Novocure announced a series of C-suite changes on Thursday as investor debate continues to haunt its recent lung cancer study. In response, NVCR stock tumbled again.
The leadership changes are meant to "prepare for future growth," Novocure said in a news release. The company went on to say that after a review of Novocure's future needs, Chief Medical Officer Ely Benaim will step down and leave the company.
In the interim, Piet Hinoul, current senior vice president and head of global medical affairs, will be the head of the medical department. Novocure is searching for Benaim's replacement.
Investors are likely to view the timing negatively, Evercore ISI analyst Vijay Kumar said in a note to clients. On Jan. 5, NVCR stock skyrocketed after the company said its medical device led to a statistically significant improvement in overall survival compared with standard therapies alone. But questions about Novocure's ultimate market and the study's design have sent shares tumbling since.
That trend continued on today's stock market as Novocure stock skidded 5.2% to close at 88.03. The announcement earlier this month sent shares to a high point at 120.03.
NVCR Stock Round-Trips Its Breakout
Novocure sells a body-worn medical device that uses electrical frequencies to slow the division of cancer cells. Recently, Novocure said adding its technology on top of standard immuno-oncology or chemotherapy drugs led to an improvement in overall survival for lung cancer patients. This group of patients previously worsened after one round of chemotherapy.
But debate about the market size and how Novocure designed the study called Lunar continue to plague NVCR stock. Shares broke out of a consolidation with a buy point at 91.08 on the Jan. 5 news, according to MarketSmith.com. After quickly hitting a profit-taking zone, shares are now back below their buy point.
"On Novocure's part, the company noted that Uri Weinberg, the current chief science officer, was responsible for all of the protocol development and heads the biostatistics team, while (Benaim) was responsible for medical affairs, clinical operations and safety," Evercore's Kumar said. He kept his underperform rating on NVCR stock.
Now, Weinberg will transition to a new role as chief innovation officer. In this role, he will look for new uses for Novocure's so-called tumor treating fields. Moshe Giladi, currently the senior vice president of preclinical research, will assume the role of Novocure's chief science officer.
New Chief Growth Officer
Chief Commercial Officer Pritesh Shah will move into the new chief growth officer position. He will manage Novocure's portfolio and brand strategies and establish the framework for new launches, market access and intelligence. He will also be responsible for new uses of the technology in the U.S.
"We believe the successful readout of Lunar marks the beginning of a transformational period for Novocure, with multiple pivotal studies near completion and numerous future studies preparing for launch," Novocure Chief Executive Asaf Danziger said in a written statement. "Our leadership needs to continue to evolve with our anticipated growth."
Kumar says NVCR stock is overvalued based on its pipeline, rather than the sales it actually accrues.
"Our initial work on Lunar suggests that the bar for clinical evidence is high, and physicians will still want details on how the (study) was run," he said. "Based on this initial feedback, market opportunity for second-line non-small cell lung cancer setting might be minimal."
Still, NVCR stock has a strong Relative Strength Rating of 93 out of a total 99, according to IBD Digital. This puts shares in the top 7% of all stocks when it comes to 12-month performance.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
