It has been a long year for the biotech sector, and if Hillary Clinton wins today’s election, it could stay difficult for some companies. The general consensus is, even if she does win the election, the House will stay firmly in the hands of the Republicans, and while drug pricing will remain a topic, huge government interference would seem unlikely in the near term.
A new RBC report features three baskets of biotech stocks to Buy that have three very distinct differences. We focused on the basket of four stocks that they think investors can buy now, because the timing in their view is irrelevant, and they see the stocks de-risked and having mergers and acquisitions potential.
This clinical-stage pharmaceutical company already has presented outstanding Phase 3 data that RBC feels has a very good chance of working. Aerie Pharmaceuticals Inc. (NASDAQ: AERI) is focused on the discovery, development and commercialization of first-in-class therapies for the treatment of patients with glaucoma and other diseases of the eye.
The company has reported very positive results on its Phase 3 trials for Rhopressa, which is being developed as a once-daily dosed glaucoma therapy. The trials have achieved their primary efficacy endpoint, demonstrating non-inferiority of Rhopressa compared to timolol, the most widely used comparator. In September, the company reported the successful 90-day primary efficacy results of its 12-month Phase 3 “Mercury 1” clinical trial for its fixed-dose combination product candidate, Roclatan.
With 31 million prescriptions being written for glaucoma, this could be a huge winner. The stock dropped last week after the company noted a delay in the product launch while also reporting growing losses that missed expectations. Wall Street analysts, though, remain positive on the shares overall.
The Wall Street consensus price target for the stock is $54.11. The shares closed on Monday at $34.05 but were down more than 2% Tuesday morning.
This stock has been on a total roller-coaster ride over the past year. Medicines Co.’s (NASDAQ: MDCO) goal is to be a leading provider of solutions in three areas: serious infectious disease care, acute cardiovascular care and surgery and perioperative care. The company is focused on saving lives, alleviating suffering and contributing to the economics of health care by focusing on 3,000 leading acute/intensive care hospitals worldwide.
The RBC team noted this in the report:
Carbavance for gram negative infections looks good with one positive Phase 3 reported (more trials coming) and PCSK9si with Phase 2 details pending is differentiated. Cash per share as of the last reported quarter was ~$8.55.
The company partners with Alnylam for PCSK9si, but both revusiran and PCSK9si use the same platform: RNA interference (RNAi) with a GalNAc, a type of sugar molecule, conjugate to knock down messenger RNA levels, which in turn lowers the amount of protein the messenger RNA encodes for.
It should be noted that last night after the market closed, the company announced it would be discontinuing MDCO-216 ahead of the 11/15 presentation at AHA, as it did not show effects on atherosclerotic plaque to warrant further development. While disappointing, many on Wall Street had not included MDCO-216 sales in their models and this development should not impact valuation.
The consensus price objective is $50.80. The shares closed yesterday at $32.52 and were down fractionally in morning trading.