Out of all of the stocks in the Healthcare sector, biopharmaceutical stocks are some of the most popular due to the revenue potential of discovering new treatments. The process between the discovery of a drug to potential FDA approval can determine whether a company’s stock will flop or prevail. On February 3rd, Wedbush analyst Liana Moussatos issued a note to investors naming the top catalysts for emerging pharmaceuticals in February and all of 2015. Highlights from her report are as follows:
Intercept Pharmaceuticals (NASDAQ: ICPT):
Intercept Pharmaceuticals is a biopharmaceutical company known for developing small-molecule drug treatments for chronic liver diseases. The company’s current leading drug is called obeticholic acid (OCA) which is currently in Phase 3 testing. OCA is used to treat Primary Biliary Cirrhosis (PBC), portal hypertension, bile acid diarrhea, and nonalcoholic steatohepatitis (NASH).
Phase 2 of OCA to treat NASH “was stopped one year early [due to] better-than-expected efficacy,” according to Liana Moussatos. However, shares of Intercept fell following the early ending of OCA’s Phase 2 trial. With that said, Moussatos believes, “the FDA recognizes the significance and value of the [Phase 2] results without getting lost in the minutiae which led to ICPT’s recent devaluation.”
Moussatos maintains an Outperform rating on Intercept Pharmaceuticals with an acquisition value of $493, stating “In short, we believe OCA possesses one of the more clinically de-risked Phase 2 datasets among biotech drugs in development.” She added, “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 concluded, “Moreover, we see upside potential to our estimates of the eligible patient population as well as pricing. Meanwhile, we see significant upside potential beyond PBC from follow-on indications such as PSC, portal hypertension, NASH and bile-acid diarrhea.”
The analyst expects there will be an update on Phase 3 testing of OCA for the treatment of NASH in the first quarter of 2015.
Liana Moussatos has rated ICPT 8 times since April 2013, earning a 43% success rate recommending the company and an impressive +170.4% average return per recommendation.
Omeros Corp. (NASDAQ: OMER):
Omeros is a biopharmaceutical company developing drugs to treat inflammation, coagulopathies and disorders of the central nervous system. Omeros has an extensive pipeline in the works of “inflammation and neurological treatment candidates ranging in development stage from FDA approved OMIDRIA™ to Phase 2 to preclinical and the ability to generate in-house new drug candidates from their state-of-the-art drug discovery platforms,” according to Moussatos.
The analyst believes, “the company has reduced pipeline risk through diversification–having a late-stage clinical candidate OMIDRIA™ (OMS302) which has successfully completed two Phase 3 clinical trials, was approved by the FDA on May 30, 2014 and may potentially be approved by the EMA in 2015.” Moussatos expects gross peak annual sales could reach about $500 million.
In addition, Omeros recently raised $70.6 million (net)/$75 million (gross) in a recent equity financing to support the launch of OMIDRIA.
Liana Moussatos maintains an Outperform rating on OMER with a $52 price target, noting “With such an extensive and potentially lucrative pipeline, we believe OMER is trading at an attractive valuation for investors with a 2015 time horizon.”
Liana Moussatos has rated OMER 12 times since March 2012, earnings a 67% success rate recommending the company and a +53.7% average return per recommendation.
Pacira Pharmaceuticals (NASDAQ: PCRX):
Pacira Pharmaceuticals is a specialty pharmaceutical known for the development of non-opioid products for postsurgical pain control. Its lead product, EXPAREL, was commercially launched in the United States in April 2012. According to Moussatos, EXPAREL “has shown positive data with regards to pain control over 72 hours, as well as reduction in opioid use and opioid-related side effects which can often lead to cost savings for the hospital.”
Liana Moussatos maintains an Outperform rating on Pacira with a price target of $130 as she believes “EXPAREL is particularly well-positioned to capitalize on the ongoing shift by physicians toward multimodal pain management as they strive to reduce opioid burden.” As a result, the analyst “expect[s] the stock to perform well as sales meet expectations and the large market opportunity (~40 million addressable patients) for a unique asset becomes fully appreciated.”
Liana Moussatos has rated PCRX 6 times since August 2014, earning a 100% success rate recommending the stock and a +10.1% average return per recommendation.
Receptos (NASDAQ: RCPT):
Receptos is a biopharmaceutical company known for developing therapeutic candidates for the treatment of immune and metabolic diseases. The company’s leading drug is called RPC1063, which is an oral supplement that was tested in Phase 2 and 3 clinical trials to treat relapsing multiple sclerosis (RMS) and ulcerative colitis (UC). RPC 1063 is also currently in a Phase 2 trial of treating inflammatory bowel disease (IBD). According to Moussatos, “clinical risk is lower than normal as RPC1063 has the same disease target as Novartis’s approved RMS treatment Gilenya, but has a better safety profile and best-in-class potential.”
In addition, Receptos is in a Phase 2 trial of another drug called RPC4046 for the treatment of eosinophilic esophagitis (EoE). Moussatos thinks, “RPC4046 offers an orphan drug opportunity for Receptos to develop its own sales force.” In addition, the analyst believes “execution risk is lower than normal as [she] consider[s] management to have higher-than-normal knowledge and experience in the pharmaceutical industry—especially in multiple sclerosis.”
Liana Moussatos maintains an Outperform rating on Receptos with an acquisition value of $160. She anticipates “RPC1063 is likely to achieve clinical success and regulatory approval and could reach gross peak annual worldwide multi-billion dollar sales for RMS and for IBD.” In addition, she projects that “ RPC4046 treatment of EoE could reach over $1 billion in gross peak annual worldwide sales with premium orphan drug pricing and the oral GLP- 1 candidate could reach gross peak WW sales of over $5 billion.” She concludes “With recent Phase 2 success for both RMS and IBD, we believe Receptos is likely to attract a partner and/or its acquisition.”
Liana Moussatos has rated RCPT 8 times since June 2013, earning a 78% success rate recommending the company and an overwhelming +111.9% average return per recommendation.
Relypsa (NASDAQ: RLYP):
Relypsa is a biopharmaceutical company focused on the development of non-absorbed polymeric drugs to treat disorders related to renal, cardiovascular and metabolic diseases. The company’s leading drug is called Patiromer which is currently in Phase 3 testing. The drug is used to treat hyperkalemia, a life threatening condition in which the levels of potassium in a person’s blood are abnormally high. On December 15, 2014, Relypsa announced the FDA acceptance of the NDA for Patiromer.
According to Moussatos, “Patiromer has the potential to be best-in-class and the first breakthrough treatment for hyperkalemia since 1958.” With that said, the analyst believes “it has the potential to fill an unmet need for [chronic kidney disease and [heart failure] patients with mild or moderate-to-severe hyperkalemia as well those on a suboptimal dose of a RAASi due to recurrent hyperkalemia.”
Moussatos reiterates an Outperform rating on RLYP with a price target of $63, believing that the FDA acceptance of the NDA for Patiromer is “setting the stage for approval before year end 2015.With a small specialty sales force of about 100 reps, [Moussatos] project[s] peak annual sales of Patiromer could reach about $1.4 billion in the U.S. alone.”
Liana Moussatos has rated RLYP 7 times since December 2013, earning a 71% success rate recommending the stock and a +15.6% average return per recommendation.
All of these biopharmaceutical companies have a lot to look forward to this year with Liana Moussatos remaining bullish. Will their treatments have a positive effect on their stocks?
Liana Moussatos is currently ranked the #2 analyst out of 3476 total on TipRanks, with an overall success rate of 73% recommending stocks and a +61.4% average return per recommendation.