After a horrible 2015 and 2016, the biotechnology industry finally came back to life in 2017, shrugging off many of the issues that have clouded the waters, especially during the lengthy and hard-fought presidential campaign of 2016. Candidates making threats about price controls when it costs billions of dollars sometimes to get a new drug to market held shares down, but when Donald Trump emerged the winner, the shrill rhetoric died down and the sector flourished in 2017.
Many on Wall Street feel that mergers and acquisitions activity is set to pick up in 2018, and many top analysts also feel that the lower corporate tax rate may be a huge lift to the companies with U.S.-focused operations, while the lower repatriation tax rate could jump-start companies with billions overseas.
Many drug and biotech giants appeared to wait on making deals while tax reform worked its way through Congress. With clarity around repatriation, and with the corporate tax rate dropping to 21% from 35%, as well as research and development write-off criteria being defined, many may start to take a step forward. New leadership at the U.S. Food and Drug Administration (FDA) is also cited as positive.
24/7 Wall St. reviews dozens of daily analyst research reports, and this turns into hundreds of reports each week. In the second half of December there have been many Wall Street strategists making big bold predictions for stocks in the year ahead. That is after the Dow Jones Industrial Average was up about 25% and the S&P 500 was up about 20% so far in 2017.
We screened our coverage of the biotech industry for December looking for the top picks from around Wall Street for 2018. We found 12 top companies that analysts are very positive on and all are rated Buy.
Investors looking to a small cap play could be very interested in this stock. 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. ALLN-177 targets oxalate in the gastrointestinal (GI) 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:
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.
The Jefferies price objective for the stock is $22, and the Wall Street consensus target is $24.67. The stock closed Friday at $10.06.
This biotech giant remains a top stock for investors to buy and a safe way to play the potential growth in biosimilars. Amgen Inc. (NASDAQ: AMGN) focuses on areas of high unmet medical need and leverages its biologics manufacturing expertise to strive for solutions that improve health outcomes and dramatically improve people’s lives.
A biotechnology pioneer since 1980, Amgen has grown to be one of the world’s leading independent biotechnology companies, reaching millions of patients around the world and developing a pipeline of medicines with breakaway potential. The company’s five key marketed products are among the top-selling pharmaceutical products in the world.
Merrill Lynch notes that the company has billions in overseas cash and could see some big tax relief with a lower rate for repatriation of those funds.
Shareholders receive a 3.01% dividend. Merrill Lynch has a $209 price target, and the consensus target is $190.78. The shares closed Friday at $173.90.
This lesser known biotech has big upside potential. AnaptysBio Inc. (NASDAQ: ANAB) is engaged in developing antibody product candidates focused on unmet medical needs in inflammation and immuno-oncology. It 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. Its 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. A Jefferies research report noted this:
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 is $102. The consensus target is $91.25, and shares closed most recently at $100.72.