An under-the-radar biotech firm called Tempest Therapeutics Inc. notched its best week on record after results from a liver cancer trial sent the stock surging 3,973% — and tumbling the next day.
Wall Street cheered as the stock shot up to $9.77 on Wednesday when the drug developer said its experimental cancer therapy in a cocktail with two Roche Holding AG drugs worked better than the pair of drugs by themselves. The surge after the Roche-run study helped push Tempest’s market value to $130 million from a mere $3 million as of the previous day’s close.
Shares of Tempest have come off that high in the two latest trading sessions as investor enthusiasm moderated and a broader market selloff in risky assets batters the high-risk biotechnology sector. The firm’s market value of $49 million on Friday remains more than 15-fold of what it was, before the jump.
Tempest was “coming from an almost unfathomably low valuation going into this data readout,” as investors were skeptical following earlier study results, according to William Blair analyst Matt Phipps. “The company is still clearly undervalued for the blockbuster opportunity” of its cancer drug, he wrote in a note dated Wednesday.
Analysts tracked by Bloomberg that cover the company are universally bullish, with all four rating Tempest the equivalent of a buy. The average of three price targets suggests the stock could more than quadruple from its current $4 a share level.