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Idera Pharmaceuticals, Inc. Shares Soar On Earnings

By Todd Campbell - May 11, 2015 at 1:39PM

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Shares are trading higher on optimism following Idera Pharmaceuticals' first quarter financial results.

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 in Idera Pharmaceuticals (IDRA -4.49%) shot higher by 10% earlier today after the company reported its first quarter financial results.

So What: The clinical-stage biotech company reported first quarter results and updated investors on its research pipeline, which includes IMO-8400 for the treatment of Waldenstrom's macroglobulinemia and patients with large B-cell lymphoma with a MYD88 L265P mutation.

During the first quarter, Idera Pharmaceuticals had a net loss of $12.5 million, or $0.12 per share. Spending on R&D rose to $8.7 million from $6.9 million a year ago, and general and administrative expenses climbed to $3.8 million versus $2 million last year.

The increase in costs associated with advancing its clinical pipeline was offset by $80.6 million that was raised in a secondary offering in February. As a result, Idera Pharmaceuticals finished the quarter with $116.9 million in cash, compared to $48.6 million exiting December.

Now What: As a clinical stage company, Idera Pharmaceuticals doesn't generate any significant revenue, and growing expenses tied to IMO-8400 means that it's been forced to tap equity markets through dilutive share offerings to finance its research.

That's unlikely to change anytime soon, so investors should be wary -- at least until the company can offer up some trial data that adds conviction to IMO-8400.

Fortunately, investors may not have to wait too much longer for insight. The company has completed enrollment in the dose escalation cohort of its IMO-8400 study evaluating IMO-8400 in Waldenstrom's, and Idera Pharmaceuticals has reiterated its plans to release results from this trial in the fourth quarter.

Also, Idera Pharmaceuticals has enrolled its first large B-cell lymphoma patient with the MYD88 L265P mutation in a phase 1/2 trial, and results from that trial should be available next year.

Regardless, since more than 90% of oncology drugs that enter human clinical trials end up in the waste basket, there is significant risk associated with owning this company, and for that reason I'm content to watch this one from the sidelines.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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