Needless to say, the biotech world has had a very difficult 18 months. Even the biggest and the best companies, many of which trade cheaper than big pharmaceutical companies, have suffered as investors have fled the sector. Much of the blame for the poor showing is the rhetoric from politicians, even President Trump, over drug pricing, and while there is always an argument for lower prices, taking down an entire sector is extreme.
Three new reports from the analysts at Wedbush focus in on companies that not only have data that could prove to be huge, but their shares have been absolutely hammered over the last year, offering aggressive accounts the best entry points in some time. These stocks are very speculative, and though rated Outperform, they are only appropriate for very aggressive portfolios.
This stock has taken a beating, but has rallied nicely off the January lows. Lexicon Pharmaceuticals Inc. (NASDAQ: LXRX) is a fully integrated biopharmaceutical company that is applying a unique approach to gene science based on Nobel Prize–winning technology to discover and develop precise medicines for patients with serious, chronic conditions.
Through its Genome 5000 program, Lexicon scientists have studied the role and function of nearly 5,000 genes over the past 20 years and have identified more than 100 protein targets with significant therapeutic potential in a range of diseases. Through the precise targeting of these proteins, Lexicon is pioneering the discovery and development of innovative medicines to safely and effectively treat disease.
Recently, the company received approval from the U.S. Food And Drug Administration (FDA) for its oral drug Xermelo for treating carcinoid syndrome diarrhea (CSD), a disorder that usually develops in patients suffering from gastrointestinal cancer tumors. Xermelo’s 250-mg oral version was approved as the first and the only orally administered drug for treating CSD in combination with somatostatin analog (SSA) therapy in adults inadequately controlled by SSA therapy. Xermelo already had secured orphan drug designation and fast track status from the U.S. Food and Drug Administration (FDA).
In addition to its approved drug, Xermelo, Lexicon has a pipeline of promising drug candidates in clinical and preclinical development in neuropathic pain, diabetes and metabolism.
The Wedbush price target for the stock is $38, and the Wall Street consensus target is $25.67. The shares closed most recently at $15.07.
This company has an incredible nine partnered and internal programs in clinical development. MacroGenics Inc.(NASDAQ: MGNX) is a clinical-stage biopharmaceutical company focused on discovering and developing innovative monoclonal antibody-based therapeutics for the treatment of cancer, as well as autoimmune disorders and infectious diseases. The company generates its pipeline of product candidates primarily from its proprietary suite of next-generation antibody-based technology platforms.
The combination of MacroGenics’ technology platforms and protein engineering expertise has allowed the company to generate promising product candidates and enter into several strategic collaborations with global pharmaceutical and biotechnology companies.
The FDA has granted orphan drug designation to MGD006 (also known as S80880), a DART molecule that recognizes both CD123 and CD3, for the investigational treatment of acute myeloid leukemia.
Wedbush noted in the report:
Macrogenics reported a net loss of $58.5M in 2016, which included $75 million in proceeds from Johnson & Johnson mid-year for MGD015 collaboration. Burn is expected to increase next year as programs advance forward, and assuming no additional high-value partnerships are entered into this year, we believe 2016 year-end cash balance of $285 million should be sufficient to fund operations through 2018.
Wedbush has a $44 price target, and the consensus target is $35.75. The stock closed Thursday at $20.01.
This stock has been on a roller-coaster for years and traded up sharply on good news recently. Pacira Pharmaceuticals Inc. (NASDAQ: PCRX) is a specialty pharmaceutical company that develops, commercializes and manufactures proprietary pharmaceutical products primarily for use in hospitals and ambulatory surgery centers in the United States.
The company develops pharmaceutical products based on its proprietary DepoFoam drug delivery technology. Its lead product includes, Exparel, a liposome injection of bupivacaine, an amide-type anesthetic indicated for infiltration into the surgical site to produce postsurgical analgesia. The company also markets DepoCyt(e), a liposomal formulation of the chemotherapeutic agent cytarabine indicated for the intrathecal treatment of lymphomatous meningitis, a life-threatening complication of lymphoma, a cancer of the immune system.
Its development pipeline comprises DepoMeloxicam, a long-acting non-steroidal anti-inflammatory drug, which is in preclinical development for the treatment of acute postsurgical pain, and DepoTranexamic Acid, a pre-clinical development product for the treatment or prevention of excessive blood loss during surgery by promoting hemostasis.
The analyst’s report noted:
2017 has the potential to be a banner year for Pacira Pharmaceuticals as the company makes progress on the commercial front with its new partnership with DePuy Synthes and clinical catalysts are announced that could potentially expand the market for EXPAREL. Our 12-month price target is calculated based on sum-of-parts for each drug/indication combination using a 30% annual discount from our peak annual revenues projections and 1-10x multiple, depending on stage of development to reflect risk.
The $89 Wedbush price target compares with the $53.54 consensus target, as well as Thursday’s closing price of $49.40.
Here are three big opportunities for aggressive investors. There are also substantial risks, should the outcomes not play out favorably. With that in mind, some smaller speculative positions could be the right play for aggressive, risk-tolerant accounts.