Needless to say, the biotech world has had a difficult 2019, with the SPDR S&P Biotech ETF (NYSE: XBI) down 20% from highs posted in April. 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 over drug pricing, and while there is always an argument for lower prices, taking down an entire sector is extreme. Toss in various litigation issues, and the storm has been rough.
In a new Baird report, the analysts focus on 10 companies that not only have data that could prove to be huge but are also offering aggressive accounts some of the best entry points this year. These stocks are very speculative, and though rated Outperform, they are only appropriate for very aggressive portfolios.
These three are larger market capitalization plays, and they have huge upside to the Baird price targets.
Apellis Pharmaceuticals
This company raised money earlier this year via an equity and convertible offering, and it looks well funded going forward. Apellis Pharmaceuticals Inc. (NASDAQ: APLS) is a clinical-stage biopharmaceutical company focused on the development of novel therapeutic compounds for the treatment of a broad range of life-threatening or debilitating autoimmune diseases, based upon complement immunotherapy through the inhibition of the complement system at the level of C3. Apellis is the first company to advance chronic therapy with a C3 inhibitor into clinical trials.
The company recently announced details about its Phase 2 FILLY study investigating intravitreal APL-2 (pegcetacoplan) for the treatment of geographic atrophy secondary to age-related macular degeneration, which were published in the Journal of the American Academy of Ophthalmology.
The Baird team noted this in its report:
Data from the Phase 1b PHAROAH and PADDOCK trials give us confidence pegcetacoplan will show superior hemoglobin induction to Soliris in the December PEGASUS top-line data. On safety, the lack of serious infections in PHAROAH, PADDOCK, and the PLAUDIT trial in autoimmune hemolytic anemia plus PEGASUS over-recruitment give us comfort against a safety signal.
The Baird price target for the shares is a lofty $45, but that compares to the nearly inline Wall Street consensus target of $44. The shares closed Tuesday’s trading at $22.10 apiece, down over 8% on the day.
Medicines Company
This stock actually has been on a roll over the past 60 days. Medicines Co. (NASDAQ: MDCO) is a biopharmaceutical company that focuses on developing therapeutics for the treatment of therosclerotic cardiovascular disease. The company is developing inclisiran, an investigational RNA interference therapeutic that inhibits production of proprotein convertase subtilisin/kexin type 9, which controls LDL-cholesterol levels. It has a collaboration agreement with Alnylam Pharmaceuticals.
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