Black Friday is past. So is Cyber Monday. But it’s not too late to buy one of the best Christmas gifts of all — biotech stocks. Analysts think there are three biotech stocks, in particular, that look like good picks right now: Stemline Therapeutics (STML), Global Blood Therapeutics (GBT), and Sesen Bio (SESN). Let’s take a closer look.
Stemline: Analysts See 200% Gains Ahead of Upcoming FDA Decision
Stemline filed a biologics license application (BLA) for its lead drug candidate, ELZONRIS (SL-401), which in October 2017 reported promising phase 2 data as a first-line treatment for blastic plasmacytoid dendritic cell neoplasm (BPDCN). The application has received priority review from the FDA and has a PDUFA date scheduled for February 21, 2019, which is when regulators will decide the drug’s commercial fate. ELZONRIS has also been granted Breakthrough Therapy Designation and Orphan Drug Designation by the FDA.
“Given the strength of the pivotal study data combined with the significant unmet clinical need for BPDCN patients, we believe there is a strong likelihood of approval by the PDUFA date,” Ladenburg analyst Matthew Kaplan opined. “We believe SL-401 could generate >$130 million U.S. revenues in the BPDCN indication at peak. We are encouraged by the progress of STML’s commercial preparations and look forward to updates as we move closer to the PDUFA date.”
Kaplan rates STML shares a Buy with a price target of $41, which implies a potential upside of nearly 300% from current levels.
Wedbush’s top analyst David Nierengarten added, “With stock trading near the lower end of its YTD range we would recommend investors accumulate shares going into what is likely to be a straightforward approval process for SL-401. With Breakthrough Status and BLA submitted we believe -401 is poised to be approved in early 2019, and we have confidence that STML can make a successful transition into a commercial company given small size of BPDCN market. With an EV of just about $400M, which is also what we approximate peak SL-401 sales at, we see STML as an attractive and easily digestible takeover target.” (To watch Nierengarten’s track record, click here)
Bottom line: When it comes to Wall Street’s bet, the odds are on this biotech stock, with TipRanks analytics showcasing STML as a Strong Buy. With an average price target of $30.80, analysts are predicting massive upside potential of about 200% for the stock. In total, Stemline stock has received 6 ‘buy’ ratings in the last three months.
Global Blood: Clear Shot at Accelerated Approval
Monday, Global Blood provided positive regulatory update on potential accelerated approval for Voxelotor in sickle cell disease (SCD) after consulting with the FDA. The company plans to have a pre-NDA FDA meeting in Q1:19 and possibly start submitting regulatory filings with a NDA in H2 2019.
In reaction, Wedbush analyst Liana Moussatos boosted her price target on GBT stock to $93 (from $73), while reiterating an Outperform rating.
Moussatos commented, “We remain comfortable with our August 2020 U.S. launch timing, $40.1 million 2020 sales estimate and achieving more than $1 billion in 2023. Although GBT stock greatly appreciated on December 3rd with this news, it should not be a surprise after positive comments from key opinion leaders (KOLs) participating in the FDA-ASH SCD Clinical Endpoints Workshop (October 17-18, 2018; Rockville, MD) were supportive of elevated hemoglobin in SCD (to treat hemolysis) as a primary endpoint for accelerated approval. Due to anticipated reduced regulatory and clinical risk and positive expanded HOPE Part A and HOPE-KIDS 1 results presented at ASH, we are increasing our multiple to 7x for positive Phase 3 results and raising our PT to $93 from $73. With GBT closing at $46.62 on December 3 after the news was released, we consider the stock to be undervalued in front of potentially major regulatory catalysts in 2019-2020. The Company ended Q3 with about $482.1 million in cash and we project runway into 2021 or longer depending on potential sales.”
Moussatos is not the only fan of the biotech company on Wall Street, as TipRanks analytics exhibit GBT as a Strong Buy. Based on 11 analysts polled in the last 3 months, 10 rate a Buy rating on Global Blood stock while only 1 recommends Hold. The 12-month average price target stands at $90.78, marking a 95% upside from where the stock is currently trading.
Sesen: All Eyes on 6-Month Data Readout from VISTA
Sesen is on-track to report updated six-month results from the ongoing Phase 3 VISTA study of Vicinium for the treatment of NMIBC in December. Recall, VISTA is a 134-patient, single-arm study with co-primary endpoints of complete response rate at 12 months and duration of response (DOR), and secondary endpoints of event-free survival, progression-free survival, overall survival, and time to cystectomy. The company previously published the initial 3-month readout back in May (39% CR rate), which was robust and within expectations.
H.C. Wainwright’s Swayampakula Ramakanth has weighed in with his two cents: “Based on the dinner discussions [with KOL], we believe that depending on the final VISTA results, Vicinium could have a compelling case for FDA approval. The more important factors in Vicinium’s favor are the current high unmet need for BCGunresponsive NMIBC and the drug’s excellent safety profile; with virtually no bladder-saving therapies available, a safe, proven treatment like Vicinium could enjoy a first-mover advantage with both the agency and with clinicians. In our view, Vicinium would very likely be approved should the drug achieve a 12-month complete response rate of >20% in VISTA, and should not be ruled out either if it only manages to repeat the previous 16% response rate achieved in Phase 2. Therefore, with regards to the upcoming six-month results, we believe that a response rate of >30% would be a strong positive for Sesen, while a rate on par with the 27% achieved in Phase 2 would still be on track for positive 12-month results.”
Ramakanth rates SESN stock a Buy with 12-month price target of $3.00, which implies a potential upside of nearly 87% upside from current levels.
We can see from TipRanks that SESN has received 4 ‘buy ratings’ in the past 12 months. Based on these ratings, the average $5.00 price target on the stock translates into upside of over 200% from the current share price. (See SESN’s price targets and analyst ratings on TipRanks)