Healthcare Business

Top Biotech Plays Highlight Jefferies Growth Stocks to Buy

Medicines Company

This stock has been on a total roller-coaster ride over the past year. Medicines Co.’s (NASDAQ: MDCO) goal is to be a leading provider of solutions in three areas: serious infectious disease care, acute cardiovascular care and surgery and perioperative care. The company is focused on saving lives, alleviating suffering and contributing to the economics of health care by focusing on 3,000 leading acute/intensive care hospitals worldwide.

The company partners with Alnylam for a different drug, PCSK9si, but both revusiran and PCSK9si use the same platform: RNA interference (RNAi) with a GalNAc, a type of sugar molecule, conjugate to knock down messenger RNA levels, which in turn lowers the amount of protein the messenger RNA encodes for. Jefferies noted this in its report:

As a result of Alnylam Pharmaceuticals update, Medicines Company provided a safety update on ALN-PCSsc, in which it reported no issues. The company decided to continue the Orion-1 study in late Aug and as of late september continued to see no material issues. We’d also point out that the dose exposure of ALN-PCSsc is multi fold lower than revusiran.

The $43 Jefferies price target is lower than the consensus target of $50.05. The shares closed most recently at $36.54.

Vanda Pharmaceuticals

This is another top biotech that the analysts recently assumed coverage on with a Buy rating. Vanda Pharmaceuticals Inc. (NASDAQ: VNDA) focuses on the development and commercialization of products for the treatment of central nervous system disorders. The company’s marketed products include Hetlioz (tasimelteon), a product for the treatment of non-24-hour sleep-wake disorder, and Fanapt (iloperidone), a product for the treatment of schizophrenia.

The company’s clinical development products include tradipitant (VLY-686), a small molecule neurokinin-1 receptor antagonist that is under the clinical development for the treatment of chronic pruritus in atopic dermatitis; Trichostatin A, a small molecule histone deacetylase inhibitor; and AQW051, a Phase 2 alpha-7 nicotinic acetylcholine receptor partial agonist. The Jefferies report noted:

We assumed coverage with a Buy and see further long-term upside to shares despite the stock’s recent run. We believe the Hetlioz program will ramp from here and see four key Phase 2 and phase 3 studies are expected to report results in 2017.

The Jefferies price target is posted at $23, while the consensus target is $22. The shares closed most recently at $17.41.

While these are all very aggressive stocks, and only suitable for risk-tolerant accounts, they could have big upside potential. Investors may want to scale buy some shares and keep some dry powder, should any of the earnings or clinical data knock prices back.

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