After an incredibly wild and wooly year for investors, many across Wall Street are cautiously optimistic for 2021. Most equity strategists at the major banks and brokerage firms we cover see the country returning to a more normal state of affairs. The rollout of the COVID-19 vaccines and a reopening of the economy could very well jump-start growth. One sector that is a very solid idea for aggressive growth stock investors is biotechnology.
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A new Stifel research report includes the firm’s picks for the sector for 2021. We screened the list for Buy-rated stocks that have the biggest upside to the posted price targets. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Acadia Pharmaceuticals
This stock helped to drive the strong outperformance from the firm’s top picks list for November. Acadia Pharmaceuticals Inc. (NASDAQ: ACAD) is focused on the development of therapeutics to treat central nervous system disorders.
The company’s lead asset, Nuplazid (pimavanserin), has been approved for the treatment of Parkinson’s disease psychosis. Nuplazid is also in development for the treatment of dementia-related psychosis and schizophrenia negative symptoms. Acadia Pharmaceuticals also is developing an early-stage pipeline in acute and chronic pain and other central nervous system disorders.
The company reported that third-quarter Nuplazid sales came in at a very strong $120.6 million (10% growth quarter over quarter) as specialty pharmacy channels continue to see growth. In addition, ACP-044 (from CerSci) is expected to enter Phase 2 trials for acute and chronic pain in the first half of 2021.
The analysts noted this when discussing the potential approval of Nuplazid for DRP:
While some investors worry that maintenance studies are over-enriched for success, from our research we think the psychiatry division is likely to be receptive to ACAD’s DRP study as the foundation for approval. Our work is based on discussions with a regulatory specialist with prior experience at FDA, as well as our research into a few precedent cases that we believe are bullish for the company. At a high level, our conversations with a regulatory specialist are affirming to Acadia’s view on the matter: the consultant we spoke with believes that the agency has a favorable view of “relapse prevention” or “maintenance” trials, viewing them as potentially representative of real world practice patterns in CNS wherein not all patients respond, and only those individuals who initially do better stay on a drug long term.
Stifel has set a $70 price objective for the shares, while the Wall Street consensus target is $59.61. Friday’s closing price for Acadia Pharmaceuticals stock was $55.25.
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