- Biotech stocks have been through an extended lean patch, making them ideal candidates for a strong rebound.
- Verrica (VRCA): Approval of its viral skin disease treatment could transform the company into a commercial-stage biopharma.
- Amicus (FOLD): Pompe disease treatment approval opens up huge market opportunity for the biopharma.
- Athersys (ATHX): Potential approval for Japanese licensee would provide additional financing options.
- Nanobiotix (NBTX): Stock could be in for a reversal if ASCO abstract show positive data for its lead radio-enhancer therapeutic candidate.
- Lexicon Pharma (LXRX): Successful resubmission of regulatory application for heart failure drug will remove an overhang.
- Moderna (MRNA): “Science Day” may give more insights into its non-Covid pipeline.
- United Therapeutics (UTHR): FDA decision on a more convenient formulation of drug to treat lung disease is due this month.
Biotech stocks are languishing close to their early 2020 bottom that they’d dropped to immediately after the onset of the Covid-19 pandemic. The sector was once considered as a better bet for those investors taking flight away from risky assets in times of uncertainty. Thus, the defensive appeal of biotech stocks has been waning.
What else can explain the 44% plunge of the SPDR S&P Biotech ETF (NYSE:XBI) for the year-to-date (YTD) period. The iShares Biotechnology ETF (NASDAQ:IBB), which has a higher weighting of large-cap pharma stocks, is down a far less 20%. This suggests the bulk of the weakness in the small- and mid-cap spaces.
Food and Drug Administration (FDA) approvals, positive clinical readouts, mergers & acquisitions and more favorable government policies, are among the catalysts that can kickstart a recovery in biotech stocks.
When the turbulence, both extraneous and inherent to the sector, clears up and sanity prevails, these biotech stocks, especially the ones with a robust product lineup, promising pipeline opportunity and strong cash position could be in for big gains.
| Verrica | VRCA | $5.94 |
| Amicus | FOLD | $6.87 |
| Athersys | ATHX | $0.66 |
| Nanobiotix | NBTX | $4.65 |
| Lexicon Pharma | LXRX | $1.79 |
| Moderna | MRNA | $133.81 |
| United Therapeutics | UTHR | $177.54 |
Verrica (VRCA)
West Chester, Pennsylvania-based Verrica (NASDAQ:VRCA) is a dermatology-focused biopharma. The company is still chasing its maiden regulatory approval, which has thus far proved elusive.
After two complete response letters — a term used to refer to FDA communication regarding rejection of drug — and a three-month extension in between the two, Verrica is once again knocking on the FDA’s door.
The company has a Prescription Drug User Fee Act (PDUFA) goal date of May 24 for its new drug application (NDA) for VP-102 as a treatment option for molluscum contagiosum — a kind of skin infection caused by virus. VP-102 is a drug-device combination consisting of cantharidin delivered through a single-use applicator that facilitates precise dosing and targeted administration.
There is currently no FDA-approved treatment for molluscum and the unapproved treatments used have many limitations, including scarring, pain and poor efficacy. If VP-102, named Ycanth, manages to clear the FDA hurdle this time around, Verrica stock could be in for strong gains.
Amicus (FOLD)
Philadelphia, Pennsylvania-based Amicus (NASDAQ:FOLD) has a PDUFA goal date of May 29 for its NDA for miglustat, which is one of the two components of AT-GAA. The second component, namely cipaglucosidase has a decision date of July 29. Nods for the two components would make the combination eligible to treat Pompe disease.
Pompe disease is an inherited lysosomal disorder caused by the deficiency of the acid alpha-glucosidase (GAA) enzyme. This leads to the accumulation of glycogen in the lysosomes of muscles and other tissues, often resulting in morbidity and mortality.
Following a survey of physicians, SVB Leerink analyst Joseph Schwartz said doctors see clinical value in the two-part investigational treatment. The analyst is of the view the uptake could be more than what he modeled previously. The differentiation vis-à-vis Sanofi’s (NASDAQ:SNY) FDA-approved Pompe disease treatment Nexviazyme is less but the market for Pompe disease treatment is big enough to accommodate more than one player, Schwartz said.
Athersys (ATHX)
Cleveland, Ohio-based Athersys (NASDAQ:ATHX) is a developer of “MultiStem” cell therapy product for neurological, inflammatory & immune, cardiovascular and other critical care indications. The indication for which the investigational therapy is in the most advanced stage of clinical study is ischemic stroke.
MultiStem therapy is being evaluated in a registrational trial in Japan by Athersys’ collaboration partner Healios K.K. and in a pivotal late-stage trial in the U.S. Healios has an exclusive license to develop and commercialize the therapy for ischemic stroke and acute respiratory distress syndrome (ARDS) in Japan. Topline results from the Japanese leg of the Phase 3 ischemic stroke trial conducted by Healios is expected in May.
