Needham Sees Potential in These Healthcare Stocks: Omeros Corporation (OMER), Senomyx Inc. (SNMX)

Needham & Company analyst Serge Belanger weighed in on biotechnology companies Omeros Corporation (NASDAQ:OMER) and Senomyx Inc. (NASDAQ:SNMX) on August 31, rating both stocks a Buy.

Belanger affirmed a Buy rating on Omeros with a price target of $32 after the company released data from its OMS721 Phase 2 trial on August 18. OMS721 is Omeros’s pipeline drug to treat thrombotic microangiopathies (TMAs). The company describes this condition as “clumps of aggregated platelets in small blood vessels, which lead to thrombocytopenia (below-normal platelet counts) and schistocytes (fragmentation in red blood cells) that can cause dangerously low oxygen levels in organs like the brain and kidney as well as anemia.”

The Phase 2 trial tested three patients, two of whom have atypical hemolytic uremic syndrome, or aHUS. These two patients received the mid-dose of the pipeline drug and experienced a 47% increase in mean platelet count; an 86% decrease in mean schistocyte count; and a 71% increase in mean haptoglobin.

While Belanger notes that “the initial ph 2 data for OM721 looks promising and supports evaluation in the fixed-dose portion of the ph 2 study, it remains early to fully evaluate the potential of OMS721 in treating TMAs and make comparisons to Soliris (eculizumab), the current standard of care for aHUS, which generates >$2B in annual sales.” As such, the analyst continues to view Omeros “as a story whose focus is on the Omidria launch and pipeline opportunities with large market potential.”

Belanger has rated Omeros seven times total since 2013, earning a 50% success rate recommending the company and a +39.4% average return per recommendation when measured over a one-year horizon and no benchmark.

Belanger also reiterated a Buy rating on Synomyx with a $10 price target after the company announced, alongside PepsiCo, the commercialization of new products formulated with Sweetmyx S617. Synomyx uses proprietary taste science technologies to develop new flavor ingredients for food and beverage. Sweetmyx S617 will reduce the amount of high-fructose corn syrup in Pepsi’s beverage products by 25%

John Poyhonen, President and CEO of Senomyx, said of the partnership, “In August, Senomyx earned a commercial milestone from PepsiCo for the first sale of a concentrate using Sweetmyx S617. Reformulated concentrates will be used in Manzanita Sol® nationally and Mug Root Beer® in two United States test markets. We are looking forward to receiving feedback on the market acceptance of these lower-calorie offerings.”

PepsiCo currently has exclusive rights to use new flavor ingredients and natural high intensity sweeteners internationally in non-alcoholic beverages.

Belanger noted, “While the announcement may seem underwhelming, since these are not prominent PEP brands and the launches are occurring on a regional level, we view the announcement as the initial roll-out of S617 products. We believe PEP is committed to the use of S617 to deliver products with reduced sugar and we expect that over time S617 will be incorporated in additional PEP products in the U.S. as well as in other geographies.”

Overall, Serge Belanger has a 44% success rate recommending stocks and a +30.0% average return per recommendation when measured over a one-year horizon and no benchmark.

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