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Pfizer Bought a Penny Biotech Stock Just Before It Doubled


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Pfizer’s investment in biotech stock ContraFect has more than doubled in about three weeks. Photograph by Drew Angerer/Getty Images

Pfizer took a $3 million stake in a biotech company called ContraFect about three weeks ago. Now it is worth more than $6 million.

So far, so good.

The rally follows a rough 2019 for the biotech firm (ticker: CFRX), which is focused on discovering and developing so-called direct lytic agents to treat life-threatening infectious diseases, including staphylococcus that is resistant to antibiotics. ContraFect stock ended 2018 at $1.53 each and slipped from there, setting a record intraday low of 27 cents in August.

ContraFect “has had a bumpy road in 2019 in terms of stock price,” Maxim Group analyst Jason McCarthy wrote in a Dec. 18 research report.

By December, the company had a “financing overhang,” as McCarthy wrote. ContraFect, which , said it would raise capital through a $10 million public offering and a $3 million private placement of stock to Pfizer (PFE).

Shares in the public offering were priced at 27 cents, and surged to 32 cents on Dec. 10, the day of the announcement of the Pfizer purchase, from 29 cents in the previous trading session.

777彩票地址 in the placement, a stake of 8.7%, according to a form Pfizer filed with the Securities and Exchange Commission. Pfizer is now ContraFect’s top shareholder, according to S&P Capital IQ.

777彩票地址ContraFect stock ended 2019 at 62 cents. It amounts to a 59% drop for the year, but the price is more than double what Pfizer—and buyers in the public offering—paid.

777彩票地址Maxim Group’s McCarthy, who rates ContraFect at Buy with a $2 price target, noted that the company had about $27 million in cash on its balance sheet after the offering and placement, up from $10.5 million at the end of the third quarter.

Pfizer’s investment was a “validating of the ContraFect antimicrobial platform,” the analyst wrote.

In response to a request for comment about its investment in ContraFect, Pfizer provided a statement from Annaliesa Anderson, its vice president and chief scientific officer, bacterial vaccines and hospital.

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777彩票地址“There is a high unmet medical need for new therapeutic modalities to address antibiotic resistant bacteria that can cause life-threatening infections,” she said. “We look forward to supporting ContraFect as they work to advance novel first-in-class biological therapies with the potential to directly kill bacteria such as methicillin-resistant Staphylococcus aureus (MRSA) in a targeted manner.”

Anderson will join ContraFect’s Science & Technology Committee as an observer, Pfizer said.

Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives and board members—so-called insiders—as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.

Write to Ed Lin at edward.lin@barrons.com and follow .


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