An approval for the MultiStem therapy in Japan would de-risk the broader treatment approach and also allow Athersys to tap into additional non-dilutive financial options such as partnerships, Needham analyst Gil Blum said in a note in April.
Nanobiotix (NBTX)
France’s Nanobiotix (NASDAQ:NBTX) is a late-stage biopharma which uses physics-based approaches for treating cancer. The company’s lead pipeline asset, codenamed NBTXR3, is a radio-enhancer, and is made up of nanoparticles. It is injected directly into a malignant tumor prior to standard radiotherapy, and once radiotherapy is administered, it gets activated and enhances the dose of radiotherapy.
The main advantage with the radio-enhancer is that it induces significant tumor cell death without increasing the damage to surrounding healthy tissue.
Nanobiotix is due to present at the American Society of Clinical Oncology (ASCO) meeting due June 3-7, Phase 1b/2 data for NBTXR3 from two separate studies. These studies evaluate the investigational therapy for locally-advanced or recurrent head and neck squamous cell carcinoma and rectal cancer. The company will also present data from a pivotal Phase 3 study of NBTXR3 activated by radiotherapy alone, or radiotherapy in combination with Eli Lilly’s (NYSE:LLY) Erbitux for platinum-based chemotherapy-ineligible elderly patients with advanced head & neck squamous cell carcinoma.
Ahead of the conference abstracts on the presentations will be posted online on May 26.
Positive data for the lead candidate could give the sagging Nanobiotix stock a big lift.
Lexicon Pharma (LXRX)
Woodlands, Texas-based Lexicon Pharma (NASDAQ:LXRX) faced a setback late last year, when it decided to voluntarily withdraw the application for its sotagliflozin. The company is seeking approval for the drug candidate for reducing severe cardiovascular risk in type 2 diabetes patients. Lexicon reasoned that the withdrawal was to fix a technical issue.
Lexicon issued an update for sotaglifloxin refiling in its May 5 earnings report:
We plan to resubmit our New Drug Application (NDA) for sotagliflozin for the treatment of heart failure this month having received confirmation from the FDA in late April that it is aligned with our resubmission plans.
A successful refiling by this timeframe could catalyze upside in the stock.
The average analysts’ price target for Lexicon stock, according to TipRanks, is $11.50, suggesting nearly 550% upside potential.
Moderna (MRNA)
Cambridge, Massachusetts-based Moderna (NASDAQ:MRNA) is scheduled to host its “Science Day” on May 17. The event is open for both analysts and investors. It will serve as a platform to provide insights into advancements in its platform science, messenger RNA technology and pipeline.
Moderna did share some details in the earnings statement released on May 4 and the subsequent earnings call.
Moderna’s stock jump-started following the earnings release, with part of the upside attributable to the positive broader market reaction to the Fed’s anticipated 50-basis-point hike. The stock rallied to an all-time high a tad below $500 in August 2021 but has since then pulled back notably. With Covid revenues expected to taper off amid the improvement in the pandemic situation and competition from effective treatment options, the next big catalyst that can drive the stock higher is pushing another of its pipeline candidates past the finish line.
Moderna said in its earnings release it expects to have four Phase 3 programs running in the second quarter — an omicron-containing bivalent Covid-19 booster, flu, respiratory syncytial virus and cytomegalovirus.
Analysts, on average, expect this biotech stock to nearly double over a 12-month timeframe, and for any meaningful upside, the company needs copious support from it non-Covid pipeline.
United Therapeutics (UTHR)
Silver Spring, Maryland-based United Therapeutics (NASDAQ:UTHR) has a PDUFA catalyst in May for its Tyvaso DPI, which is being evaluated as a treatment option for pulmonary hypertension associated with interstitial lung disease. The initial NDA submitted in April 2021 received a CRL due to issues with a third-party facility. Following a resubmission in December 2021, the regulator announced a fresh PDUFA goal date of February 2022, which was then extended by three months to May.
Tyvaso DPI is developed in collaboration with Mannkind (NASDAQ:MNKD), as it incorporates the dry powder formulation technology and Dreamboat inhalation device technology used in Mannkind’s Afrezza inhalation powder product. United Therapeutics sees this a more convenient method of administration compared with traditional nebulized Tyvaso therapy
The two companies are also developing BluHale, a Bluetooth-connected accessory for the Tyvaso DPI inhaler with a companion mobile application intended to help the patient track information about inhaler use.
The average analysts price target for United Therapeutics is $238, suggesting an incremental 30% upside from current levels.
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On the date of publication, Shanthi Rexaline did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.