Cancer is the leading cause of death globally, and a disease that touches almost every person in our nation one way or another. In a new research report, the Healthcare team at UBS took an in-depth look at the top companies that are making major advances in cancer therapeutics. They point out that significant advances have been made in treatments in recent years, and new breakthroughs in cancer cell biology have led to the emergence of far more targeted cancer therapies, which has resulted in improved survival rates and a better quality of life for many cancer patients.
Here is the UBS list of stocks that are rated Buy and have a significant presence in the race to find cures for cancer.
BioMarin Pharmaceutical Inc. (NASDAQ: BMRN) is a top mid-cap to buy at UBS and a possible takeover target. The UBS team thinks that media speculation of big-pharma interest in BioMarin is likely related to the commercial success of the orphan drug model globally. Its diversified and expanding pipeline, which includes molecular breast cancer inhibitors, could also provide significant strategic value to acquirers. The UBS price target for the stock is $76, and the Thomson/First Call consensus figure is $83.37. BioMarin closed Tuesday at $61.99 a share.
Celgene Corp. (NASDAQ: CELG) will soon launch Otezla, which was recently approved for treating psoriatic arthritis. The big issue for the company is the current review of the patents for its top cancer drug Revlimid, which range from 2016 to 2027. Although many think the judgment will go its way, final decisions are still waited for. The outcome will determine the exact length and depth of Celgene’s intellectual property on the drug. UBS has a $209 price target on the stock, and the consensus is at $193.21. Celgene closed trading on Tuesday at $146.64.
Gilead Sciences Inc. (NASDAQ: GILD) is a top biotech that was crushed in the biotech sell-off, but posted huge earnings after the bell Tuesday. Down since late February, the stock trades at a very low 15.2 times forward earnings. The company has shown excellent efficacy in chronic lymphocytic leukemia and indolent non-Hodgkin’s lymphoma with its top drug idelalisib, which is an oral inhibitor. The UBS price target is $102, and the consensus figure stands at $97.67. Gilead closed Tuesday at $72.86.
Incyte Corp. (NASDAQ: INCY) should be giving pipeline updates at the upcoming American Society of Clinical Oncology (ASCO) meeting. If it can deliver promising data sets at ASCO for its key pipeline drugs and programs, many Wall Street firms believes it will be increasingly viewed as a core holding among mid-cap biotechs. The UBS price target is $90, and the consensus target is $72.08. The stock closed Tuesday at $49.32, so a move to the UBS target would be a huge 82% gain.
Medivation Inc. (NASDAQ: MDVN) has a top prostate cancer drug that would be a valuable acquisition for an acquiring company. Xtandi is a highly leverageable likely blockbuster product in prostate cancer, a very large market segment with potential upside in breast cancer. The partnership with Astellas suggests a natural buyer, but the UBS team thinks that third parties would also be interested. The UBS price target is $85, and the consensus target is $91.25. Medivation closed Tuesday at $62.58.
Merck & Co. Inc. (NYSE: MRK) is the big-pharma partner with Endocyte, which recently received good news on its cancer drug vintafolide, doubling the stock in a day. The stock also won European backing to treat ovarian cancer. The pharmaceutical giant pays shareholders a very solid 3.1% dividend. UBS has a $58 price target, and the consensus target is $57.50. Merck closed Tuesday at $57.77.
Pfizer Inc. (NYSE: PFE) trades at a low 9.75 times earnings. The company updated investors and physicians at a recent conference on the Phase 2 trial results on palbociclib for advanced breast cancer. The doctors on the breast cancer panel at the conference were much more optimistic than previously about the possibility of palbociclib being filed and approved on Phase 2 data in first line advanced breast cancer. Patients with hormone receptor-positive metastatic breast cancer enjoyed a median PFS rate of 20.2 months when taking a combination of palbociclib and the antiestrogen drug Femara (letrozole), compared to 10.2 months for letrozole alone, according to researchers presenting the latest data at the American Association for Cancer Research meeting in San Diego. Investors are paid a 3.4% dividend. The UBS price target is $36, and the consensus target is $34.15. Pfizer closed Tuesday at $31.
Puma Biotechnology Inc. (NYSE: PBYI) is a stock that UBS views as having multiple catalysts. A cocktail of drugs containing Puma’s neratinib given before surgery eliminated evidence of cancer in the breast and lymph nodes in 55.6% of women, compared with 32.6% of those given standard drug therapy, the company said in a recent statement. The improvement was seen in women with cancer fueled by the HER-2 protein and was not definitive, particularly in cancers also sensitive to the hormone estrogen. The UBS price target is $125, while consensus is at $134.50. Puma closed Tuesday up big at $83.78.
The search for a definitive cure for cancer is a search that goes down many roads for many different therapies. The top biotechnology and large pharmaceutical companies taking the lead in the search should prove to be solid investments for investors for years to come. Depending on investors’ risk tolerance, they can go either way, purchasing the top biotech names or taking a safer route with big cap pharmaceuticals.
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