Barring a huge meltdown, the S&P 500 will once again have a double-digit year of gains, and most investors should be looking at their 401(k)s and other accounts with some added holiday cheer. One thing is for sure: 2018 will be a year for stock picking, because passive investing is forcing more and more dollars into a small group of mega-cap stocks, and that could be laying the groundwork for a sizable move down next year.
With that in mind, we screened the Jefferies top stock picks from a recent research report and found four momentum biotech plays that still have solid upside to the Jefferies price targets and would be solid additions to aggressive accounts with higher risk tolerance. All are rated Buy.
This is a lesser known biotech with big upside potential. AnaptysBio Inc. (NASDAQ: ANAB) is engaged in developing antibody product candidates focused on unmet medical needs in inflammation and immuno-oncology. The company develops its product candidates using its antibody discovery technology platform, which is designed to replicate, in vitro, the natural process of antibody generation.
The company’s product pipeline includes ANB020 and ANB019, which are being developed to treat severe inflammatory disorders with unmet medical need. The company’s ANB020 product candidate is an antibody that inhibits the activity of interleukin-33 and is used for the treatment of severe adult asthma and severe adult peanut allergy. The analysts at Jefferies noted this in the research report:
AnaptysBio is due to readout Phase 2 data in adult severe peanut allergy in the first quarter of 2018 and we see potential for ANB020 to confer tolerance against ~1 peanut or better in 35-50% of trial patients. If the data reads out as we expect, we think this would bode well for it to surpass peanut immunotherapy efficacy at 6, 9 and 12+ month timepoints in future trials. Depending on the strength of the data readout, we think shares could be up $20-$30.
The Jefferies price target for the stock is a healthy $102, and the Wall Street consensus target is $84.39. The shares closed trading Friday at $84.39.
Investors looking for a small cap play could be very interested in this company. Allena Pharmaceuticals Inc. (NASDAQ: ALNA) is focused on developing and commercializing non-systemic oral protein therapeutics to treat metabolic and orphan diseases, with a particular focus on nephrologic and urologic conditions. Its lead product candidate, ALLN-177, is in an ongoing Phase 2 clinical trial and is being developed for the chronic management of hyperoxaluria and kidney stones.
ALLN-177 is an orally administered, recombinant oxalate-degrading enzyme. It targets oxalate in the gastrointestinal tract to reduce the burden of both dietary and endogenously produced oxalate. ALLN-177 has the potential to decrease the oxalate available systemically for deposition as calcium oxalate crystals or stones in the kidneys, as well as to reduce the incidence of calcium oxalate related complications.
Jefferies had this say about the company:
ALLN-‘177 has completed Phase 2 for enteric hyperoxaluria, demonstrating both safety and meaningful effect. The company has an upcoming meeting with the FDA (late 2018 or early 2018) to go over the Phase 3 efficacy endpoint and the procedure for a BLA filing, which we believe could be a catalyst for shares. We expect this to lead to the start of a Phase 3 study in the first quarter of 2018. We see blockbuster potential for ALLN-177 and model $624 million in peak-adjusted sales.
Jefferies has a $22 price objective, which compares with the posted consensus target of $24.67. The stock closed Friday at $14.00 a share.