Health and Healthcare

Merrill Lynch Has 3 Top BioPharma Picks to Win From the Aging of America

Jon C. Ogg

Published: May 10, 2016 7:45 am

Last Updated: January 13, 2020 9:39 am

When investors hear the term “The Silver Economy,” some may think of the metal silver. Other investors think of this as the aging trends happening in the world. There are now, or will be soon, a record number of elderly and aging adults who need care of some sort. A Merrill Lynch report has a whole wave of companies featured as Global Ageing Primer Picks.

While much of the report targets how society is not prepared to deal with this tidal wave of the elderly, it also sees opportunity in several sectors. The firm sees a multi-trillion dollar opportunity in and around health care, financials, aged-care and consumer operations.

24/7 Wall St. decided to first focus on the biotech and pharmaceutical picks from the firm here. These companies are all rated as Buy at Merrill Lynch, and the firm assigned a “High” exposure to longevity. This implies that each one has ageing-related products, technologies, services and solutions as core to the business model, with a material amount of sales or growth being a driver.

ACADIA Pharmaceuticals

Besides being rated as Buy, ACADIA Pharmaceuticals Inc. (NASDAQ: ACAD) has a $40 price objective at Merrill Lynch. The firm also most recently covered ACADIA because Nuplazid was priced at a premium to other antipsychotic drugs for its June launch. The company expects a slow launch due to CNS drug prescription and patient trends.

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ACADIA’s quote from CEO Steve Davis on May 5 said:

We are very excited about the recent FDA approval of NUPLAZID, the first and only drug approved for the treatment of hallucinations and delusions associated with Parkinson’s disease psychosis. Parkinson’s psychosis tends to strike in the more advanced stages of Parkinson’s disease – at a time when patients are often experiencing significant challenges in controlling their motor symptoms such as tremor, slow movement and muscle rigidity. For the first time, physicians will have a drug to treat hallucinations and delusions without worsening motor function in Parkinson’s psychosis patients. We look forward to making NUPLAZID available to physicians and patients in June.

ACADIA has a $3.3 billion market cap, and its $29.25 share price is against a 52-week trading range of $16.64 to $51.99.

Cynapsus Therapeutics

Merrill Lynch has a $33 price objective on Cynapsus Therapeutics Inc. (NASDAQ: CYNA), while the current share price is $12.18. This is obviously a speculative buy rating that gets very few research calls.

The company is a specialty central nervous system pharma outfit developing and preparing to commercialize a fast-acting sublingual thin film for the on-demand management of debilitating OFF episodes associated with Parkinson’s disease.

Cynapsus Therapeutics announced just on April 28 that its senior management will present a corporate overview in several investor conferences, two of which have already past in the prior week:

• Bloom Burton & Co. HealthCare Investor Conference on May 2, 2016 at 10:00 a.m. ET at the Sheraton Centre Hotel in Toronto
• Deutsche Bank Securities 41st Annual Health Care Conference on May 4, 2016 at 11:20 a.m. ET at the InterContinental Hotel in Boston
• Bank of America Merrill Lynch 19th Annual Health Care Conference on May 12, 2016 at 11:20 a.m. PT at the Encore at Wynn Hotel in Las Vegas

Cynapsus has a consensus analyst price target of $20.90 and a 52-week range of $10.54 to $18.50. Its market cap of $150 million classifies this in the highly speculative small-cap category with little to no significant revenues.

Radius Health

Radius Health Inc. (NASDAQ: RDUS) is also a Merrill Lynch Buy-rated speculative company with a “high” longevity exposure. Its $58.00 price objective was almost 75% above the $33.28 share price. Merrill Lynch’s most recent call was on May 5 and addressed a data display delay due to post-terror security issues in Belgium. The firm believes that Radius offers an attractive risk/reward profile for investors. The firm said:

The company’s lead pipeline asset, abaloparatide, should reach the U.S. and E.U. markets in 2016/2017 and could generate peak sales of roughly $1.5 billion.

Radius Health reported earnings just in the prior week for this report. The company disclosed that it had $439.8 million in cash and cash equivalents at the end of its first quarter. Radius’ CEO Robert Ward said at that time:

We are extremely pleased to have submitted our first New Drug Application to the U.S. FDA for abaloparatide-SC for the treatment of postmenopausal osteoporosis and our MAA is currently under review in Europe. In anticipation of our first potential launch, we are developing our commercial plans and building our marketing organization in the U.S. To maximize the potential of this new investigational drug outside the U.S., we are continuing our productive partnering discussions and anticipate entering into a marketing collaboration prior to a potential first commercial launch.

Radius has a consensus analyst target of $59.83, and its 52-week range is $24.75 to $84.64.