Why Anacor Pharmaceuticals, Inc. Shares Dropped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Anacor Pharmaceuticals, Inc. (NASDAQ: ANAC  ) opened Thursday's trading with a 10% decline, but have recovered somewhat to a more modest 6% loss in the afternoon, after last night's release of the company's first-quarter earnings.

So what: Investors seem disappointed by the fact that Anacor won't have any drugs on the market next quarter, as the company has no real sales at the moment. It reported $4.2 million in revenue for the quarter, which was boosted primarily by funding provided by the Bill and Melinda Gates Foundation and the Defense Threat Reduction Agency to develop certain treatments for neglected diseases. Anacor's increased spending (primarily due to stock-based compensation) resulted in a loss of $0.51 per share, which was deeper than the $0.39 loss per share Wall Street had expected.

Now what: In last night's earnings call, Anacor executives reiterated their plans to obtain FDA approval for toenail antifungal treatment Kerydin on July 29 -- at the very end of the second quarter -- but note that ramping up sales and marketing efforts will take some time and that the real "launch" quarter will be the fourth quarter, rather than the third. Kerydin is Anacor's closest-to-market treatment, and a lot is riding on its success. Anacor already projects that it will burn through nearly $90 million of its cash on hand by the end of the year, to end up with about $60 million left over. It'll be important for the company to drive Kerydin sales quickly to keep its reserves from running out, or today's shareholders may be forced to endure a dilutive secondary offering.

Invest in the next wave of health-care innovation
The Economist compares this disruptive invention to the steam engine and the printing press. Business Insider says it's "the next trillion-dollar industry." And the technology behind it is poised to set off one of the most remarkable health-care revolutions in decades. The Motley Fool's exclusive research presentation dives into this technology's true potential and its ability to make life-changing medical solutions never thought possible.  To learn how you can invest in this unbelievable new technology, click here now to see our free report.


Read/Post Comments (1) | Recommend This Article (1)

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 May 22, 2014, at 1:45 PM, tonymagoo wrote:

    This review neglected to take into consideration the other items in the Anacor Pipeline. While they are in the future, dermatitis treatment has an enormous market with limited topical treatment successes. Continued financing of infectious disease applications may continue to provide sources of money for research and entry into a lower margin marketplace that will help mankind.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2949837, ~/Articles/ArticleHandler.aspx, 11/26/2014 10:15:39 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...


Advertisement