BioTech

Investor Confidence in Genocea Biosciences Inc. (NASDAQ:GNCA) Drops

Genocea Biosciences Inc. (NASDAQ:GNCA)

Genocea Biosciences Inc. (NASDAQ:GNCA)

Investor confidence in Genocea Biosciences Inc. (NASDAQ:GNCA) has taken a hit in the wake of disappointing third quarter financial results. Shares of the company fell 12.6% in Tuesday’s trading session as law firms alleged possible securities violations following the earnings report.

Genocea Biosciences Inc. (NASDAQ:GNCA)

Class Action Investigation

A wider than expected net loss for the quarter appears to have spooked investors, accelerating a sell-off that began in May. The stock has shed more than 70% of its total market value since the start of the year as it continues to trade in a strong downtrend.

The stock’s sentiments have also taken a hit from law firms that allege the company provided materially false and misleading statements regarding business operation and compliance policies. According to Pomerantz LLP, the biopharmaceutical company failed to disclose its funds were insufficient to support Phase 3 trials of GEN-03.

Genocea Biosciences Inc. (NASDAQ:GNCA) is also accused of overstating the potential of its lead candidate drug GEN-003. In September, the company was forced to halt spending and development activities of the drug as it explored strategic alternatives. The news caused the stock to drop 76.5% to close at $1.25 a share.

Q3 Financial Results

In addition to the class action lawsuit, a Q3 net loss of (-$16.9) million compared to a net loss of (-$12.8) million reported last year has not gone well with investors. Research and development expenses in the quarter increased $1.3 million to $1.2 million. The company attributes the increase to higher external manufacturing related expenses and increase in compensation to support Phase development of GEN-003.

During the third quarter, Genocea Biosciences Inc. (NASDAQ:GNCA) implemented a corporate restructuring that resulted in a strategic shift to immuno-oncology. The changes resulted in a charge of $1.1 million to be paid in the fourth quarter. The company exited the quarter with cash and cash equivalent of $22 million compared to $35.2 million at the end of the second quarter. The existing finances are sufficient to support operating expenses and capital expenditure into the middle of 2018.

Separately, Genocea Biosciences Inc. (NASDAQ:GNCA) is to highlight the power of its proprietary antigen identification system ATLAS at the upcoming Society for Immunotherapy of Cancer (SITC) 32nd Annual Meeting.

“These data demonstrate the versatility of ATLAS and support our use of the technology in the development of next-generation neoantigen cancer vaccines,” said Jessica Baker Flechtner, Ph.D., chief scientific officer at Genocea.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: Monica has an undergraduate degree in Accounting and an MBA she earned – with Honors. She has six years of experience in the financial markets and has been an analyst for the past two years.

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