When a stock’s price hits a slump, it’s tempting to just avoid those stocks. After all, bottom prices usually happen for a reason, and those reasons usually don’t bode well for the stock’s prospects. But there are times—more frequent than most would suspect—when this common wisdom conflicts with the facts.
Because the fact is that many fundamentally healthy stocks can and will experience periods of falling stock prices. Maybe there was a change in company leadership, or a hyped product didn’t live up to expectations, or sales were down for a month. Any of these – and many more short-lived factors – can push stock prices down.
For investors, those lower share prices in otherwise solid stocks mark an important entry point, an opportunity to buy low before selling high. The trick is to separate the odds from the really bad stocks.
Recently, The Street analysts tapped into three stocks they see as long-term winners, but with low share values at the moment. According to The TipRanks database, these are Strong Buy stocks with solid upside potential. Let’s take a closer look at that.
Bioxcel Therapeutics (BTA)
We’re starting with a small-cap biopharmaceutical company, Bioxcel. This company works in the fields of neuroscience and immune oncology, researching and developing new drugs for the treatment of serious diseases. Bioxcel uses an AI approach to screen a pool of drug candidates and find the right one to advance to clinical stages.
For now, Bioxcel has two drug candidates in the pipeline. The first, BXCL501, is an orally dissolving thin film – a relatively new mode of drug delivery – of dexmedetomidine. The drug was originally developed as a treatment for agitation due to opioid withdrawal symptoms and other conditions. The FDA has accepted Bioxcel’s NDA application for BXCL501 for the treatment of agitation due to schizophrenia and bipolar disorder. The PDUFA date is set for January 5 of next year. Adoption was supported by the SERENITY I and II pivotal Phase 3 studies – data from those studies showed that BCXL501 provided significant clinical relief within 20 minutes of dosing.
Other clinical trials of the drug are ongoing, including the TRANQUILITY Phase 1b/2 trial. This trial is evaluating the drug as an acute treatment for dementia-related agitation. The company plans to continue clinical trials in late-stage dementia patients in the second half of this year. Data from the RELEASE trial, published in March, demonstrated efficacy in treating patients with opioid withdrawal symptoms and supported the investigation of this adjunctive drug candidate.
The second drug candidate, BCXL701, is an orally administered innate immunity activator used in the treatment of aggressive prostate cancer and other advanced solid tumors. By the end of May, this drug candidate had demonstrated anti-tumor activity as a monotherapy against melanoma and had been evaluated for safety in more than 700 patients.
But even with two drug candidates showing promise and doing recent clinical research, BTAI stocks have fallen. The answer could lie in the company’s stock offering in June, in which it marketed 3,155 million shares for $31.70 each. That pricing was well below the $36.85 per share where the stock traded the previous day.
Canaccord analyst Sumant Kulkarnic reviewed this stock and wrote: “Stock action in BTAI has been frustrating. This was compounded by some investor fears around the timing/price of recent capital increases. In terms of catalysts, a potential approval for BXCL501 comes in early , and a pivotal program for dementia agitation will begin in 2H21. The latter remains an important point of attention for investors…. In summary, as long as BTAI can deliver on its plans, we continue to believe that patient investors can be rewarded…”
To this end, the analyst rates BTAI as a buy, along with a price target of $95. Investors will take home a gain of approximately 287%, should the target be reached in the next 12 months. (To see Kulkarni’s track record, click here)
Strong Buy’s consensus rating for this stock is unanimous, based on 4 recent reviews – showing Canaccord’s opinion is not an outlier. BTAI shares are trading at $24.86 and have an average price of $112, indicating a very bullish upside potential of 354%. (See BTAI stock analysis on TipRanks)
Hookipa Pharma (HOOK)
Next up, Hookipa Pharma, is another clinical research firm in the field of immune oncology. Hookipa uses a proprietary platform to modify arenaviruses to deliver virus-specific and tumor-specific genes directly to the patient’s T cells, “training” the immune system to create the appropriate response. The company is using this approach to develop treatments for several serious viral diseases, including CMV, HBV and HIV, as well as HPV-related cancer and prostate cancer.
The company has two leading research trajectories. In the field of infectious diseases, HB-101 is a potential prophylactic treatment against CMV – a candidate for a vaccine. HB-101 is currently in Phase 2 of the clinical trial and enrolling patients. Safety and efficacy data are expected to come in in 2H21.
