Bank of America Sees Over 350% Upside in Foamix (FOMX) Stock

Foamix (FOMX) hasn’t had a great year, with shares falling 33% since the start of 2019. But things aren’t as bad as they may seem, argues Bank of America analyst Jason Gerberry.

The analyst reiterated a Buy rating on the stock, citing an attractive valuation and pipeline optionality. Gerberry also went out on a limb and maintained an ultra-bullish price target of $11. For perspective, Foamix’s stock closed at $2.39 yesterday, so this implies upside of more than 350%.

Yesterday, the company outlined its ambitious strategy in its earnings conference call. Gerberry has compiled the following takeaways from the call:

  1. NDA review  FOMX is through mid-cycle review with the FDA and remains confident for the anticipated approval of 101 in October.
  2. Launch preparation  sales force alignment is underway (hiring offer to be made contingent on FDA approval). FOMX remains on track for early January launch of FMX-101, and plans to have 51 sales rep ready at launch.
  3. Pricing  launch price has not been finalized for FMX101, but mgmt. reiterated expectation that reimbursement access with limited restriction (tier 2 to tier 3) is feasible for FMX-101 with a net-to plan pricing range of $200-$400m.
  4. FCD105 (acne)  FMX plans to initiate a Phase 2 trial of FCD105, a topical foam formulation that combines 3% minocycline (anti-bacterial) and 0.3% of adapalene (anti-inflammatory), for the treatment of acne in 3Q19. The trial will be randomized US study of ~400 patients, with topline results expected mid-2020.

Overall, this acne drug maker stands as a ‘Strong Buy’ name among Wall Street analysts. In the last three months, FOMX has won three bullish recommendations. With a return potential of close to 360%, the stock’s consensus price target lands at $11.00.

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