Healthcare Business

Wall Street Hammered These 3 Biotech Stocks: Are They Really Screaming Buys?

Sarepta Therapeutics

This is another top biotech that has been hit very hard this year. Sarepta Therapeutics Inc. (NASDAQ: SRPT) is a biopharmaceutical company focused on the discovery and development of unique RNA-targeted therapeutics for the treatment of rare, infectious and other diseases. It is primarily focused on rapidly advancing the development of its potentially disease-modifying Duchenne muscular dystrophy (DMD) drug candidates, including its lead DMD product candidate, eteplirsen, designed to skip exon 51. Sarepta is also developing therapeutics for the treatment of infectious diseases, such as drug-resistant bacteria and other rare human diseases.

With an FDA showdown approaching for two companies that have drugs to treat DMD, many think that Sarepta has a clear advantage over its direct competitor due to fewer side effects reported with its drug. Merrill Lynch is bullish in front of the FDA panel and the Prescription Drug User Fee Act (PDUFA), which is scheduled for the first quarter of next year.

Merrill Lynch recently reinstated coverage with a Buy rating and a $49 target. The consensus target is $45.62, and the stock closed Thursday at $24.28.

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PTC Therapeutics

This company falls into biotech binary event bucket. PTC Therapeutics Inc. (NASDAQ: PTCT) is a global biopharmaceutical company focused on the discovery, development and commercialization of orally administered, proprietary small molecule drugs targeting an area of RNA biology referred to as post-transcriptional control. Such processes are the regulatory events that occur in cells during and after a messenger RNA is copied from DNA through the transcription process. PTC’s internally discovered pipeline addresses multiple therapeutic areas, including rare disorders, oncology and infectious diseases.

PTC recently presented data from the Phase 3 ACT DMD study on Translarna (ataluren) for the treatment of nonsense mutation DMD. Although Translarna was safe and generally well tolerated, the primary endpoint was not statistically significant in the overall intent-to-treat study population. However, pre-specified meta-analysis of combined ACT DMD study and Phase 2b studies on Translarna demonstrated benefit across primary and key secondary efficacy endpoints.

Those positive results resonated well with Merrill Lynch, which thinks the drug continues to stay approved in the European Union. The company should complete the clinicals and submit the new drug application before the end of this year, with a likely PDUFA in the middle of 2016.

The Merrill Lynch price target is a gigantic $88, and the consensus target is $82.40. Considering that shares closed most recently at $27.01, this could be a moon-shot if analysts are correct.

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While these stocks are only suitable for very aggressive accounts that can afford big price swings and have a high risk tolerance, they also could bring huge upside if approvals are granted.