Wall Street's Top Biotech Analyst Loves These 2 Life Science Stocks

October 11, 2017
By Mark Terry, BioSpace.com Breaking News Staff

Umer Raffat, senior managing director of Evercore ISI, was recently named the best biotechnology analyst of the year by Institutional Investor. Given that heady designation, investors might want to listen when Raffat gives his recommendations for biotech companies. Here’s his two top picks.

1. Allergan

The Dublin-based powerhouse’s shares were two-percent higher yesterday, but are down about 14 percent from a year ago. But Raffat points out that the company is trading as if it doesn’t have anything in its pipeline. But it does. A lot. The company announced today that it will present 22 abstracts at the 2017 Fall Clinical Dermatology Conference (FCDC) in Las Vegas from Oct. 12-15. The posters range from results for topical oxymetazoline hydrochloride for the treatment of rosacea to the clinical efficacy and tolerability of a cosmetic growth factor serum for facial photodamage.

Raffat told CNBC’s “Closing Bell,” that the company “is about to enter a fairly heavy phase of pipeline readouts starting in 2018.” In addition, compared to other companies in the large-cap category, Allergan has a lot of diversity in its growth with less patent risk. “I also think,” he added, “the quality of growth comes from the highest margin parts of the business.”

Allergan (ALGN) is currently trading for $208.75.

2. Dermira

Headquartered in Menlo Park, Calif., Dermira is, as its name suggests, focused on the dermatology market. The company has filed for approval for Cimzia (certolizumab pegol) an injectable alpha-TNF for plaque psoriasis, wrapped up a Phase III trial for glycopyrronium tosylate for primary axiliary hyperhidrosis, and has olumacostat glaseretil, a topical ACC inhibitor that targets sebum for acne vulgaris in a Phase III trial. It also has lebrikizumab, an injectable alpha-TNF monoclonal antibody for atopic dermatitis in Phase II trials, and undisclosed early-stage programs. On Oct. 5, it announced that it had completed patient enrolment in its CLAREOS-1 and CLAREOS-2 Phase III clinical trials of olumacostat glaseretil in patients ages nine years and older with facial acne vulgaris.

Raffat cites the Phase III trials for acne as being a “huge catalyst” for the company in the next six months. “We tend to think that they have a pretty good shot going into this upcoming Phase III and that wasn’t necessarily the case for some of the recent trials that failed.”

The company’s Cimzia is approved for rheumatoid arthritis. In July 2017, the company filed with both the U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMA) for approval for adult patients with moderate-to-severe chronic plaque psoriasis.

“Despite the tremendous progress that has been made in psoriasis drug development during the last decade and the number of FDA-approved treatment options that are currently available, healthcare professionals and patients continue to express the need for additional treatment options,” said Tom Wiggans, Dermira’s chairman and chief executive officer, in a July statement. “If approved, we believe Cimzia would represent an important new treatment option for previously untreated patients living with moderate-to-severe chronic plaque psoriasis, as well as patients who have received prior treatment with another biologic therapy.”

Dermira is currently trading for $29.87.