3 Under-the-Radar Bay Area Biotechs That Could Double in 2018
Biotech stocks are generally viewed as highly volatile. Of course, along with volatility comes the possibility for huge upside rewards. Here are three biotech stocks that are notable for having only “buy” ratings from the Street along with upside potential of over 100 percent.
Based in Redwood, Calif., Heron has a product portfolio that includes Sustol (granisetron) for nausea and vomiting associated with chemotherapy, Cinvanti (HTX-019), which has a PDUFA data of Nov. 12, 2017, a neurokinin-1 receptor antagonist, and HTX-011, a local anesthetic bupivacaine in a fixed-dosed combination with meloxicam.
TipRanks, writing for Nasdaq.com, believes the stock is “extremely undervalued” and ready to take off next year. It’s received seven back-to-back buy ratings from the Street, with an average price target of $32.17, compared to its current price of about $15.35.
“One of the more recent ratings comes from four-star Northland Securities analyst Carl Byrnes,” TipRanks writes. “He says that so far SUSTOL has been very well received, and he is feeling optimistic ahead of the drug’s November 12 PDUFA date. At the same time, Byrnes believes that HTX-011 can become the best-in-class therapy for postoperative pain management. The drug provides sustained relief for the first 72 hours and minimizes the need for highly-addictive opioids.”
Headquartered in Fremont, Calif., on Oct. 12, the company announced positive results in a phase III trial for tenapanor for irritable bowel syndrome with constipation (IBS-C). The drug blocks the NHE3 transporter in the gastrointestinal (GI) tract, which reduces the absorption of dietary sodium. The company expects to take the drug to the U.S. Food and Drug Administration (FDA) in 2018.
Analysts, according to TipRanks, believe the stock could double in the next year. The average price target is $16, way above its current share price of approximately $6.90.
Tim Chiang, an analyst with BTIG, wrote in a note to investors, “With the solid pivotal results shown from this Phase III study, we think tenapanor’s efficacy/side effect profile will be competitive in a sizeable market where there are more than 30 million patients with IBS-C…. We believe tenapanor has the potential to become a significant new treatment for IBS-C, with peak sales potential of $500 million or more by 2025.”
3. Iovance Biotherapeutics
Located in San Carlos, Calif., Iovance focuses on immuno-oncology. On Sept. 25, it announced the closing of its public offering of 8,846,154 shares of its common stock at a public offering price of $6.50 per share. It’s currently running for around $7.25.
The company has received five back-to-back buy ratings in the last three months with an average analyst price target of $15. Mark Breidenbach, an analyst with Oppenheimer, repeated a buy rating last week with a $13 price target. He wrote, “[We are optimistic] that the company’s lead asset, LN-144, could find success in late stage melanoma patients who do not respond to front-line therapy. In our view, the core technology behind Iovance’s therapies has already been validated in multiple trials conducted at major academic institutions, and the success of the company rests on its ability to reproduce these results with a centrally-manufactured product.”
As usual with biotech stocks, let the buyer beware. Although these all look promising, if the FDA for some reason chooses not to approve the drugs, stock prices could go in the opposite direction.