In the world of biotech investing, there are some surefire ways for stocks to move. Pipeline announcements, clinical data and regulatory approval all can move the needle as catalysts for stocks in the sector. Needless to say, the biotech world has had a very difficult year and a half. Even the biggest and the best companies, many of which trade cheaper than big pharmaceutical companies, have suffered as investors have fled.
In a new report, SunTrust Robinson Humphrey analysts are focused on upcoming catalysts for stocks in their coverage universe. They stress investors take advantage and buy stocks that have been hit by the political uncertainty. Four stocks in their coverage universe rated Buy could have big catalysts in the month of February or by the end of the first quarter.
This is one of Wall Street’s favorites and it posted solid earnings last year. BioMarin Pharmaceuticals Inc. (NASDAQ: BMRN) develops and commercializes innovative biopharmaceuticals for serious diseases and medical conditions. Its product portfolio comprises five approved products and multiple clinical and preclinical product candidates.
Over the past decade, BioMarin has become one of the top orphan drug companies, and it looks poised to stay there. The company is expected to post around $1.09 billion in revenue this year and possibly around $1.32 billion next year following the approval of Vimizim, an enzyme replacement therapy for Morquio syndrome, which posted big results in the quarter.
The SunTrust analyst cites February 13 to 17, when the company is expected to release updated Phase 1/2 data for BMN 250 for the treatment of Sanfilippo B syndrome. Positive clinical results obviously could boost shares.
The SunTrust price target for the stock is $115, and the Wall Street consensus target is $113.44. The shares closed Monday at $85.54.
This top large cap pick has big upside potential. Celgene Corp. (NASDAQ: CELG) has an outstanding partnered pipeline, which most think is low risk and has the potential to yield several blockbuster drugs. Certain Wall Street analysts also think the company can grow earnings 15% on a compounded annual growth rate basis going forward. Otezla, which treats psoriasis and psoriatic arthritis, had achieved considerable prescriptions among physicians, but the scripts have slowed after a solid launch, showing the importance for sales outside of the United States.
Celgene’s blockbuster blood cancer drug Revlimid continues to dominate. Pomalyst sales also continue to be solid. Cancer drug Abraxane is also growing at a respectable rate, so the company continues to have a strong lineup of top-selling drugs. Wall Street analysts have noted that the company has discussed at its recent conference the benefits of longer duration Revlimid.
Celgene has a very compelling pipeline, and with four existing Phase 3 trial assets, that may add strong new drugs and revenue prior to the end of the decade.
The U.S. Food and Drug Administration (FDA) is scheduled to make an approval decision by February 24 for Revlimid as a maintenance treatment in patients with newly diagnosed multiple myeloma after receiving an autologous stem-cell transplant. This decision isn’t an enormously important one for Celgene, but the company would certainly like to have another indication for its blockbuster blood cancer drug.
SunTrust has a $150 price target. The consensus target is $140, and shares closed Monday at $113.18.
This clinical-stage biopharmaceutical company had a hot 2014 initial public offering and the stock has done outstanding since the debut. Kite Pharma Inc. (NASDAQ: KITE) focuses on the development and commercialization of novel cancer immunotherapy products. It is developing a pipeline of engineered autologous cell therapy-based product candidates for the treatment of solid and hematological malignancies.
The company’s lead product candidate is KTE-C19, a chimeric antigen receptors–based therapy that is in Phase 2 clinical trials for the treatment of patients with refractory diffuse large B cell lymphoma, including primary mediastinal B cell lymphoma and transformed follicular lymphoma.
The SunTrust analysts point to the KTE-C19 (ZUMA-1) for refractory non-Hodgkin’s lymphoma. Specifically the six month follow-up to the Phase 2 pivotal top-line data released September 26, 2016. The completion is expected in the first quarter of 2017. A late-breaking abstract is expected at BMT Tandem Meeting February 26, 2017.
The $80 SunTrust price target compares with the consensus target of $74.46. The stock closed at $48.74.
La Jolla Pharmaceutical
This biopharmaceutical company has been mentioned recently as a possible takeover candidate. La Jolla Pharmaceutical Co. (NASDAQ: LJPC) is focused on the discovery, development and commercialization of innovative therapies intended to significantly improve outcomes in patients suffering from life-threatening diseases.
The company has several product candidates in development. LJPC-501 is La Jolla’s proprietary formulation of angiotensin II for the potential treatment of catecholamine-resistant hypotension (CRH).
The SunTrust team notes that the company will be releasing top-line data for LJPC-501’s pivotal ATHOS-3 Phase 3 study by the end of the first quarter. This is a Phase 3, double-blind, randomized study of LJPC-501 in adult patients diagnosed with CRH conducted in multiple centers globally.
The $38 SunTrust price target is less than the consensus target of $43.40. The stock closed Monday at $19.18.
These stocks are extremely volatile and only suitable for very aggressive and risk-tolerant investors. With that caveat in place, positive clinical outcomes or FDA approvals could be a huge boost for the companies.