Biotechnology is notoriously one of the most volatile sectors on the stock market. As such, the approval or denial of a biotechnology company’s pipeline treatment or positive or negative data from a trial can send its stock through the roof or down to the ground.
A handful of biotechnology companies are slated to announce updates on their pipelines in the second half of 2015. Here is what investors should watch out for in Sarepta Therapeutics Inc (NASDAQ:SRPT), Intercept Pharmaceuticals Inc (NASDAQ:ICPT), and Novavax, Inc. (NASDAQ:NVAX).
Sarepta Therapeutics Inc
Sarepta Therapeutics focuses on developing RNA-based therapeutics for the treatment of rare, infectious, and other life threatening diseases.
On June 26, Sarepta announced that it had completed a New Drug Application for eterplirsen, its pipeline drug that targets the underlying cause of Duchenne muscular dystrophy (DMD), a genetic degenerative muscle disease. The deadline for FDA approval of eterplirsen is rapidly approaching on August 25.
Cowen and Co analyst Phil Nadeau is “uncertain of eteplirsen’s clinical profile in relation to a potential FDA and/or EMA approval. Eteplirsen initially appeared to (and later failed to) induce novel dystrophin production and showed significant clinical benefit in its Phase 2.” As such, the analyst rated Sarepta Therapeutics a Market Perform on August 7 without providing a price target.
On average, Phil Nadeau has a 69% success rate recommending stocks and a +29.3% average return per recommendation when measured over a one-year horizon and no benchmark. Nadeau has only given Sarepta a neutral rating, thus not earning a success rate nor an average return on the stock.
Out of 9 analysts polled by TipRanks in the last 3 months, 5 analysts are bullish on Sarepta Therapeutics and 4 are neutral. The average 12-month price target for Sarepta is $36.63, marking a 12.85% potential upside from where the stock last closed. On average, the all-analyst consensus for Sarepta is Moderate Buy.
Intercept Pharmaceuticals Inc
Intercept Pharmaceuticals is known for developing drugs to treat liver disease. The company’s pipeline drug is called Obeticholic acid, or OCA, and is used to treat patients with the liver disease Primary Biliary Cirrhosis (PBC).
Intercept announced on June 29 that it had completed a New Drug Application (NDA) for OCA to treat PBC. The drug received fast-track designation in the United States and orphan drug designation in both the U.S. and Europe. Investors are hoping that the FDA will announce their decision of whether they approve or deny OCA this week.
Wedbush analyst Liana Moussatos believes “the FDA could provide confirmation of a Q1:16 advisory committee meeting and PDUFA date” for OCA and “anticipate[s] this announcement could provide a catalyst for the stock.” The analyst sees the drug launching “in H1 2016 and project[s] WW peak sales could reach $2.26BN in 2022.” Moussatos reiterated an Outperform rating on Intercept on August 7 with a fair value estimate of $493.
On average, Liana Moussatos has a 42% success rate recommending stocks and a +23.2% average return per recommendation when measured over a one-year horizon. She has rated Intercept 21 times since 2009, earning a 40% success rate recommending the stock and a +59% average return per recommendation.
Similarly on August 7, Needham analyst Alan Carr reiterated a Buy rating on Intercept with a $500 price target, noting, “The company submitted an NDA for Obeticholic Acid (OCA) in Primary Billiary Cirrhosis in late June 2015. A response from the agency regarding filing and priority review is expected this month. We assume approval and launch in late 1Q16.”
Overall, Alan Carr has a 70% success rate recommending stocks and a +37.7% average return per recommendation when measured over a one-year horizon and no benchmark. The analyst has rated Intercept 8 times since 2012, earning a 50% success rate recommending the stock and a +64.9% average return per recommendation.
Out of 12 analysts polled by TipRanks in the last 3 months, 9 are bullish on Intercept Pharmaceuticals and 3 are neutral. The average 12-month price target for Intercept is $400.83, marking a 69.51% potential upside from where the stock last closed. On average, the all-analyst consensus for Intercept is Moderate Buy.
Novavax, Inc. specializes in developing recombinant protein nanoparticle vaccines to treat a broad range of infectious diseases.
The company is currently in mid-stage trial for a vaccine to treat respiratory syncytial virus (RSV), which affects individuals with compromised immune systems, including small infants and senior citizens. Novavax has been working on two separate trials: an immunization study for the elderly and an immunization study in expecting mothers in an attempt to implement infant immunity. The company is expected to release data from both trials in the third quarter of this year.
Novavax also recently released top-line data from its Phase 1 Ebola vaccine trial as part of the WHO’s Teleconference on Ebola Vaccine Clinical Trials.
On another note, Novavax is slated to announce second quarter 2015 earnings on Monday, August 10, after market close. The Street expects the company to post a loss of ($0.09) per share on $9.9 million in revenue.
J.P Morgan analyst Cory Kasimov expects “Phase 2 updates from the RSV (elderly and maternal immunization) and seasonal flu programs before the end of 2015 (likely 3Q)” and continues “to see a high probability of success for these assets.” In relation to the company’s positive Ebola vaccine trial data, Kasimov finds “the promising results from this early trial” to be reassuring and supports his confidence “in NVAX’s innovative technology platform and its ability to create effective vaccines for a wide variety of infectious diseases.” As such, the analyst maintained an Overweight rating on the stock on July 21 without providing a price target.
Overall, Cory Kasimov has a 49% success rate recommending stocks and a +6.6% average return per recommendation when measured over a one-year horizon and no benchmark. He has rated Novavax 5 times since 2010, earning an 80% success rate recommending the stock and a +51% average return per recommendation.
Similarly on July 21, Piper Jaffray analyst Edward Tenthoff noted that Novavax’s top-line data from Phase I Ebola GP demonstrates “strong immunogenicity and good tolerability” and views it as a success. In light of this, Tenthoff reiterated an Overweight rating on the stock and raised his price target from $10.50 to $15.
On average, Edward Tenthoff has a 54% success rate recommending stocks and a +18.3% average return per recommendation when measured over a one-year horizon and no benchmark. The analyst has rated Novavax 4 times since 2009, earning a 50% success rate recommending the stock and a +41.9% average return per recommendation.
Out of 2 analysts polled by TipRanks in the last 3 months, both are bullish on Novavax. The average 12-month price target for Novavax is $12.50, marking a 15.42% potential upside from where the stock last closed. On average, the all-analyst consensus for Novavax is Strong Buy.