Analysts Chime in on Two Volatile Biotech Stocks: Catabasis Pharmaceuticals Inc (CATB), Alcobra Ltd (ADHD)

The biotech world is full of news today, and analysts are accordingly prompted to share insights on Catabasis Pharmaceuticals Inc (NASDAQ:CATB)¬†and¬†Alcobra Ltd (NASDAQ:ADHD). Catabasis shares are ascending on the heels of an exciting joint research collaboration announcement whereas Alcobra shares are conversely diving in the midst of an FDA decision to place a full clinical hold on its key Phase III trial. On opposite sides of the news spectrum, both analysts remain bullish. Here’s why:

Catabasis Pharmaceuticals Inc

Today, Catabasis shares have skyrocketed 67% after the biotech firm announced a joint research collaboration with Sarepta to investigate combination treatment for Duchenne Muscular Dystrophy (DMD).

The alliance will be a one-two punch combining Sarepta’s exon-skipping technology with Catabasis’ NF-kB inhibitor CAT-1004 in hopes to discover joint treatment approach effects for treating DMD with the aid of a preclinical mouse model.

On back of the research collaboration news, Wedbush analyst Liana Moussatos reiterates an Outperform rating on shares of CATB with a $17 price target, which represents a nearly 134% upside from where the stock is currently trading.

The CATB drug has prospective capabilities to work in all DMD boys, considering that the NF-kB inhibition has potential in decreasing overall inflammation of muscle as well as improving end results, which Moussatos notes is “similar to what is observed with current steroid treatment; we would expect the mechanism of the two therapies to be complimentary.”

Moussatos asserts, “We believe positive data from Part B of the MoveDMD trial as well as signals of synergy in these preclinical studies could lay the foundation for treating DMD boys with the combination. We believe Catabasis will begin a pivotal study next year; these data could allow for boys treated with Exondys 51 to be included. Our discussions with physicians suggest that many are interested in combination therapy.”

Ultimately, “In our view, if MoveDMD is positive, physicians are likely to be open to exploring a combination of the two treatments for DMD boys,” Moussatos concludes.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Liana Moussatos is ranked #200 out of 4,185 analysts. Moussatos has a 42% success rate and yields 12.3% in her annual returns. However, when recommending CATB, Moussatos loses 31.6% in average profits on the stock.

TipRanks analytics exhibit CATB as a strong Buy. Based on 3 analysts polled in the last 3 months, 100% rate a Buy on CATB. The 12-month price target stands at $23.33, marking a 238% upside from where the shares last closed.screen-shot-09-29-16-at-07-26-pm

Alcobra Ltd

Alcobra shares have been sent crashing nearly 55% after yesterday’s news hit that the FDA has decided to place a full clinical hold on its Phase III MEASURE study evaluating the pipeline Metadoxine Extended Release (MDX) drug designed to treat ADHD in adults. The hold comes after a finding surfaced indicating “adverse neurological findings” in a preclinical study.

Despite the FDA verbal decision to place the trial on hold, Cantor analyst Mara Goldstein remains bullish on ADHD stock, considering metadoxine has been out commercially for a period of time already, without revealing issues of safety in any prior trial work, which includes the first Phase III study. As such, Goldstein reiterates a Buy rating on ADHD with a price target of $16, which represents a 700% increase from where the shares last closed.

The analyst believes, “With a full clinical hold placed on Alcobra’s MDX by the FDA, the shares are likely to be pressured this morning. We have liked the reworked Phase III MEASURE study, which has been a key component of our investment thesis, and with proximity to data (1Q17), we liked the risk/reward scenario on the shares. The clinical hold is based on preclinical information rather than clinical events, which could be resolved but we do not have a window into this yet.”

Moreover, “Our valuation of Alcobra is based on the potential of MDX, as we expect it to drive the potential for both a commercial partnership and the possibility of the company being acquired, given the strategic value of a commercial asset with market potential in excess of $1 billion,” Goldstein concludes.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst Mara Goldstein is ranked #1,044 out of 4,181 analysts. Goldstein has a 43% success rate and gains 2.9% in her yearly returns. However, when recommending ADHD, Goldstein loses 13.0% in average profits on the stock.

TipRanks analytics demonstrate ADHD as a Hold. Based on 5 analysts polled in the last 3 months, 2 rate a Buy on ADHD, 2 maintain a Hold, while 1 issues a Sell. The consensus price target stands at $9.33, marking a nearly 360% upside from where the stock is currently trading.


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