The biotech sector recovered at the end of 2019. The Nasdaq Biotechnology Index rose 20% between October and December and outperformed the S&P 500 by 9%. Some analysts assume that the increase will continue until 2020.
Washington's lack of attention to drug prices or Medicare for All, which is currently focused on trade negotiations and impeachment proceedings, and the JP Morgan Healthcare conference from January 13-16, which typically arouses investor interest, will be seen as reasons for this to be bullish , Jared Holz, a sector strategist at Jefferies, believes the start of the year is a likely period for mergers and acquisitions.
"We continue to believe that given the pipeline demand for large-cap bio-pharmaceutical products on the horizon, much stronger consolidation can be expected," said Holz.
This leads us to believe that now is a good time to bargain in the healthcare sector. In TipRanks & # 39; Stock Screener, we found three biotech stocks that have not yet caught up with the upward trend in the industry, but analysts are willing to see some upward movement in 2020. Look at the dates.
Bluebird Bio (BLUE)
Nobody doubts that the gene therapy company Bluebird Bio had problems. We are talking about a 50% decrease in the past two years. Oppenheimer analyst Mark Breidenbach believes, however, that the decline offers investors an opportunity to buy.
bluebird was recently featured at the American Society of Hematology (ASH) annual conference, and Breidenbach was there for information. The 4-star analyst predicts a "blue sky" after the presentation of Bluebird.
Bluebird has approved a product for patients in the EU; Zynteglo, the first gene therapy approved for transfusion-dependent β-thalassemia (TDT). Breidenbach assumes that "Zynteglo sales in Europe will slowly increase from 2020". Bluebird plans to launch a rolling biological license application for treatment in the U.S. by the end of the year.
The company also has several drugs in the pipeline, of which data from the ongoing Phase 1/2 HGB-206 study on experimental LentiGlobin gene therapy for sickle cell diseases (SCD) were a highlight for the analysts.
“At ASH, Bluebird showed concrete signs of progress in the hemoglobinopathy pipeline. The results in sickle cell anemia (SCA) were particularly impressive. […] Nine treated patients with a follow-up of ≥ 6 months showed sustained haematological improvements and a 99% reduction in serious symptoms, including VOC and ACS episodes, ”said Breidenbach.
Another catalyst for Breidenbach is bluebird's partnership with Bristol-Myers Squibb. The two are working on a therapy candidate for patients with relapsed and refractory multiple myeloma. The positive top-line results from KarMMa, a phase 2 study by Idecabtagene Vicleucel (Ide-Cel; bb2121), reached the primary endpoint and the secondary key endpoint.
Breidenbach said: "We believe that important KarMMa data will support FDA approval of ide-cel by the end of 2020, and we believe that new data from competitive products could help to calibrate commercial potential expectations . "
As a result, Breidenbach improved its BLUE rating from perform to outperform, along with a price target of $ 135, implying an upside potential of over 50%. (To look at Breidenbach's track record, Click here)
On the street, Bluebird currently has 8 purchase and 5 hold ratings, which combine to form a rating with moderate purchase consensus. The average price target is $ 118.67 and indicates a possible upward trend of 36%. (See BLUE stock analysis at TipRanks)
Aridis Pharmaceuticals (ARDS)
Another company that had problems in 2019 is Aridis Pharmaceuticals. Biotechnology ended the year down 60%.
H.C. Wainwright analyst Vernon Bernardino believes that now is the right time for investors to jump on board. The analyst initiated coverage for Aridis stocks with a buy rating and set a price target of USD 7, which implies an upside potential of 57%. (To look at Bernardino's track record, Click here).
What sparked the analyst's interest? Bernardino believes that Aridis has "novel product targets and mechanisms of action" and a clinical strategy "that aims to achieve superiority and maximize the likelihood that Aridis' fully human mAbs will be used as first-line antibacterial therapies become." The analyst added, "We believe Aridis' antibacterial mAb candidates have the potential to be effective against antibiotic-resistant strains of bacteria with an urgent threat."
Aridis has several therapies in the pipeline. The most advanced candidate is AR-301, which is currently in a phase 3 study for the treatment of hospital-acquired pneumonia (HAP) and ventilator-associated pneumonia (VAP), which is derived from the gram-positive bacterium Staphylococcus aureus (S. aureus ) was acquired. Bernardino believes that the drug will have regulatory approval by 2022 and that AR-301 projects could reach annual sales of approximately $ 700 million by 2030.
Bernardino said: "We believe that the potential for results from the ongoing Phase 3 study with AR-301 as adjunctive therapy in patients with hospital-acquired and ventilator-associated pneumonia as a positive catalyst in early 2020 will be underestimated."
Similarly, other Wall Street analysts like what they see. With 3 buy ratings received in the past three months, the stock achieved a “strong buy” street consensus. With an average price target of $ 18, analysts see an upside potential of 270% for Aridis. (See Aridis price targets and analyst ratings at TipRanks)
Ocugen Inc (OCGN)
For investors at the clinical stage of the biopharmaceutical company Ocugen, it was a miserable year 2019 when the share price was reduced by almost 90%. However, at least according to H.C. Wainwright analyst Swayampakula Ramakanth.
Ramakanth initiated reporting on Ocugen with a buy recommendation and set a target price of USD 1.25. If the goal is achieved, investors will see solid gains of 140% over the next 12 months. (To look at Ramakanth's track record, Click here)
The main candidate for Ocugen is OCU300, a treatment for host eye graft disease (oGVHD), a condition that can damage the surface of the eye and tear-producing glands and that has no approved therapy. The drug is currently in a phase 3 trial and the results of the Topline are expected for 2H20. There are an estimated 63,000 oGVHD patients in the United States. An increase to 140,000 is expected by 2030.
Ramakanth commented, “Given the promising data that has been generated to date, we believe that the Phase 3 OCU300 trial is likely to have a positive value that could be an important catalyst. In addition, OCU300 is the first and only product candidate to receive orphan drug designation (ODD) for oGVHD from the FDA. We currently expect OCU300 risk-adjusted revenue to reach $ 141 million by 2030 and to grow from $ 5 million in 2021. "
There is currently hardly anything going on on the street, and only another analyst interferes with the prospects of the micro-cap. An additional purchase rating means that Ocugen is classified as a mediocre purchase. However, the average price target is $ 1.63 and implies a massive upside potential of 213%. (See Ocugen price targets and analyst ratings at TipRanks)