Kymera Therapeutics (NASDAQ: KYMR)

Kymera Therapeutics (NASDAQ: KYMR) is a clinical-stage biopharmaceutical company, founded in 2016 and headquartered in Massachusetts. The company is focused on the discovery and development of “novel small molecule therapeutics that selectively degrade disease-causing proteins by harnessing the body’s own natural protein degradation system.”

The company’s proprietary targeted protein degradation platform, Pegasus aims to discover “selective small molecule protein degraders” to treat diseases.

Shares of Kymera have more than halved in value over the past month as the stock has tanked 56.4% and is currently hovering near its 52-week low with a closing price of $14.27 on May 31.

Rising Short Interest

Interestingly, there is a high short interest in KYMR stock. Short interest refers to the number of shares that have been sold short by investors but have not yet been closed out. KYMR saw significant short interest in the month of May.

A high short interest indicates a pessimistic stance on the part of investors. According to Nasdaq data, as of May 13, there was short interest totaling 4,931,834 shares, a rise of 42.5% from the total of 3,461,765 shares on April 29. Based on an average daily trading volume of 1,342,395 shares, the days-to-cover ratio is currently around 3.67 days.

This ratio indicates the number of days it takes short sellers to repurchase all the borrowed shares or cover their positions.

However, Insiders are Optimistic

Despite the short interest signal, corporate insiders seem to be positive about the stock. On May 31, the Biotechnology Value Trading Fund (BvF Partners) bought shares worth $4.1 million.

Corporate Insiders are very positive about the stock. According to the TipRanks Insiders page, corporate insiders have bought shares worth $9.3 million in the past three months.

Disappointing Q1 Results

This dip in stock price was fueled by the company’s Q1 results where its collaboration revenues almost halved to $9.6 million in fiscal Q1 versus $18.7 million in the same period last year. Net losses for Kymera widened to $36.7 million in Q1, almost tripling from $13.1 million in the same period last year.

However, the silver lining to these disappointing results was that at the end of Q1, KYMR had cash and cash equivalents of $523.3 million. The company expects “that its cash, cash equivalents, excluding any future potential milestones from collaborations, will enable the Company to fund its operational plans into 2025.”

In addition, Kymera CEO, Nello Mainolfi, stated that with “three active clinical programs, 2022 promises to be a year rich in data and milestones that build upon our prior scientific achievements. Of note, we anticipate sharing initial safety and proof-of-mechanism data for our two oncology programs, KT-413 and KT-333, and filing an IND [Investigational New Drug] for our MDM2 program, KT-253, in the second half of 2022.”

Wall Street’s Take

The disappointing Q1 results have not discouraged Wall Street analysts like Brookline Capital analyst Leah R. Cann who remains bullish on the stock with a Buy rating. Cann expects that Kymera will launch “its first products in the next seven years, we estimate that Kymera will have product revenue in 2028, increasing to total product revenue of $37.1 billion in 2030.”

However, the analyst acknowledged that considering that KYMR is a “development-stage” company, these estimates do carry a high degree of risk.” Cann’s price target of $80 implies an upside potential of 460.6% at current levels.

Other analysts are also upbeat about the stock with a Strong Buy consensus rating based on seven Buys and two Holds. The average Kymera Therapeutics price target of $58.33 implies 308.8% upside potential.