Health and Healthcare

Goldman Sachs Has 4 Sizzling Biotech Stocks to Buy That Are Under $10

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While most of Wall Street focuses on large- and mega-cap stocks, as they provide a degree of safety and liquidity, many investors are limited in the number of shares they can buy. Many of the biggest public companies, especially the technology giants, trade in the hundreds, all the way up to over $1,000 per share or more. At those steep prices, it is pretty hard to get any decent share count leverage.

Many investors, especially more aggressive traders, look at lower-priced stocks as a way to not only make some good money but to get a higher share count. That can really help the decision-making process, especially when you are on to a winner, as you can always sell half and keep half.
Goldman Sachs is the premier investment bank in the world, so we screened the firm’s outstanding research database and found four biotech stocks trading under the $10 level that could provide investors with some solid upside potential.

While all four are rated Buy at Goldman Sachs, they are much better suited for aggressive investors, and it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Axcella Health

This clinical-stage biotechnology company received some big patent news this year. Axcella Health Inc. (NASDAQ: AXLA) is pioneering a new approach to treat complex diseases and improve health using endogenous metabolic modulator (EMM) compositions.

The company’s product candidates are comprised of EMMs and their derivatives that are engineered in distinct combinations and ratios to simultaneously impact multiple biological pathways. Axcella’s pipeline includes lead therapeutic candidates for non-alcoholic steatohepatitis (NASH) and the reduction in risk of overt hepatic encephalopathy recurrence. Additional muscle- and blood-related programs are in earlier-stage development.

The company offers AXA1665 for use in treating overt hepatic encephalopathy; AXA1125 and AXA1957 to treat NASH; AXA2678 for use in treating muscle atrophy; and AXA4010 to target multiple biological pathways to support normal structures and functions of the blood.

Back in the summer, Axcella announced that the issuance of new patents has resulted in two lead product candidates, AXA1665 and AXA1125, now being covered under U.S. patents for both composition of matter and methods of use. These are the first patents related to Axcella’s family of applications for AXA1665, the firm’s product candidate to reduce the risk of overt hepatic encephalopathy recurrence.

Goldman Sachs has a $9 price target, though the Wall Street consensus target is much higher at $18. The shares have traded solidly higher in the past couple of weeks and were last seen below $6 per share.

CytomX Therapeutics

This small-cap company is working on cancer treatments. CytomX Therapeutics Inc. (NASDAQ: CTMX) is a clinical-stage, oncology-focused biopharmaceutical company with a vision of transforming lives with safer, more effective therapies. It is developing a novel class of investigational antibody therapeutics, based on the firm’s Probody technology platform, for the treatment of cancer. CytomX has strategic drug discovery and development collaborations with AbbVie, Amgen, Astellas and Bristol-Myers Squibb.
Probody therapeutics are designed to remain inactive until they are activated by proteases in the tumor microenvironment. As a result, Probody therapeutics are intended to bind selectively to tumors and decrease binding to healthy tissue, to minimize toxicity and potentially create safer, more effective therapies. As leaders in the field, our innovative technology is designed to turn previously undruggable targets into druggable targets and to enable more effective combination therapies.

The CytomX clinical-stage pipeline includes first-in-class product candidates against previously undruggable targets, including a CD166-targeting Probody drug conjugate wholly owned by CytomX (CX-2009) and a CD71-targeting Probody drug conjugate partnered with AbbVie (CX-2029). CD166 and CD71 are among cancer targets that are considered to be inaccessible to conventional antibody drug conjugates due to their presence on many healthy tissues.

The shares have traded sideways since the summer and may be ready to break out. The Goldman Sachs price target is $12, and the consensus target is $14.30. The shares were trading early Friday trading above $7.50.

Kaleido Biosciences

The shares were hit hard in early November but have bounced back strong. Kaleido Biosciences Inc. (NASDAQ: KLDO) is a clinical-stage health care company with a differentiated, chemistry-driven approach to targeting the microbiome to treat disease and improve human health. The company has built a proprietary product platform to enable the rapid and cost-efficient discovery and development of novel Microbiome Metabolic Therapies (MMTs).

MMTs are designed to modulate the metabolic output and profile of the microbiome by driving the function and distribution of the gut’s existing microbes. Kaleido is advancing a broad pipeline of MMT candidates with the potential to address a variety of diseases and conditions with significant unmet patient needs.

Kaleido has a collaboration agreement with Gustave Roussy Cancer Center to develop microbiome metabolic therapies in immuno-oncology; a research collaboration with Washington University School of Medicine to explore the influence of microbiome metabolic therapies on microbial and host physiology and metabolism; and a research collaboration with Janssen to prevent childhood-onset of atopic, immune and metabolic conditions.

The $15 Goldman Sachs price objective is above the $13.25 consensus figure. Shares have met resistance recently at the $10 level.

Magenta Therapeutics

This could be another red-hot idea for investors looking for a biotech play. Magenta Therapeutics Inc. (NASDAQ: MGTA) is a clinical-stage biotechnology company developing therapeutics to transform hematopoietic stem cell (HSC) transplants for patients with immune and blood-based diseases. It maintains a platform with an integrated and modular approach, which aims to reboot the blood and immune systems.

The company also develops a pipeline of small molecules; biologics, including antibody drug conjugates; and a cell therapy, with transplant options for many more patients with autoimmune diseases, blood cancers and genetic diseases. The company’s C100 program targets HSCs, immune cells and disease-causing cells. The C200 program targets HSCs and disease-causing cells, and the C300 program targets only immune cells.

Magenta Therapeutics announced in early December it has initiated patient enrollment in a Phase 2 trial of MGTA-145 in combination with plerixafor for stem cell mobilization in patients with multiple myeloma. The company also plans to initiate a Phase 2 trial of MGTA-145 for allogeneic stem cell transplant for patients with acute myeloid leukemia, acute lymphocytic leukemia and myelodysplastic syndrome in early 2021.

Earlier in 2020, a Phase 1 trial of MGTA-145 in stem cell mobilization in healthy volunteers met all of its primary and secondary endpoints. Meanwhile, Magenta said preclinical data showed that MGTA-117 is an “effective, potent conditioning agent for transplant with anti-leukemic activity” in animal models of acute myeloid leukemia.

The Goldman Sachs price target is $15. The consensus target is $17.33. Shares traded between $7.00 and $7.50 last week.

These four sizzling biotech stocks are trading under the $10 level and have big upside to the analyst price targets. Again, while not suitable for conservative portfolios, aggressive investors can get some solid share leverage buying 5,000, 10,000 or more shares and can make money on a much smaller share price move. Plus, they are all covered with a Buy rating at one of the top firms on Wall Street, Goldman Sachs.

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