Small Cap Idera Pharmaceuticals Inc (IDRA): Was Yesterday’s Bounce Overdone? IBB & XBI

Yesterday, small cap biotech Idera Pharmaceuticals Inc (NASDAQ: IDRA) surged 21.89% apparently on news about open enrollment for a clinical trial in what amounts to an orphan drug treatment, meaning its probably worth taking a closer look at the stock as well as consider its performance verses that of biotech ETFs like the iShares NASDAQ Biotechnology Index ETF (NASDAQ: IBB) and SPDR S&P Biotech ETF (NYSEARCA: XBI).

What is Idera Pharmaceuticals Inc?

Small cap Idera Pharmaceuticals is a clinical stage biotechnology company developing a "novel approach" for the treatment of autoimmune diseases and certain genetically defined forms of B-cell lymphoma. The technology platform is based on nucleic acid therapeutics designed to inhibit overactivation of Toll-like receptors. In addition, the company is conducting clinical development of TLR antagonists in autoimmune and inflammatory diseases, and preclinical development of their use in certain genetically defined forms of B-cell lymphoma.

For reference, the iShares NASDAQ Biotechnology Index ETF tracks the Nasdaq Biotechnology Index through 119 holdings while the SPDR S&P Biotech ETF tracks the S&P Biotechnology Select Industry Index through 58 holdings.

What You Need to Know or Be Warned About Idera Pharmaceuticals Inc

Following acceptance of its Investigational New Drug (IND) application by FDA, Idera Pharmaceuticals had announced that enrollment is open for a Phase 1/2 clinical trial of IMO-8400 in patients with Waldenström's macroglobulinemia, a cancer affecting a type of white blood cell called B cells.  

Although its not mentioned in the press release, the Wikipedia entry for Waldenström's macroglobulinemia says that of all cancers involving the same class of blood cell, 1% of cases are WM, that there are fewer than 1,500 cases occurring in the United States annually and that the median age of onset of WM is between 60 and 65 years (with some cases occurring in late teens). In other words, it's a very rare disorder and any treatment developed would have, for better or for worst, orphan drug status.

Looking over Idera Pharmaceuticals' financials, the company has had revenues of $51k (2012), $53k (2011), $16.110M (2010) and $34.52M (2009) for the past four years along with net losses of $19.24M (2012), $23.78M (2011) and $17.96M (2010) plus net income of $7.55M (2009). At the end of last September, Idera Pharmaceuticals had $39.060 million in cash thanks to the closing of a previously announced underwritten public offering of 13,727,251 shares of common stock and pre-funded warrants to purchase up to an aggregate of 4,175,975 shares of common stock. The gross proceeds were expected to be approximately $27.7 million and the company had total current liabilities of $3.02M with not long term debt. So at least the company is not endanger of runing out of cash.

Share Performance: Idera Pharmaceuticals

On Wednesday, small cap Idera Pharmaceuticals surged 21.89% to $2.45 (IDRA has a 52 week trading range of $0.19 to $3.12 a share) for a market cap of $114.48 million plus the stock is up 175.3% since the start of the year and down 65.1% since the start of the year. Her is a quick look at the performance of Idera Pharmaceuticals verses iShares NASDAQ Biotechnology Index ETF and SPDR S&P Biotech ETF:

As you can see, investors would have been much better off investing in the two ETFs.

Finally, here are the latest technical charts from Idera Pharmaceuticals plus the two ETFs:

The BoThe Bottom Line. Certainly Idera Pharmaceuticals rewarded investors yesterday and its not endanger of running out of cash any time soon. But given its performance verses that of both the iShares NASDAQ Biotechnology Index ETF and the SPDR S&P Biotech ETF, conservative investors can probably find better places in biotech to put their money.