Market Overview

A Double Pair Trade: Morgan Stanley Buys 2 Biotechs, Sells 2 Others

A Double Pair Trade: Morgan Stanley Buys 2 Biotechs, Sells 2 Others

Biotech plays are numerous, and Morgan Stanley has a few recommendations to pare and prop a pharma portfolio.

The Ratings

Analyst Jeffrey Hung initiated coverage of:

  • Alder Biopharmaceuticals Inc (NASDAQ: ALDR) with an Underweight rating and $19 price target;
  • Exelixis, Inc. (NASDAQ: EXEL) with an Underweight rating and $19 target;
  • Myokardia Inc (NASDAQ: MYOK) with an Overweight rating and $72 target; and
  • Neurocrine Biosciences, Inc. (NASDAQ: NBIX) with an Overweight rating and $145 target.

The Alder Thesis

Ahead of the 2020 launch of Alder’s migraine drug, Hung said he expects expect stock movement on the launches of competing treatments. (See his track record here.)

“By the time they potentially reach the market in 2020, there could be three other migraine drugs on the market of the same class,” the analyst said. “Additionally, while Alder’s drug has a fast onset of action, we view efficacy across these drugs as largely similar.”

Given these circumstances, they anticipate just $500 million in sales by 2025 against a consensus estimate of $750 million.

The Exelixis Thesis

Competition is seen to be equally inhibitive to Exelixis. While its cabozantinib could seize a $520-million share of the market for treatment of second-line kidney cancer, the candidate enters more crowded arenas in first-line kidney cancer (RCC) and second-line liver cancer (HCC).

“As a result, we think adoption of cabo in 1L RCC and 2L HCC will likely be modest,” Hung said, estimating a $500-million opportunity in the latter and $560 million in the former.

The Myokardia Thesis

By Morgan Stanley’s assessment, Myokardia’s mavacamten is better positioned for leadership, with peak U.S. sales beyond $1.3 billion for non-obstructive hypertrophic cardiomyopathy and $1.5 billion for obstructive hypertrophic cardiomyopathy.

“We are positive on MYOK shares because the company's drugs target well-defined subgroups with unmet medical need, promising mavacamten Phase 2 were observed and multiple catalysts in the next 12-15 months could provide meaningful upside to shares,” Hung said. 

The firm’s earlier-stage MYK-491 is seen to offer additional near-term upside.

The Neurocrine Thesis

Neurocrine’s Ingrezza has posted consistent growth in tardive dyskinesia treatment since its launch, and Morgan Stanley projects opportunity to capture additional market share. The sell-side firm anticipates 2018 sales between $425 million and $435 million against Street estimates of $400 million.

The drug’s prospects for Tourette syndrome, coupled with Neurocrine’s Phase 2 candidate for congenital adrenal hyperplasia, could yield additional opportunity for upside, Hung said. 

Price Action

Myokardia gained 3.84 percent Monday, while Exelixis was up 1.35 percent, Neurocrine was up 1.38 percent and Alder was down 2.48 percent. 

Related Links:

Histogenics Slips Below $1 Threshold After Knee Cartilage Candidate Fails Late-Stage Study

Sangamo Shares Sink After Data Release For Gene Editing Product Candidate

Latest Ratings for ALDR

Sep 2019DowngradesBuyHold
Sep 2019ReiteratesNeutral
Sep 2019ReiteratesNeutral

View More Analyst Ratings for ALDR
View the Latest Analyst Ratings

Posted-In: Jeffrey Hung Morgan StanleyAnalyst Color Biotech Price Target Initiation Analyst Ratings General Best of Benzinga


Related Articles (EXEL + ALDR)

View Comments and Join the Discussion!

Latest Ratings

AMRXRaymond JamesDowngrades
CATStandpoint ResearchDowngrades
LULUWells FargoMaintains260.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

Sonos EPS Short Of Estimates In First Post-IPO Report

BofA Upgrades Sanofi, Names 3 Growth Drivers For Pharma Stock