The COVID-19-induced sell-off has taken a toll on stocks across sectors. An analyst at Cantor Fitzgerald presented his take on how biotech investing could look after the coronavirus pandemic and highlighted his top franchise picks among neuro and platform technology-enabled smid-cap biotechs.
The Impact On Biotechs From The Coronavirus
Foreign travel restrictions, infected employees, work-from-home policies and canceled key clinical meetings are likely to affect the biotech sector in the form of stalled development, regulatory delays, difficult commercial launches and the potential of decreasing drug supplies, analyst Charles Duncan said in a Monday note. (See his track record here.)
The analyst also said he expects ongoing studies at major academic medical centers to be affected due to resource redistribution to COVID-19.
Clinical data from ongoing studies could be confounded by infections in the coming months, he said.
Additionally, the analyst sees disruption likely hindering access to capital in the coming weeks, months and quarters, which in turn could modulate pipeline opportunities.
Yet Cantor is optimistic the storm clouds will clear.
" ... We do believe that investing is fundamentally an act of optimism and that there will be a future world in which the biotech sector can outperform again," Duncan said.
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Cantor's Top Picks For Established Franchises
ACADIA Pharmaceuticals Inc. (NASDAQ: ACAD)
Cantor said it believes Acadia's Nuplazid, indicated to treat hallucinations and delusions associated with Parkinson's disease psychosis, will see volume growth due to increasing penetration and persistence in the condition. The firm also looks ahead for a sNDA filing for pimavanserin for dementia-related psychosis in the summer of 2020, with a potential PDUFA date in the fourth quarter.
Price Target: $75
Halozyme Therapeutics, Inc. (NASDAQ: HALO)
Duncan expects a regulatory decision for daratumumab in multiple myeloma, both in the U.S. and Europe, in mid-2020. A perjeta/herceptin fixed dose combo could be potentially approved in the fourth quarter of 2020, the analyst said.
This impending catalyst is underappreciated by investors, according to Cantor.
Price Target: $35
Neurocrine Biosciences, Inc. (NASDAQ: NBIX)
Neurocrine's Ingrezza — indicated for Tardive dyskinesia — will continue to see demand growth, with revenue continuing to grow into 2020, according to Cantor.
"Opicapone and other pipeline efforts may fuel investor interest in top-line growth in 2H20," Duncan said.
Price Target: $130
Cantor's Seemingly Good Values
GW Pharmaceuticals PLC- ADR (NASDAQ: GWPH)
Cantor sees robust growth for GW Pharma in 2020 driven by the following four catalysts:
- Payor expansion efforts in the U.S.
- Higher penetration into adults through long-term care
- EU launch
- TSC opportunity in the second half of 2020
Price Target: $174
Catalyst Pharmaceuticals Inc (NASDAQ: CPRX)
Catalysts' 2020 Firdapse revenue guidance of $135 million to $155 million is achievable given the increased traction with neuromuscular/movement disorder specialists and possible growth-driving sNDA filing in MuSK-MG, pending favorable Phase 3 data in 2020, according to Cantor.
Price Target: $12
Cantor's Top Picks With Underappreciated Launch Dynamics
Aimmune Therapeutics Inc (NASDAQ: AIMT)
Aimmune's peanut allergy oral immunotherapy Palforzia's commercial traction is becoming increasingly visible this year, Duncan said. The analyst said he expects European approval to come through in the second half of 2020.
Price Target: $64
Biohaven Pharmaceutical Holding Co Ltd (NYSE: BHVN)
Biohaven's migraine drug Nurtec in an oral disintegrating tablet was approved in February and is being commercially launched, according to Cantor.
The company has launched a patient affordability and access program that could allow patients with commercial insurance to pay as little as zero for the drug, according to the sell-side firm.
With rival therapies facing supply issues, the firm said it expects Biohaven's drug to come out on top.
Price Target: $95
Intra-Cellular Therapies Inc (NASDAQ: ITCI)
Cantor is of the view that Caplyta would drive a paradigm shift in schizophrenia treatment. The firm said bipolar disorder presents a large total addressable expansion opportunity, with data from a study in the indication due mid-2020.
Price Target: $47
Cantor's Top Picks Among COVID-19 Therapeutic Platforms
Cantor, though cautious on COVID-19 therapeutic platforms, said data could be catalytic for these stocks.
Inovio Pharmaceuticals Inc (NASDAQ: INO)
Duncan said he looks ahead to the Phase 3 REVEAL-1 study data in the fourth quarter of 2020. Additionally, the analyst said he expects clinical trial execution updates and data for INO-4800, the company's COVID-19 vaccine candidate, in the fall.
Price Target: $12
Novavax, Inc. (NASDAQ: NVAX)
Phase 3 data from NanoFlu is due in the first quarter of 2020, and updates on progress in a COVID-19 vaccine program are likely to serve as catalysts for Novavax, according to Cantor.
Price Target: $16