successes there hasn't been much of an impact.

If you want market-topping returns, you need to put together the best portfolio you can. Luckily, we've found another stock we are incredibly excited about -- excited enough to dub it "The Motley Fool's Top Stock for 2013." We have compiled a special free report for investors to uncover this stock today. The report is 100% free, but it won't be here forever, so click here to access it now.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.


Read/Post Comments (6) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 22, 2013, at 10:35 AM, kblumbio wrote:

    If your going to base part of your argument on the Market Cap , try getting it right after the secondary which was done at no discount because of strong demand (somewhat unusual) with the green shoe , there are now 25,5 mil shares and according to Thomson this AM's market cap is 308 mil.

  • Report this Comment On February 22, 2013, at 11:17 AM, kblumbio wrote:

    Also your 16% institutional ownership # is also incorrect according to Thomson 24.41% is owned by Investment managers and 1.21% by brokerage firms and 33.58% by insiders! But don't let your mistakes get in the way of your of your conclusions !

  • Report this Comment On February 22, 2013, at 12:21 PM, kblumbio wrote:

    Also your cash/debt # $28.3 million / $1.5 million are the 9/30/2012 figures and they have spent somewhere between $7 to $8 million since then based on their burn rate and raised $49 million in the offering so they probably have around $50 million now.

  • Report this Comment On February 22, 2013, at 12:23 PM, kblumbio wrote:

    Sorry $70 million!!!!!!!!!!

  • Report this Comment On February 22, 2013, at 1:13 PM, kblumbio wrote:

    Caps wow 41% of the 22 I repeat 22 members (that sample is to small to call a poll) and this tiny # rates NLNK to underperform the S&P 500. WOW and big bear zzlangerhan thinks it will fail BIG DEAL he also predicted the failure of PCYC he's only off by 3,000% which I am very happily long LOL LOL !

  • Report this Comment On February 22, 2013, at 1:32 PM, kblumbio wrote:

    ZZLANGERHAN is following 164 stocks and your going to assume that he has a good grasp on all well I looked at his list and his ratings and in general he appears to be wrong as often as right and you're going to base your article on his opinion and his sloppy facts ! sad and pathetic

Add your comment.

DocumentId: 2265561, ~/Articles/ArticleHandler.aspx, 7/31/2014 2:23:17 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 16,670.58 -209.78 -1.24%
S&P 500 1,942.98 -27.09 -1.38%
NASD 4,394.40 -68.51 -1.54%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

7/31/2014 2:06 PM
NLNK $21.24 Down -1.58 -6.92%
NewLink Genetics C… CAPS Rating: **
LLY $61.26 Down -1.36 -2.17%
Eli Lilly & Co. CAPS Rating: ****
TEVA $53.39 Down -1.50 -2.72%
Teva Pharmaceutica… CAPS Rating: *****

Advertisement