Biotech stocks are risky investment bets that can swing an investor's fortunes in a big way. An investment decision backed by careful scrutiny and analysis — of a company's pipeline, collaborations, fundamentals, key make-or-break events and cash runway — can fetch disproportionate returns.
Here are three biopharma stocks that have the potential to more than double from current levels:
- Immatics (NASDAQ:IMTX)
- FibroGen, Inc. (NASDAQ:FGEN)
- Replimune Group, Inc. (NASDAQ:REPL)
- Immatics: Immatics is a clinical-stage biopharma engaged in the discovery and development of T cell directing cancer immunotherapies.
The shares of the German biotech were listed on the Nasdaq in July 2020 following its business combination with Arya Sciences Acquisition Corp, a SPAC sponsored by Perceptive Advisors.
The Pipeline: The company's T cell receptor (TCR)-based immunotherapies offer a targeted therapy to patients with high medical need. It has two lead product classes, namely engineered Adoptive Cell Therapies, or ACTengine, and antibody-like TCR Bispecifics, or TCER.
ACTengine is based on genetically engineering patients own T cells — a type of blood cells that are key to the immune system — with a TCR to recognize the cancer target. This would program the T cells to attack the tumor. These engineered T cells are then multiplied in labs and reinfused into the patients to treat the tumor.
The product candidates belonging to the class ACT are IMA201, IMA 202 and IMA203, which are in Phase 1 trials, as well as IMA204, which is in preclinical development. IMA301 is preclinical stage ACT allo product candidate.
IMA401 and IMA402 are two preclinical TCR bispecifics candidates.
"Overall, we view TCR approaches as potentially transformational for the solid tumor therapeutic space, with the ability to target a wide range of antigens not accessible by CAR-T or classical antibody approaches," SVB Leerink analyst Jonathan Chang said in a note.
Although competition is steadily increasing, Immatics' comprehensive TCR-based immunotherapy approach will expand the potential utilization of TCRs across a broad range of tumor types and stages, the analyst said.
Cash and cash equivalents as well as other financial assets stood at $303.6 million as of Sept, 30, 2020, providing cash runway into 2023.
Upcoming Catalysts: Combined initial data readout from its ACTengine product candidates, IMA201 and IMA 202, in solid tumors and IMA203 in hematologic malignancies and solid cancers in the first quarter.
Investigational new drug application filing for IMA204 in solid cancers in 2021.
IND filing for IMA301 in hematological and solid cancers in 2022.
IND filing for IMA-401 in solid cancers by year end 2022.
FibroGen: FibroGen focuses on advancing treatment options for anemia, fibrotic disease and cancer, leveraging its expertise in fibrosis and hypoxia-inducible factor biology.
HIF is a protein complex that plays a key role in the body's response to low oxygen concentrations and inflammation.
The Pipeline: FibroGen's anemia drug roxadustat is being developed along with AstraZeneca PLC (NASDAQ:AZN). It is approved in China and Japan for chronic kidney disease-induced anemia, and awaits clearance in the U.S. and Europe for the same indication.
It is also being evaluated for anemia in myelodysplastic syndrome patients and chemotherapy-induced anemia.
FibroGen's fibrotic portfolio consists of pamrevlumab, which is being evaluated for multiple indications such as pancreatic cancer, Duchenne muscular atrophy, idiopathic pulmonary fibrosis and COVID-19.
The company's announcement March 1 regarding the FDA's decision to hold an Adcom meeting ahead of the roxadustat PDUFA date of March 20 led to a sell-off in shares. The stock has pulled back over 30% since the start of March.
"At this reduced share price we believe that the market is still undervaluing FibroGen's anti-CTGF antibody pamrevlumab, which is in phase 3 studies for three large indications, as well as roxadustat in China and Japan," SVB Leerink analyst Geoffrey Porges said in a note.
Even in the bear-case scenario of no approval for roxadustat in the U.S. and EU, FibroGen shares are worth $52/share, according to the analyst.
This, the analyst said, is an unlikely scenario. Approval for the drug in both dialysis-dependent and non-dialysis-dependent patients could push the stock value up to $85, he said.
The company recently initiated a Phase 3 study of pamrevlumab in combination with systemic corticosteroids in patients with ambulatory Duchenne muscular dystrophy.
FibroGen expects to end 2021 with cash in the range of $660 to $670 million.
Upcoming Catalysts: Phase 2 data for roxadustat in chemotherapy-induced anemia in the second-half of 2021.
Data from the Phase 3 study of roxadustat in anemia of myelodysplastic syndromes in the first half of 2022.
Resection data from the Phase 3 study of pamrevlumab in locally advanced pancreatic cancer in the second half of 2022.
Data from the Phase 3 study of pamrevlumab in DMD in the second half of 2022.
Replimune: Replimune is a pursuing a novel approach in taking on cancer with its oncolytic immunotherapy. It uses viruses that have been modified to selectively replicate in tumor cells and kill them. In a two-pronged strategy, oncolytic viruses kill tumors at the site of injection and also activate immune system to kill cancer cells anywhere in the body.
The company's lead candidate RP1 is being evaluated as a monotherapy as well as in combination with anti-PD1 antibodies such as Bristol-Myers Squibb's Opdivo and the Sanofi (NASDAQ:SNY)-Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) combo's Libtayo for multiple cancer types such as melanoma, non-melanoma skin cancer, micro instability-high cancers, non-small cell lung cancer, or NSCLC, and cutaneous squamous cell carcinoma, or CSCC.
RP2 and RP2 are being studied as monotherapy option and in combination with anti-PD1 antibodies against solid tumors.
"While the oncolytic virus landscape is competitive, we believe REPL has a lower risk profile given similarities between REPL's approach and the clinically validated T-Vec approach and the fact that REPL is being led by the same team that developed T-Vec," SVB Leerink analyst Chang said.
The cash balance of $493.3 million as of Dec. 31, the company said, will fund its operating expenses and capital expenditure requirements into the second half of 2024.
Upcoming Catalysts: Initial data for RP1 in new indications such as anti-PD1 failed NSCLC, anti-PD1 failed CSCC and CSCC solid organ transplant recipient patients due in 2021.
Updates across all RP1 programs anticipated in 2021.
Initial Phase 1 data for RP2 in combination with Opdivo due in 2021.
Initial single-agent data for RP3 in 2021.
Screening Criteria Used: Market cap of over $300 million.
Average trading volume of over 100,000.
Cash runway of two-plus years.
Sell-side rating of Buy or above.
Key upcoming catalysts.