Yesterday was a great day for biotech stocks. The iShares Nasdaq Biotechnology ETF (NASDAQ:IBB), which tracks 144 biotech and pharmaceutical companies, reversed losses and surged as much as 4% from the session’s lows. Among the equities in focus today are biotech companies Relypsa Inc (NASDAQ:RLYP), Sarepta Therapeutics Inc (NASDAQ:SRPT), Zafgen Inc (NASDAQ:ZFGN), and Clovis Oncology Inc (NASDAQ:CLVS).
Oppenheimer analyst Ling Wang reiterated an Outperform rating on shares of Relypsa, with a price target of $55, which implies an upside of 167% from current levels.
Wang wrote, “We recently met with RLYP management to obtain an update. RLYP plans to block the IMS data for competitive reasons and will instead release monthly Veltassa prescription data at mid-month 8-K filing. Feedback from an RLYP-conducted survey post-Veltassa approval showed high physician interest, which suggests a lack of general concern on Veltassa’s black box label on drug separation. We continue to believe Veltassa has the potential to change the treatment paradigm of hyperkalemia and view the share weakness on competitive front (YTD >30% down) as overdone.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Ling Wang has a yearly average return of -21.5% and a 14.2% success rate. Wang has a -10.3% average return when recommending RLYP, and is ranked #3557 out of 3579 analysts.
Sarepta Therapeutics Inc
RBC Capital analyst Simos Simeonidis reiterated a Sector Perform rating on shares of Sarepta, with a $15 price target, following the news that the FDA has postponed a meeting of its advisory panel to review Sarepta’s drug for a rare muscle wasting disorder due to inclement weather forecast for Washington DC.
Simeonidis commented, “When can we expect a new panel? “A future meeting date will be announced in the Federal Register“. We believe it will be soon, given the high profile nature of this AdCom and the pressure/scrutiny the agency is under to get to a decision. Thus, we assume that despite the difficulty in coordinating everyone’s schedules it should not be more than a 2-4 week delay. On the other hand, if the agency wants to keep most of the same (still unannounced) roster, we point to the obvious challenge of coordinating the schedules of a dozen or so busy clinicians and scientists, so we see an outside chance for a longer delay.”
The analyst concluded, “No major impact, other than the prolongation of the anxiety for patients, companies, investors and analysts. This delay also gives patient advocacy groups more time to continue to campaign against the negative tone of the AdCom briefing documents, realizing that a CRL for eteplirsen means the exon 51 DMD community would be left without a drug near-term.”
According to TipRanks.com, analyst Simos Simeonidis has a yearly average return of -30.3% and a 17.8% success rate. Simeonidis has a -60.6% average return when recommending SRPT, and is ranked #3536 out of 3579 analysts.
The overwhelmingly majority of analysts still say Sarepta Therapeutics is a “buy.” The average forecast is for the stock to hit $40 in the coming months, according to TipRanks.
FBR analyst Christopher James upgraded shares of Zafgen from a Market Perform to an Outperform rating, while raising the price target to $20 (from $9.00), following positive top-line efficacy data from the Phase III ZAF-311 trial in patients with the rare Prader-Willi syndrome.
James wrote, “Beloranib achieved statistically significant reductions in co-primary efficacy endpoints of total body weight and hyperphagia-related behaviors relative to placebo. With these data, additional data from ZAF-203 expected in 1Q16, and a risk mitigation proposal for beloranib’s potential use in PWS patients, Zafgen plans to revisit discussions with the FDA regarding beloranib’s complete clinical hold status. Recall, beloranib was placed on complete clinical hold in December following two patient deaths due to pulmonary embolism (PE) and a series of thrombotic events. We view the efficacy data for beloranib as compelling at current share prices, and we remain focused on thromboembolic risk in PWS patients and Zafgen’s next steps with the FDA.”
According to TipRanks.com, analyst Christopher James has a yearly average return of -33.3% and a 12.1% success rate. James has a -62% average return when recommending ZFGN, and is ranked #3525 out of 3579 analysts.
Out of the 6 analysts polled by TipRanks, 5 rate Zafgen stock a Buy, while 1 rates the stock a Hold. With a return potential of 75%, the stock’s consensus target price stands at $18.17.
Clovis Oncology Inc
Finally, Credit Suisse analyst Kennen MacKay initiated coverage on shares of Clovis Oncology, with an Outperform rating and price target of $32, which implies an upside of 45.5% from current levels.
MacKay wrote, “We note potential for near-term rucaparib approval (NDA submission in Q2:16), and we model peak $1.4Bn in annual ovarian cancer revenues before patent expiry in ’24/’25 US/EU (comp. of matter, assuming HW extensions). Despite setbacks, we see value in rociletinib, and anticipate regulatory approval with a label similar to Tagrisso, though we do not see the asset as competitive. We anticipate the FDA will grant approval to give physicians options in patients who cannot tolerate Tagrisso (up to 10%). Ultimately, we note T790M patients have few other treatment options, and we see rociletinib as a superior alternative to chemotherapy, suggesting reason for FDA approval despite response rates well below Tagrisso.”
As of this writing, out of the 7 analysts polled by TipRanks in the last 3 months, 4 rate Clovis stock a Hold, while 3 rate the stock a Buy. With a return potential of 64%, the stock’s consensus target price stands at $36.14.