The company also has several drug candidates in Phase 1 trials against HPV-related cancers. This is a dangerous class of cancers that affect women and is related to the human papilloma virus. The company started trials with HB-201 and HB-202 at the end of last year. Data released last May showed acceptable safety and tolerability factors. In June, Hookipa released data on HB-200, one of the other cancer drug candidates. The candidate showed only 18% overall response, but exhibited antigen-specific CD8 + T cell responses described as ‘excellent’.
Despite these ongoing trials and early data, the company’s stock plummeted in June. HC Wainwright analyst Swayampakula Ramakanth believes the sale was unjustified.
“In our view, the sell-off is likely due to lower-than-expected efficacy data from the cohort receiving alternating HB-202/HB-201 treatment…. However, we think it is premature to call. First, all eight patients enrolled in the HB-202/HB-201 cohort to date remain on treatment, and only four of them are evaluable for efficacy, one of whom achieved the target tumor shrinkage of nearly 20%. In addition, preliminary data on antigen-specific CD8+ T cells are consistent with the preclinical data. Finally, the company is still increasing the dose level for HB-202/HB-201 and no dose-limiting toxicities and no Grade 3 treatment-related adverse events were observed,” Ramakanth noted.
The analyst summed up: “Overall, we believe that alternating treatment with HB-202/HB-201 still has the potential to provide stronger efficacy compared to HB-201 monotherapy, and the recent sell-off creates an attractive starting point for long-term investors.”
In line with these comments, the analyst rates HOOK a Buy, and its price target of $21 implies upside potential of about 181% for one year. (To view Ramakanth’s track record, click here)
Wall Street’s love for this stock is clear from the unanimous Strong Buy consensus rating. That consensus is based on 4 recent Buy reviews, which is good news for HOOK. The stock is priced at $7.48 and their average price target of $23.33 implies ~212%. (See HOOK stock analysis on TipRanks)
Medicines up (ASND)
We close this list with Ascendis Pharma, another biotech company. Ascendis is an emerging company focused on endocrinological disorders, serious diseases that can affect the entire body of the patient. The company’s pipeline includes three drug candidates in clinical trials for diseases including childhood and adult growth hormone deficiency, adult hypoparathyroidism and achondroplasia. Ascendis also has an oncology program, with two drug candidates in early development.
Ascendis is developing these drug candidates using a proprietary platform, a platform that allows a “carrier” drug – one with known biochemical actions – to deliver the therapeutic agents directly to specific areas of the body. The therapeutic agents are proteins, peptides and other small molecules.
The company’s two top candidates, TransCon hGH and TransCon PTH, have both been in the news recently. The first, also called lonapegsomatropin, has its Biologics License Application pending with the FDA, and the regulatory agency wants additional time for further review. In mid-June, it was announced that the PDUFA date has been moved to September 25. This drug is a treatment for pediatric growth hormone deficiency.
Also in the news, the company announced that it had met enrollment goals for its Phase 3 Pathway trial for TransCon PTH, palopegteriparatide, a treatment for hypoparathyroidism in adults. The trial is already underway and first results are expected in 1Q22. If the trial warrants it, the company expects to submit a new drug application in mid-2022.
And yet, with approval applications pending and clinical trials underway, ASND shares are down 32% this year.
Joseph Schwartz, which is hedging Leerink’s share, however, thinks the current low price is an opportunity for investors to get in.
“Notwithstanding [the] announcement that ASND’s PDUFA for TransCon hGH is delayed by three months to September 25, our positive outlook for a successful regulatory outcome remains unchanged… The company believes the FDA simply needs more time to review the application and review their internal procedures to complete, and the FDA may not need the entire three months. So far, the agency is not requesting additional details or site visits; ASND believes that all requests have been addressed and that the labeling discussions have concluded very favorably… Now that the PDUFA has been pushed back and the overhang of the potential worst-case scenario… apparently removed, we believe that this strengthens the probability of a positive regulatory outcome,” Schwartz said.
Schwartz rates ASND stock as outperforming (i.e., buying) along with a price target of $178. Investors can earn ~54% gains if the analyst’s statement comes true. (To view Schwartz’s track record, click here)
Overall, Wall Street seems poised to give this stock a shot. Out of 10 recent ratings, the Buys outweigh the Holds 9 to 1, for a strong buy consensus rating. Shares are selling for $115.30 and their average target of $190.13 represents a ~65% increase over the next 12 months. (See ASND Stock Analysis on TipRanks)
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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.