November 3, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Biotech stocks, in general, are trading down this year. For some, that’s a reason to get out of the market. For others, it’s a reason to shop for bargains. Several analysts with The Motley Fool discussed three biotech stocks that could be major bargains.
1. Biogen
This Cambridge, Mass.-based Biogen is a leader in multiple sclerosis, but it’s been struggling to stay dominant in the market with intense competition. The company’s chief executive officer, George Scangos, is retiring soon, leaving the company in limbo, while investors push for the company to either buy somebody to bolster its stock value, or get bought by a bigger company.
George Budwell mentions several possible catalysts, including a buyout. “A buyout could come before year’s end, presumably around the time Scangos is expected to formally step down.”
Another, slightly oblique potential catalyst is an upcoming topline readout of Eli Lilly ’s solanezumab for Alzheimer’s disease. Both Biogen’s aducanumab and Lilly’s solanezaumab focus is on clearing beta amyloid, although they use different mechanisms to do it. If Lilly’s data looks good, it might boost Biogen’s stock.
Budwell says, “The big-picture issue is that Biogen is a solid, revenue-generating biotech with modest near-term growth prospects, a fairly clean balance sheet, and a rather pedestrian valuation within its peer group.” So it might be undervalued even without the potential catalysts.
Biogen is currently trading for $277.60.
2. Xencor
Xencor has an XmAb antibody engineering platform that precisely alters the Fc domain, which is the part of the antibody structure, to make them work better. Brian Feroldi writes, “While I’m generally wary of clinical-stage biotechs that promise ‘game-changing’ technology, what impresses me about Xencor is that it has already convinced some of the largest healthcare companies in the world to sign on as partners.”
That includes Novartis , Johnson & Johnson , Merck , Amgen , Novo Nordisk , Alexion Pharmaceuticals and others.
The company’s product that’s furthest along is in a Phase II trial, but Feroldi likes its pipeline and technology, so it’s likely to have long-term potential. And if its platform does what it says it does, just about every company developing antibody-based therapeutics will come calling.
Xencor is currently trading for $19.
3. Bluebird bio
Bluebird bio focuses on gene therapy. Lenti-D is in a Phase II/III trial for cerebral adrenoleukodystrophy (CALD). LentiGlobin is in a Phase II/III trial for beta thalassemia, as well as in a Phase I/II trial in severe sickle cell disease. The company is expecting to see a number of catalysts across its programs in the next 15 months, including initial data from its Phase I trial of its bb2121 candidate in relapsed/refractory multiple myeloma and updates on its Lenti-D program in cerebral adrenoleukodystrophy.
Cory Renauer writes, “Positive beta-thalassemia data alone would make bluebird bio’s recent market cap of around $1.76 billion seem awfully small. If the company’s presentations also lead to further encouragement in sickle-cell disease, it could send the stock soaring.”
Bluebird bio is currently trading for $38.80.
