The New Year brings another turbulent season for biotech investors as top-line data continues to be released and the FDA’s approval process marches on. Here is what Liana Moussatos of Wedbush, a top ranked analyst, is keeping an eye on in the emerging pharmaceutical area going into 2016 for Relypsa Inc (NASDAQ:RLYP), Intercept Pharmaceuticals Inc (NASDAQ:ICPT), and XOMA Corp (NASDAQ:XOMA).
Relypsa has been in many biotech headlines since the FDA approved Veltassa in late October. Veltassa treats hyperkalemia, or elevated potassium levels, and is the first drug of its kind since 1958. The company launched the drug last month with 120 sales reps, and has recently announced a partnership with Sanofi to help market the drug. Moussatos projects peak annual sales for the drug to reach over $1 billion in the U.S. alone.
Moussatos currently has an Outperform rating on Relpysa with an $86 price target, last rated on December 30, 2015. She explains, “Given the clinical profile of patiromer [Veltassa], we believe it has the potential to fill an unmet need for [chronic kidney disease] and [heart failure] patients with mild or moderate-to-severe hyperkalemia… In the U.S., we estimate there are about 2.4 million CKD and HF patients who would be immediately eligible for patiromer treatment, with additional opportunities to further expand and grow the market.”
Looking forward, the analyst is expecting clinical data from the drug-to-drug interaction testing in early 2016. Moussatos explains, “While we are unaware of evidence from Veltassa’s clinical program that suggests a DDI, we believe positive results from the DDI study could reduce the time required in the product insert to dose other drugs with in vitro binding to less than six hours before and after Veltassa dosing.” Moussatos reiterates her Outperform rating on the company with an $86 price target.
According to the 9 analysts polled by TipRanks in the last 3 months, 8 are bullish on RLYP while one remains neutral. The average 12-month price target for the stock is $45.44, marking a 60% potential upside from where shares last closed.
Intercept Pharmaceuticals Inc
Moussatos remains bullish on Intercept with an Outperform rating and an acquisition value of $493, last rated on December 30, 2015. The analyst is optimistic on the company thanks to its primary pipeline candidate, OCA, or obeticholic acid, to treat Primary Biliary Cirrhosis (PBC). The analyst notes the drug’s high probability for success, declining regulatory risk, and low commercial risk. The analyst adds that documents briefing OCA in PBC will be released before April 7, with potential FDA approval by May 29.
She explains, “In short, we believe OCA possesses one of the more clinically de-risked data sets among biotech drugs in development. Despite stopping the FLINT Phase 2 NASH trial one year early for better-than-expected efficacy, PBC remains the lead program and is a relatively well defined orphan market with a clear unmet medical need, in our view. Should OCA be approved, we believe the barriers to commercial adoption will be relatively low as many patients have been identified and are receiving treatment.”
Moussatos is one of 6 analysts polled by TipRanks who are bullish on Intercept, while 2 are bearish and 2 are neutral. The average 12-month price target between these 10 analysts is $318.75, marking a 113% potential upside from where shares last closed.
Going into 2016, Moussatos is awaiting the opening of Xoma’s second international site for Phase 2 testing of XOMA 358 in congenital hyperinsulinism. The analyst is also looking forward to top-line data from Phase 2 testing of XOMA 358 in both congenital hyperinsulinism and post-bariatric surgery hyperinsulinism, as well as top-line Phase 3 data from gevokizumab in Pyoderma gangrenosum.
The analyst highlighted the company’s license agreement with Novo Nordisk for XMetA program in diabetes, commenting, “We consider this event to be positive as it provides nondilutive financing for the company while allowing the XMetA program to be developed by one the industry leaders in diabetes, Novo Nordisk.” Overall, Moussatos remains bullish on the company as she last issued an Outperform rating with a $6 price target on December 30, 2015.
Moussatos remains bullish on Xoma while 2 other analysts polled by TipRanks are neutral. The average 12-month price target between these 3 analysts is $3.90, marking a 193% potential upside from where shares last closed.