Needless to say, the biotech world has had a very difficult 18 months. Even the biggest and the best companies, many of which trade cheaper than big pharmaceutical companies, have suffered as investors have fled the sector. Much of the blame for the poor showing is the very shrill rhetoric from politicians, including President Trump, over drug pricing. While there is always an argument for lower prices, taking down an entire sector is extreme.
In a new research report, SunTrust Robinson Humphrey’s outstanding biotech analyst, Edward Nash, and his team focus in on companies that have upcoming clinical data that could prove to be huge. They cited these reasons why the stocks are very attractive now in the report.
- Catalysts over the next 6-9 months that we believe will have strong impact on the share price.
- Strong balance sheets that remove financing overhang and allow focus to be on clinical data.
- Catalysts are all related to pivotal data that will determine a regulatory submission decision.
It’s important to remember that these stocks are only suitable for very aggressive accounts, because while the catalyst events have a good chance of happening, if they don’t the downside could be big as well. All five stocks are rated at Buy by SunTrust.
This is one of the larger companies that the SunTrust team likes. Sage Therapeutics Inc. (NASDAQ: SAGE) a clinical-stage biopharmaceutical company that develops and commercializes novel medicines to treat central nervous system disorders. Its lead product candidate includes SAGE-547, a proprietary intravenous formulation of allopregnanolone that is in Phase 3 clinical development as an adjunctive therapy for the treatment of super-refractory status epilepticus (SRSE), as well as for the treatment of postpartum depression (PPD).
The analysts feel that the Phase 3 data should be out this year, and they list the probability of a positive outcome of 60% if released in the first half for treatment of SRSE and 50% in the second half of 2017 for PPD treatment.
The $95 SunTrust price objective compares with the posted Wall Street consensus target price of $83.08. The shares closed most recently at $68.40 apiece.
This company has hit our insider buying screens twice in the past two months. Versartis Inc. (NASDAQ: VSAR) operates as an endocrine-focused biopharmaceutical company in the United States. It is developing VRS-317, a long-acting recombinant human growth hormone that is in Phase 3 clinical trials for the treatment of growth hormone deficiency.
The SunTrust team expects the Phase 3 data to come out in the third quarter this year, and they feel the probability for a positive outcome is 70%.
The SunTrust price target for the shares is $25, but the consensus target is higher at $27.13. The shares closed Monday at $20.60, up almost 8% on the day.