For more risk-tolerant investors, biotech companies are clamoring for purchases. This space is consistently on the street’s radar, as a single catalyst, such as a positive FDA outcome or promising trial results, can send stocks through the roof. For example, last week ChemoCentryx (CCXI) saw its stock prices skyrocket 100% in just one day, after the FDA approved its blood vessel inflammation drug Tavneos.
However, the reverse is also true, meaning that biotech stocks carry a fair share of the risk. So how should investors pick the biotech names that are most poised to outperform the market? We recommend looking at Wall Street analysts.
While the consensus on a particular stock can be wildly mixed, it’s a signal that can’t be ignored if all the analysts covering the stock are on board. With this in mind, we used the TipRanks Database to limit 2 biotech companies that have received only bullish calls in the past three months. According to the Wall Street view, they will even double – or gain even more in the next 12 months.
The first stock we’ll look at is Celcuity, a biotech researcher with a two-track research program. The company, which studies new treatments for cancer, is following two research trajectories. The first is a new drug candidate, gedatolisib, a first-class pan-PI3K and mTOR inhibitor that has been shown to be effective in the treatment of breast cancer. The second line of research is the CELsignia platform, a patented technology that uses a patient’s cancer tumor cells to identify the signaling pathway causing the individual’s disease – and enable more accurate diagnosis, for more targeted treatment with the optimal medication.
In gedatolisib, Celcuity is preparing to initiate a Phase 3 clinical trial evaluating the drug candidate as a treatment for ER+/HER2-negative metastatic breast cancer. The trial is scheduled to begin in 1H22, shortly after the publication of initial results from previous clinical trials. In a Phase 1 study involving 17 patients earlier this year, the drug was found to be both safe and tolerable. The CELsignia platform is the subject of a series of ongoing studies evaluating its efficacy in targeting therapies for breast cancer patients.
Among the fans is Canaccord analyst Arlinda Lee, which rates CELC as a buy, along with a price target of $50. If correct, the analyst’s target could yield an annualized return of 176%. (To view Lee’s track record, click here)
“Over the next 12-24 months, we expect several catalysts to push Celcuity stocks higher. For lead candidate gedatolisib, we expect clinical data presentation at a medical conference in 4Q… With >450 patients already dosed and encouraging efficacy/safety in a Ph1b trial of 138 patients, we are optimistic that the pivotal study that follows year begins, gedatolisib can confirm efficacy/safety and support regulatory approval,” the analyst added.
Like Lee, the rest of the street is optimistic about CELC. Based on the 4 buy recommendations from the past three months and 177% upside potential, it’s clear that this ‘Strong Buy’ biotech has a lot to brag about. (See CELC stock analysis on TipRanks)
aTyr Pharma (LIFE)
For the second share, we switch to the inflammatory diseases segment. aTyr Pharma is investigating the ‘extracellular functionality and signaling pathways of tRNA synthetases’. The company is pursuing these routes to develop new therapies for a variety of cancers and inflammatory conditions. The company’s lead drug candidate, ATYR1923, is a potential first-class therapeutic agent and is currently undergoing four clinical trials. Other drug candidates are in preclinical research phases.
ATYR1923 is a Neuropilin-2 (NRP2) agonist, which acts through receptor proteins expressed by the NRP2 gene. These pathways influence the development of cardiovascular disease and are implicated in an inflammatory lung disease, pulmonary sarcoidosis. Pulmonary sarcoidosis has a high unmet medical need.
In September, aTyr published data on its Phase 1b/2a trial of ATYR1923 in the treatment of pulmonary sarcoidosis. The key endpoint was met, demonstrating that the drug candidate was safe and well tolerated, and in other endpoints, patients showed clinically meaningful improvements in symptom relief.
The company is also evaluating ATYR1923 as a treatment for COVID-19, in response to the ongoing pandemic. COVID causes pneumonia as one symptom; ATYR1923 was tested in a Phase 2 randomized, double-blind, placebo-controlled study of 32 hospitalized patients. Top line data showed positive results.
This company’s multiple routes with ATYR1923 caught the attention of RBC’s 5-star analyst Know MacKay, who writes: “We see recent data from ATYR1923’s ph2 pulmonary sarcoidosis (PS) study that provides proof-of-concept for both the agent and aTyr’s unique research platform targeting tRNA synthetase signaling and NRP-2 biology in inflammation and cancer.We view ATYR1923 as an undervalued asset with potential to reach blockbuster status in PS (we model risk-adjusted global sales of $1.2 billion by 2040) and an upside of expansion potential into other interstitial lung diseases (ILDs).”
In line with these comments, MacKay LIFE stock estimates an Outperform (ie buy), with a price target of $22. This figure suggests room for ~139% upside potential for the coming year. (To view MacKay’s track record, click here)
Given that only buy ratings have been issued in the past three months, there is no doubt that this biotech is a “strong buy.” Not to mention the $20 average price target, which places the upside potential at 117%. (See LIFE stock analysis on TipRanks)
To find great ideas for trading biotech stocks at attractive valuations, visit TipRanks’ Best stocks to buy, a newly launched tool that unites all of TipRanks’ stock insights.
Disclaimer: The opinions expressed in this article are those of the recommended analysts only. The content is for informational purposes only. It is very important to do your own analysis before making any investment.