Is Five Prime Therapeutics Stock A Buy? 

Five Prime Therapeutics Stock Forecast: The treatment of cancer is entering a new phase, as researchers discover more accurate methods of targeting cancer cells.

Traditional cancer therapies, particularly the chemotherapies in use through the late 20th century and early 21st century, took a scorched earth approach. The drugs killed cancer cells effectively, but took a lot of healthy cells down in the process. As a result, patients had limited tolerance for the treatment, and they suffered debilitating side effects.

Targeted therapies are particularly important in cancer treatment, because of the damage that traditional chemotherapy causes to patients’ bodies. The problem with targeted therapies is finding the right target. And that’s where Five Prime comes to the rescue.

How Proteins Correlate with Cancers  

Simply preventing cells from multiplying or shortening the life of cells doesn’t help patients, unless the treatment can differentiate between healthy and cancerous cells.

Researchers work to overcome this obstacle by identifying differences between cancerous and healthy cells. In one example, certain stomach and breast cancers have an overabundance of human epidermal growth factor receptor 2 protein (HER-2).

Therapies that target HER-2 are already available, which provides patients with those specific forms of cancer an effective treatment option that brings fewer side effects.

In this case, they look for differences in individual protein levels between cancer cells and healthy cells, as these proteins make it possible for cancer cells to live longer and multiply faster.

The field of protein therapeutics appears to offer significant promise for personalized approaches to cancer treatment. At its most basic, this specialized area of research examines the biological markers that cause cancer cells to behave differently from healthy cells.

Once the specific proteins and their effects have been isolated, researchers explore methods of interrupting these processes. In other words, they find compounds that put a stop to cancer cells’ ability to grow and reproduce, which in turn puts the disease in remission.

A number of biotechs have taken on this research, specializing in a range of proteins, types of cancer, and methods of treatment. Five Prime Therapeutics is focused on immuno-oncology protein therapeutics, which are designed to put the body’s own immune system to work on killing cancer cells.

Many investors are confident that big breakthroughs in cancer treatment are coming, and the companies that succeed in developing breakthrough technology and treatments stand to profit. Investors are anxious to claim a share of that profit through smart buys. Is Five Prime Therapeutics going to be a winner?

Five Prime Therapeutics Fights Cancer Differently 

Five Prime Therapeutics has a clear, concise mission statement. The company “discovers and develops innovative therapeutics to improve the lives of patients with serious diseases.”

It is working towards that goal by taking a novel approach to the exploration of extracellular proteins, in an effort to identify the best proteins for treating individual cancers.

Instead of examining the potential therapeutic value of proteins one-by-one, as is the standard procedure for most companies in this space, Five Prime looks at the problem from the opposite perspective.

It has compiled a database of all medically relevant proteins, and it systematically applies each option to determine the impact on the targeted condition.

Five Prime believes that its screening system, known as the Pro­Screen Engine, has the largest, most complete collection of extracellular proteins in the industry.

Its process complies with industry best practices for quality, and it is highly efficient. Based on that criteria, Five Prime boasts that the company’s capabilities are “unprecedented in efficiency, quality, and scale”.

Major Collaborations Are Promising

Today, Five Prime puts the ProScreen Engine’s power behind examining connections between cancer, inflammation, and the medical specialty of immuno-oncology.

FIve Prime leaders believe this area has an important role in future therapies, and it has developed a number of products through its research and development activities.

A number of therapeutic product candidates have reach the clinical trial phase, and some are in the later stages of that lengthy process.

Leaders in the pharmaceutical industry have shown interest in Five Prime’s successes, resulting in a series of strategic collaborations with major organizations.

Five Prime predicts a future in which success is inevitable, and business leaders indicate the company is on the verge of breakthrough cancer-fighting therapies. However, that optimism doesn’t appear to have investors convinced, and stock prices don’t reflect the same picture. Are investors wrong? Is Five Prime stock a buy? What is the Five Prime Therapeutics stock forecast?

Five Prime Trials & Tribulations

Five Prime was founded in 2002 by Lewis “Rusty” Williams, a respected member of the San Francisco Bay Area’s scientific community.

He was focused on the theory that testing proteins one-by-one was far less efficient – and therefore less effective – than compiling a comprehensive library and systematically testing each option against the selected problem. The idea immediately attracted investor interest, so there was no need to raise capital for more than a decade.

Five Prime eventually held its IPO on September 23, 2013, and stock prices trended upwards. They peaked in November 2016 at just over $60 per share.

Unfortunately for investors, that was the highlight of the company’s stock price history, and shares have declined steadily since.

By September 2019, the stock price fell below $5 per share. A series of product failures and management shakeups made Five Prime a poor choice for any investor.

Five Prime Therapeutics Stock Forecast

The most recent financials available, fourth quarter 2018, show mixed results.

Year over year, fourth quarter revenue from collaboration and licensing decreased by 70 percent from $13.2 million in 2017 to $4 million in 2018.

For the full year, revenue did increase – from $39.5 million in 2017 to $49.9 million in 2018 – or 26 percent. The company also invested six percent  more in research and development year over year.

Early in 2019, Five Prime announced that it would redirect its focus and update its strategy to put greater emphasis on clinical development and later-stage research priorities.

This led to an uptick in new clinical trials launched over the course of the year. So far, no definitive data has been released regarding the progress of the trials, so there is no indication whether they will ultimately be successful.

For investors, that means big risk – with the potential for big rewards. Many products fail in clinical trials, even at the later stages, and any or all of Five Prime’s candidates could be next. However, if even one of the trials leads to a breakthrough in cancer treatment, substantial revenues will follow.

Whether or not Five Prime is a smart buy depends on individual investors’ goals and levels of risk tolerance. Those willing and able to take a chance will find this stock as good an option as any other similarly situated biotechs.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.