9 Biotech Stocks With Material Catalysts In Q4

Biopharma stocks are risky bets that could fetch disproportionate gains or wipe away one's entire investment thanks to their vulnerability to catalytic events.

The iShares Nasdaq Biotechnology Etf IBB has gained about 20% year-to-date period compared to the roughly 9.3% advance by the S&P 500 Index.

Biotechs have underperformed the Nasdaq Composite Index, which gained about 32% in the same period.

As we enter the last leg of the year, the following are fourth-quarter catalysts highlighted by Needham for the biotech stocks in the firm's coverage universe.

Alnylam Pharmaceuticals, Inc. ALNY

  • Year-to-date gains: +27.6%
  • Key catalysts: PDUFA date of Dec. 3 for lumasiran to treat primary hyperoxaluria type 1, and a December decision for out-licensed hypercholesterolemia drug inclisiran
  • Average analyst price target*: $163.87, suggesting roughly 12% upside

* based on Yahoo database

Crispr Therapeutics AG CRSP

  • Year-to-date gains: +63%
  • Key catalysts: Phase 1/2 trial of CTX110 in relapsed, refractory non-Hodgkin lymphoma, and additional Phase 1/2 data for CTX001 in sickle cell disease and beat thalassemia (both scheduled for the fourth quarter)
  • Average analyst price target: $96.20, suggesting roughly 3.2% downside

Needham analyst Alan Carr differs with the consensus.

"We believe there is more room for upside for the stock, particularly if the company demonstrates an acceptable safety profile and at least similar efficacy of CTX110 to autologous CAR-T cells," the analyst said in a note.

Related Link: The Week Ahead In Biotech: J&J Earnings Kickstarts Pharma Earnings, More IPOs In The Pipeline

Rhythm Pharmaceuticals Inc RYTM

  • Year-to-date gains: +8%
  • Key catalysts: FDA decision for setmelanotide in POMC and LEPR deficiency obesities (Nov. 27), Phase 3 data for setmelanotide in Bardet-Biedl and Alstrom syndromes (year-end 2020) and additional results from setmelanotide Phase 2 basket trial (fourth quarter)
  • Average analyst price target: $32.88, suggesting roughly 32.6% upside

Moderna Inc MRNA

  • Year-to-date gains: +285%
  • Key catalysts: Phase 3 COVID-19 vaccine results
  • Average analyst price target: $92.54, suggesting roughly 30% upside

Vir Biotechnology Inc VIR

  • Year-to-date gains: +245%
  • Key catalysts: interim results from the Phase 3 study of monoclonal antibody candidate VIR-7831 in treating COVID-19
  • Average analyst price target: $55, suggesting roughly 27% upside

"We acknowledge current valuation is driven in part by enthusiasm around COVID-19 programs, but believe the stock is still attractive for long-term investors," Carr said.

Zealand Pharma A S ADR ZEAL

  • Year-to-date gains: +29%
  • Key catalysts: results from at least one of the two ongoing Phase 3 trials of dasiglucagon for congenital hyperinsulinism
  • Average analyst price target: $40.72, suggesting roughly 4.6% downside

The stock is undervalued given its maturing pipeline, Carr said in the note. The analyst expects a positive outcome for the congenital hyperinsulinism study.

Needham On Gilead, Intercept, Tricia Catalysts 

Additionally, Needham expects regulatory updates from Gilead Sciences, Inc. GILD, Intercept Pharmaceuticals Inc ICPT and Tricida Inc TCDA, all of which received complete response letters earlier this year.

Gilead is also expected to release Phase 3 results for Yescarta in second-line diffuse large B-cell lymphoma, Phase 2 data for GLPG-1972 in osteoarthritis and Phase 2 data for semaglutide in combination with cilofexor and firsocostat in non-alcoholic steatohepatitis, according to Needham. 

The firm expects Intercept to shed light on the discussions with the FDA regarding the NASH drug candidate obeticholic acid, which was rejected by the FDA in June.

"We ultimately expect the drug to be approved, potentially in 2021," Carr said.

Tricida, which was handed a CRL for the metabolic acidosis treatment candidate veverimer in August, is likely to have a Type A meeting with the FDA in the fourth quarter, the analyst said. 

"We believe the drug will ultimately be approved due to strength of Phase 3 data, but acknowledge approval in 2021 is unlikely." 

The Biotech Ratings, Price Targets

  • Alnylam: Buy/$160
  • Crispr: Buy/$105
  • Rhythm: Buy/$42
  • Moderna: Buy/$94
  • Vir: Buy/$62
  • Zealand Pharma: Buy/$42
  • Gilead: Hold
  • Intercept: Buy/$100
  • Tricida: Buy/$20

Related Link: FDA's COVID-19 Vaccine Guidance Shows 'Substantial' Obligations For Developers: Analyst

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