The iShares Nasdaq Biotechnology ETF (IBB) ended 3.8 percent lower Tuesday, as investors reacted harshly toward poor earnings results by pharma giant Valeant Pharmaceuticals (NYSE:VRX). Among the equities in focus today are pharmaceutical giant Gilead Sciences, Inc. (NASDAQ:GILD), Struggling drug maker MannKind Corporation (NASDAQ:MNKD), and weed-based drug firm Zynerba Pharmaceuticals Inc (NASDAQ:ZYNE).
Here’s a quick roundup of today’s brokerage notes on GILD, MNKD and ZYNE.
Gilead Sciences, Inc.
Jefferies analyst Brian Abrahams reiterated a Hold rating on shares of Gilead Sciences, while slightly reducing the price target to $97 (from $100), following the news that six clinical trials exploring Gilead’s idelalisib (Zydelig) in combination with other therapies have been halted after receiving notices from both the FDA and EMA regarding an excess of patient deaths in treated arms versus control.
Abrahams noted, “The FDA and GILD are both still reviewing data pertaining to the AEs/deaths and the clinical trials and next steps may potentially still evolve. Recall, Zydelig has had a history of safety issues, and the drug’s label currently has black box warnings for hepatotoxicity, diarrhea/colitis, pneumonitis, and GI perforation. GILD confirmed that the number of deaths in the Zydelig-treated pts in the clinical trials assessed by the FDA and EMA were higher compared to control arms as a result of infections, though exact specifics are unknown.”
“Though the drug’s safety issues had made the ongoing studies (and potential growth into these earlier-line heme malignancy indications) risky, this does likely cap any meaningful future growth for Zydelig should it remain on the market. Removing Zydelig growth reduces DCF-based tgt incrementally to $97,” the analyst concluded.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Brian Abrahams has a total average return of 12.8% and a 48% success rate. Abrahams has a 21.5% average return when recommending GILD, and is ranked #299 out of 3726 analysts.
Out of the 25 analysts polled by TipRanks, 20 rate Gilead Sciences stock a Buy, while 5 rate the stock a Hold. With a return potential of 36%, the stock’s consensus target price stands at $121.71.
JMP Securities analyst Jason Butler reiterated a Market Perform rating on shares of MannKind after the company reported fourth-quarter results which were weighted down by non-cash impairment charges related to the termination of the commercial agreement with Sanofi for Afrezza.
Butler wrote, “Afrezza remains in limbo as we await clarity on the commercialization plan and funding options. Management reiterated plans to market Afrezza itself after receiving the rights back from Sanofi on April 5, and anticipates detailing its commercialization strategy at that time. Broad financial guidance for 2016 suggests lower R&D expenses but elevated selling expenses. If Afrezza sales do not improve (we expect that the re-launch efforts are unlikely to show an inflection in prescription trends until later in 2016 in a best case scenario) and the Mann facility is not drawn upon, management indicates that cash will be sufficient only through 2H16. Given the risks associated with the challenging launch of Afrezza thus far, we feel shares are fairly valued and we maintain our Market Perform rating, as supported by our NPV analysis.”
According to TipRanks.com, Butler has a total average return of 36.6% and a 52% success rate. Butler is ranked #133 out of 3726 analysts.
Out of the 8 analysts polled by TipRanks, 2 rate MannKind stock a Buy, 2 rate the stock a Hold and 4 recommend to Sell. With a return potential of 167%, the stock’s consensus target price stands at $3.76.
Zynerba Pharmaceuticals Inc
Despite today’s sharp pullback, Zynerba Pharmaceuticals shares are still up 71% after a related cannabidiol company GW Pharma announced positive results of the first phase 3 of Epidiolex (cannabidiol or CBD) for the treatment of Dravet syndrome, a subset of epilepsy that Zynerba is also going after.
Subsequently, Oppenheimer analyst Rohit Vanjani reiterated an Outperform rating on shares of Zynerba Pharmaceuticals, with a price target of $34, which represents a potential upside of 136% from where the stock is currently trading.
Vanjani observed, “Data for Epidiolex from the first Phase 3 trial in Dravet Syndrome patients were strongly positive. The GW data sent the whole group of cannabidiol companies up significantly, even carrying with it those companies targeting Dravet Syndrome without a cannabidiol-focused therapy […] GW Pharma did note ten serious adverse events in the treatment arm (versus three SAEs with the placebo), which will be a watch item going forward. Zynerba believes its transdermal formulation may ultimately offer a better side-effect profile.”
According to TipRanks.com, Vanjani has a total average return of 13.9% and a 54% success rate. Vanjani has a 39.1% average return when recommending ZYNE, and is ranked #132 out of 3726 analysts.