SunTrust's 5 Biotech Picks For The Next 6 Months

In a report issued Tuesday, SunTrust Robinson Humphrey analysts Edward Nash, Yun Zhong and Mike Guo revealed their top five picks in biotech over the next six months. They believe these companies will perform sturdily over the period, as major upcoming catalysts fall into place.

• Cempra Inc CEMP (Buy rated, $50 price target) is the firm’s top pick based on its potential for clinical and commercial success in the near-term. The analysts note the high probability of success of solithromycin (they assign an 80 percent chance) as the main catalyst.
• Tetraphase Pharmaceuticals Inc TTPH (Buy, $48 price target) is an antibiotic player with an imminent data release for the Phase III cUTI study. According to the note, management plans to submit an NDA by the end of the year. The analysts assign a 90 percent success probability to the study and “believe eravacycline may demonstrate superiority to active comparator levofloxacin although the trial is designed for non-inferiority.”
• Intra-Cellular Therapies Inc ITCI (Buy, $50 price target) has an interesting clinical program on track. Patient enrollment for the first pivotal Phase III study of ITI-007 for schizophrenia has been completed. Top-line data will be released in the second half of 2015. Moreover, the second Phase III study is on track to initiate soon.
• Catalyst Pharmaceuticals Inc CPRX (Buy, $7 price target) is also looking good. The analysts believe “competition has been over-stated (…) A rolling NDA submission for Firdapse will begin in 3Q15 and will be completed in 4Q15.” Firdapse will enjoy of a “priority review based on the Breakthrough Therapy designation.” Moreover, management said that the CCO position will be filled by October 1 or sooner, probably by a candidate prepared for an Orphan launch.
• Sarepta Therapeutics Inc SRPT (Buy, $33 price target) will continue to depend on the FDA. The note explained, “The DMD guidelines that the FDA released last week suggests that the Agency is actively engaged in making treatment options available to patients; the comments on dystrophin as an potential surrogate endpoint are positive for SRPT.” Furthermore, SunTrust believes that the FDA is likely to ask the same AdCom to review both eteplirsen and drisapersen, from BioMarin Pharmaceutical Inc. BMRN