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.
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.
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.
This company has partnered with a top big pharmaceutical company and the data has been very solid. Neurocrine Biosciences Inc. (NASDAQ: NBIX) is focused on developing and commercializing therapies for neurological and endocrine disorders. The company’s lead assets are Ingrezza, approved for the treatment of tardive dyskinesia, and Ongentys for the treatment of Parkinson’s disease.
The company has partnered with AbbVie on elagolix, which has been approved for the treatment of endometriosis and is currently in studies for polycystic ovary syndrome.
Stifel recently added Neurocrine Biosciences to its Select List of top stocks and said this about 2021 prospects:
In terms of 2021 pipeline catalysts, we see the ph2 data in schizophrenia negative symptoms from NBI-1065844 (formerly TAK-831) in mid-2021 along with the ph3 data for valbenazine in Huntington’s Chorea as interesting potential upside drivers that have flown a bit under the radar until recently, as investors continue to focus on the pandemic-related headwinds facing Ingrezza as the primary driver of the stock. Bottom line: we view Neurocrine’s pipeline as high risk, but with a very much upside-biased risk reward, and while we think an Ingrezza recovery alone can make this a good stock in 2021, we like that expectations for the pipeline are low.
The Stifel price target is $134, and the consensus target is $105.36. Neurocrine Biosciences stock ended trading on Friday at $100.43.
This is an off-the-radar idea for investors who are more aggressive. UniQure N.V. (NASDAQ: QURE) is a gene therapy company that engages in the development and commercialization of treatments for patients suffering from genetic and other diseases in the Netherlands. Its lead program is Etranacogene dezaparvovec (AMT-061), which is in Phase 3 HOPE-B pivotal trial for the treatment of hemophilia B.
The company also engages in developing the following:
- AMT-130, a gene therapy that is in Phase 1 and 2 clinical study for the treatment of Huntington’s disease
- AMT-060, which is in Phase 1 and 2 clinical trials for the treatment of hemophilia B
- AMT-180, a one-time intravenously administered gene therapy candidate, which is in preclinical stage for the treatment of hemophilia A
- AMT-190, an IV-administered adeno-associated virus 5-based gene therapy for the treatment of Fabry disease
Stifel said this regarding AMT-061:
Despite fears from investors that the tide may be changing at FDA with respect to how gene therapy packages are vetted, we believe the answer here is yes. The drug shows transformational efficacy for 1+ years, improving quality of life for Hemophilia patients. AMT-061 has demonstrated robust durability data and consistent Factor 9 expression. Bottom line: the fact that the phase 3 result aligns with the AMT-061 phase 2b and what one would expect from the company’s AMT-060 work renders the durability data from earlier trials more reliable and meaningful from a regulatory perspective.
Stifel has a $78 price objective, and the consensus target is $70.67. UniQure stock slipped almost 5% on Friday to end the week at $45.95.
This company is at a potential crossroad. Vertex Pharmaceuticals Inc. (NASDAQ: VRTX) engages in discovering, developing, manufacturing and commercializing small molecule drugs for patients with serious diseases in specialty markets. The company focuses on developing and commercializing therapies for the treatment of cystic fibrosis (CF) and hepatitis C.
The company markets Symdeko/Symkevi, Orkambi and Kalydeco to treat patients with CF who have specific mutations in their CF transmembrane conductance regulator (CFTR) gene, as well as Trikafta for the treatment of patients with CF 12 years of age or older who have at least one F508del mutation in the CFTR gene.
Its pipeline includes Pipeline for Alpha-1 antitrypsin (AAT) deficiency that is in Phase 2 clinical trial; VX-864, a second investigational small molecule corrector for the treatment of AAT deficiency, which is in Phase 1 clinical trial; and VX-147, which completed a Phase 1 clinical trial for the treatment of APOL1-mediated focal segmental glomerulosclerosis and other serious kidney diseases.
The analysts noted this after the company discontinued clinical trials on a very promising drug:
Vertex needs a successful drug, and after lots of hype and promising preclinical and SAD/MAD data, VX-814 discontinuation represented a major disappointment. Luckily for Vertex, VX-864 if successful is still positioned to be first to market, but the company has published limited data to date differentiating the product from VX-814 other than a few quotes from management where they noted that (1) ‘864 and ‘814 are unique molecular entities – fundamentally different chemistry, (2) elevated liver enzymes (as seen with VX-814), for small molecules, are typically due to the chemical and not mechanism, and (3) preclinical data in murine models with the human ZAAT protein and a liver phenotype, show actual liver improvement, not a safety issue or any exacerbation of underlying pathology.
The $277 Stifel price target compares with the $269.77 consensus target and the $236.72 Friday close for Vertex Pharmaceuticals stock.
This company has gone through a broad transformation over the past decade and has huge upside potential. Zogenix Inc. (NASDAQ: ZGNX) develops and commercializes transformative therapies to enhance the lives of patients and their families living with rare diseases in the United States.
The company’s first rare disease therapy, Fintepla (fenfluramine) oral solution, C-IV is approved by the DA, has received positive CHMP opinion in Europe and is in development in Japan for the treatment of seizures associated with Dravet syndrome, a rare, devastating infant-onset epilepsy.
Fintepla is also in development for the treatment of seizures associated with Lennox-Gastaut syndrome, another rare and devastating childhood-onset epilepsy. Through its subsidiary Modis Therapeutics, Zogenix is developing MT1621, an investigational novel deoxynucleoside substrate enhancement therapy for the treatment of TK2 deficiency, a rare genetic disorder.
The analysts noted this when discussing the Fintepla prospects:
We think that consensus sales estimates for Fintepla of $91 million in 2021 are likely doable or beatable given Fintepla’s best-in-class profile in Dravet, physician enthusiasm, and positive early commentary on the launch. Dravet syndrome is a severe form of childhood epilepsy wherein patients exhibit persistent refractory seizures and other neurodevelopmental issues. As is the case across all refractory epilepsy populations there remains a need for new therapies as patients may not be adequately managed on currently available anti-epileptic drugs (AEDs).
Stifel has a $60 target price on Zogenix stock. That and the $55 consensus target are well above Friday’s closing print of $19.99.