Why NewLink Genetics Corp. Shares Swooned

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of NewLink Genetics , a clinical-stage biopharmaceutical company developing immunotherapeutic options to help treat cancer, fell as much as 13% after receiving a downgrade.

So what: Before the opening bell, research firm R.W. Baird downgraded NewLink Genetics to neutral from outperform solely on a valuation basis, while keeping its price target on the company unchanged at $40. Shares of NewLink have doubled since the year began, which R.W Baird felt was a bit excessive given its current prospects.

Now what: As always, I'd remind investors that analyst upgrades and downgrades are short-term stock drivers that rarely have any bearing on our long-term investing thesis in a company. What matters is that NewLink has two very exciting clinical studies ongoing with tergenpumatucel-L, an immunotherapy aimed at treating non-small cell lung cancer, and algenpantucel-L as a treatment for resectable and non-resectable pancreatic cancer. NewLink's two lead products work by modifying cancer cell lines to express alpha-gal, a carbohydrate that we have a natural immunity to, but that trains our immune system to attack. If successful, NewLink's therapies could be a big hit in eliminating targeted cancer cells but avoiding healthy cells. But keep in mind, though, that if even one of these therapies fail, NewLink's $1 billion valuation could just as quickly be cut. It's a company I'd certainly suggest investors add to their watchlist.

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The article Why NewLink Genetics Corp. Shares Swooned originally appeared on Fool.com.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool has no position in any companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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