Concert Pharmaceuticals, Inc. (NASDAQ:CNCE) Releases Earnings and a Bombshell!

Concert Pharmaceuticals, Inc. (NASDAQ:CNCE)

Concert Pharmaceuticals, Inc. (NASDAQ:CNCE) released their Q4 and yearly earnings report this morning. In that announcement was a surprise for the market that sent shares soaring to a gain of over 90% in the first hour. Volumes have been extraordinary. Average daily volume is 142,600. However, by 1PM EST over 8.3 million shares had traded hands – almost 143 times the average!

Concert Pharmaceuticals, Inc. (NASDAQ:CNCE) Earnings Results

For the year ended December 31, 2016, net loss was $50.7 million, or $2.28 per basic and diluted share, as compared to net income of $24.2 million, or $1.14 and $1.09 per basic and diluted share, respectively, for the year ended December 31, 2015.

Revenue was $174,000 for the year ended December 31, 2016, compared to $66.7 million for the year ended December 31, 2015. The decrease in revenue relates primarily to a one-time $50.2 million change in control payment received from Auspex Pharmaceuticals in June 2015 as a result of their acquisition by Teva Pharmaceuticals Ltd. The decrease in revenue also relates to the completion of the Phase 1 clinical evaluation under our strategic collaborations with Celgene Corporation and Jazz Pharmaceuticals in 2015.

Research and development expenses were $37.0 million for the year ended December 31, 2016, compared to $28.9 million for the year ended December 31, 2015, an increase of $8.1 million. The increase in research and development expenses was primarily due to expenses associated with the development of the Company’s proprietary programs CTP-656 and CTP-543.

Pipeline for Concert Pharmaceuticals, Inc. (NASDAQ:CNCE)

Concert Pharmaceuticals, Inc. (NASDAQ:CNCE) is initially developing CTP-656 as a potential monotherapy treatment for cystic fibrosis due to gating mutations of the gene that encodes for the cystic fibrosis transmembrane conductance regulator (CFTR), a protein, which regulates components of sweat, mucus clearance and digestion.

CTP-543 was discovered by applying Concert’s deuterium chemistry technology to modify ruxolitinib, which is commercially available under the name Jakafi® in the United States for the treatment of certain blood disorders.

What sent CNCE shares rocketing

The big news though was the announcement that that Concert Pharmaceuticals, Inc. (NASDAQ:CNCE) entered into an asset purchase agreement worth up to $250 million with Vertex Pharmaceuticals, Inc., under which Vertex will acquire all rights to CTP-656 and other assets related to cystic fibrosis. The asset purchase agreement is subject to the approval of Concert’s shareholders and other customary conditions. As part of the agreement, Vertex will pay Concert $160 million in cash upon closing for all worldwide development and commercialization rights to CTP-656. If CTP-656 is approved as part of a combination regimen to treat CF, Concert could receive up to an additional $90 million in milestones based on regulatory approval in the U.S. and reimbursement in the UK, Germany or France.

Ticker Symbol CNCE
Last Price a/o 12:43 PM EST  $                    16.18
Average Volume                    122,000
Market Cap (mlns)  $                  213.84
Sales (mlns) $10.50
Shares Outstanding (mlns) 22.16
Share Float (mlns) 19.52
Shortable Yes
Optionable Yes
Inside Ownership 0.20%
Short Float 0.82%
Short Interest Ratio 1.31
Quarterly Return 6.75%
YTD Return -6.22%
Year Return -32.28%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading.