Clinical-stage genomic-defined cancer focused firm Kinnate Biopharma (US:KNTE) rose 2.3% in trading on Wednesday and a further 6.5% in extended hours trading after the market became aware that shareholder Orbimed Advisors LLC had purchased more shares in the company.
The trades were first spotted on Fintel’s Insider Trading Tracker later on Wednesday evening.
In the Form 4 filed with the SEC, Orbimed Advisors, a significant shareholder of KNTE, disclosed purchasing 1,405,168 shares in several transactions across late April and early May. This move by the investment manager could be a good indicator that shares could currently be undervalued.
The shares were purchased on market with purchase costs ranging from $2.55 to $2.67 per share and an average cost of $2.61 each. The trades totaled $3.67 million in value and boosted Orbimed’s total stake to 6.55 million shares.
Therapies Advance
KNTE’s recent accomplishments and developments are worth noting. In April, the company announced data from Part A1 of its ongoing Phase 1 trial of its KN-8701 exarafanib candidate. The company has been making strides in developing innovative therapies for patients with genomically-defined cancers.
Kinnate’s management also reported that the company ended the March quarter with $231 million of cash and liquidity which will enable the company to fund planned operations into early 2025.
When the company reported its FY2022 results in March, Kinnate told investors that its net loss grew from $89.1 million to $116.3 million as the company spent more on R&D and general expenses.
Sign of Confidence
Fintel’s Insider Sentiment Score, which finds the companies being bought most by corporate insiders, gives KNTE a score of 93.31. That ranks KNTE in 69th spot, or in the top 0.5% out of 14,869 globally screened securities, indicating a higher level of accumulation relative to its peers. This score is the result of a sophisticated, multi-factor quantitative model that identifies companies with the highest levels of insider accumulation.
When insiders, such as directors or significant shareholders, buy shares in a company, it suggests that they have confidence in the company’s performance and believe that the stock is undervalued. This is because insiders are privy to information that is not publicly available and have a better understanding of the company’s future prospects.
Orbimed’s move should be interpreted as a sign of confidence in the company’s future prospects. The firm has been investing globally for more than 20 years, putting more than $17 billion into opportunities from early-stage private companies to large multinational corporations.
Not Seeing Institutional
Meanwhile, institutional investors apparently don’t see what Orbimed does.
Fintel’s dashboards show weak levels of fund buying activity of KNTE stock in recent months. Over the last quarter, there have been no new institutional owners and the average portfolio allocation has declined by 55.3% for the 203 institutions on the register.
While the stock’s Insider Score may be high, Fintel’s Fund Sentiment Score of 20.24 is bearish.
Analysts Bullish
Following the April update to investors, Piper Sandler analyst Christopher Raymond kept his ‘overweight’ call on the stock but reduced his price target from $30 to $20 per share. The shares closed trading yesterday at $2.91 a piece.
Raymond thinks that while there is a path forward for exarafenib, he recognizes the increased risk to the overall development moving forward.
Wedbush’s David Nierengarten similarly has an ‘outperform’ rating on the shares, having put a $14 target on them, down from his previous $25, as of April 18.
Fintel’s consensus target price of $21.57 suggests the market is still very bullish on the upside potential of KNTE’s pipeline and thinks shares could rise 640% over the next year, recovering a small portion of the significant losses over the last year.
While KNTE is still a somewhat relatively new company, its focus on developing innovative therapies for genomically-defined cancers, coupled with its recent accomplishments and collaborations, makes it an attractive investment opportunity.
The recent insider buying by Orbimed Advisors Private Equity adds another layer of confidence to the company’s future prospects.
This article originally appeared on Fintel
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