While Friday was a welcome relief for shell-shocked stock investors, much of the damage that has been inflicted since the start of the quarter is still weighing on some top biotech stocks. A new report from Merrill Lynch highlights five biotechs that have been absolutely crushed during the high-beta selling, that all have outstanding potential and catalysts that can drive them much higher.
Needless to say, these stocks are only suitable for very aggressive, risk-tolerant accounts. With that in mind, they all have incredible potential, and they have been beaten down way too far in the recent market sell-off, so even a bounce back to where they were trading a month ago would be substantial.
All five of the stocks are rated Buy at Merrill Lynch, and the analysts cite the fact that each has very attractive fundamental valuations.
GW Pharmaceuticals PLC (NASDAQ: GWPH) is down a staggering 30% over the past month. The company released its second data set of favorable Epidiolex data in intractable epilepsy patients from its ongoing investigational IND trials. The data included continued efficacy in Dravet patients, as well as early data in Lennox Gastaut patients. With a solid probability of approval, the stock has big potential.
The Merrill Lynch price target is a monster $110. The Thomson/First Call consensus is even higher at $119.25. Shares closed on Friday at $63.46.
Karyopharm Therapeutics Inc. (NASDAQ: KPTI) is down a whopping 25% in the past few weeks. The Merrill Lynch team thinks the company has huge catalyst potential when it releases data in December on a combo study with dexamethasone in multiple myeloma patients.
The Merrill Lynch price target for Karyopharm shares is $57, and the consensus target is at $54.25. The stock closed Friday at $33.28 a share.
NPS Pharmaceuticals Inc. (NASDAQ: NPSP) CEO Francois Nader told Wall Street analysts to expect an FDA advisory panel to be held for its leading drug candidate Natpara before the Prescription Drug User Fee Act (PDUFA) date. That date is set for October 24, and if the panel is positive and the drug is approved, NPS will be ready to launch the drug before the end of the year. NPS is also gearing up to start a Phase 2a study of NPSP790 in autosomal dominant hypocalcemia later this year.
Merrill Lynch has a $42 price objective, while consensus target is $37.77. NPS shares ended trading on Friday at $26.16.
Orexigen Therapeutics Inc. (NASDAQ: OREX) is down a stunning 33% in the past month. The company received approval for its obesity drug Contrave on September 11, and they will be partnering with Takeda Pharmaceutical to launch sales in the coming weeks. While other company’s obesity drugs have had disappointing sales figures, the Merrill Lynch analysts feel that Takeda’s big 900 sales rep force could be a difference maker.
Merrill Lynch has a $9 price target on Orexigen, and the consensus target is even higher at $11. The stock closed on Friday at $4.08.
Vital Therapies Inc. (NASDAQ: VTL) recently had a secondary offering, and the stock has traded down 30% since on absolutely no news, negative or otherwise. The company has an upcoming binary event with Phase 3 data in the second quarter of next year for its artificial liver system for alcohol-induced liver decompensation. The Merrill Lynch team thinks the potential upside is large due to the big addressable market opportunity and the unmet need.
Merrill Lynch has a gigantic $40 price target for the stock, and the consensus target is at $37. Shares closed Friday at $15.05.