Health and Healthcare

3 Biotech Stocks With Catalysts That Have 90% to 500% Upside Potential

Lee Jackson

Published: August 9, 2016 11:05 am

Last Updated: January 13, 2020 4:47 am

Needless to say, the biotech world has had a very difficult year. Even the biggest and the best companies, many of which trade cheaper than big pharmaceutical companies, have suffered as investors have fled the sector. Much of the blame for the poor showing is the very shrill election-year rhetoric from politicians over drug pricing, and while there is always an argument for lower prices, taking down an entire sector is extreme.

In three separate new reports, the analysts at Stifel focus in on companies that not only have data that could prove to be huge, but that have stocks that have been absolutely hammered over the past year, offering aggressive accounts the best entry points in some time. These stocks are very speculative, and though rated Buy, they are only appropriate for very aggressive portfolios.

Array BioPharma

This stock has had a nice run off the February lows and the Stifel team sees more upside ahead. Array BioPharma Inc. (NASDAQ: ARRY) is biopharmaceutical company focused on the discovery, development and commercialization of small molecule drugs to treat patients with cancer in North America, Europe and the Asia-Pacific. The company currently has six registration studies that are advancing related to three cancer drugs. These programs include binimetinib (MEK162), encorafenib (LGX818) and selumetinib.

The analysts like the company’s upcoming catalysts for the rest of calendar 2016, and they note this in their recent report:

We continue to like the implied risk/reward ahead of pivotal P3 COLUMBUS data later this quarter – and believe the company, despite being third-to-market with a MEK/BRAF inhibitor combo, still has an opportunity to differentiate binimetinib/encorafenib on the basis of safety/tolerability. We remain cautiously optimistic on the regulatory path forward in NRAS melanoma with now-filed NEMO data given the enhanced PFS benefit in patients receiving prior immunotherapy –which appears to be the most clinically-relevant patient population given the current treatment paradigm. The initiation of a P1/2 dose-escalation study evaluating ARRY-382 (a CSF-1R inhibitor) with pembrolizumab generates another longer-term call option on the development front – but note liver safety could represent an initial hurdle.

Stifel lifted its price target for the stock to $8 from $7, and the Wall Street consensus target is actually higher at $8.43. The stock closed most recently at $4.45 per share.

GlycoMimetics

Stifel analysts also have liked this clinical stage biotechnology company for some time. GlycoMimetics Inc. (NASDAQ: GLYC) is focused on the discovery and development of glycomimetic drugs to address unmet medical needs resulting from diseases in the United States.

The company is developing its lead product candidates, which include rivipansel, a pan-selectin antagonist, which is in Phase 3 clinical trials for the treatment of vaso-occlusive crisis, a debilitating and painful condition that occurs periodically throughout the life of a person with sickle cell disease. Another lead candidate is GMI-1271, an E-selectin antagonist to treat acute myeloid leukemia and other hematologic cancers. Its GMI-1359, a combined CXCR4 and E-selectin antagonist, is being readied for the clinical development. The company has a collaborative research and development agreement with Pfizer.

The Stifel team is looking forward to updated Phase 2 data on GMI-1271. They think that the clinical data will be forthcoming by the end of the year. The analysts noted in the report:

The investigator-sponsored (University of Michigan) P1 trial evaluating GMI-1271 in healthy volunteers completed enrollment in a multi-dose ascending portion in March. The goal was to evaluate the incidence of bleeding rates and adhesion biomarkers to potentially inform further studies in venous thromboembolic disease. The University of Michigan initiated enrollment in a P1/2 study in 3Q16 to evaluate the safety and efficacy of GMI-1271 in patients with calf-level deep vein thrombosis.

The Stifel price target is $15, and the consensus target is set at $13.50. Shares closed most recently at $7.85.

Esperion Therapeutics

This biopharmaceutical company has a huge target price and has been rumored for some time to be a potential takeover target. Esperion Therapeutics Inc. (NASDAQ: ESPR) is focused on the research, development and commercialization of oral and low-density lipoprotein cholesterol (LDL-C) lowering therapies for the treatment of patients with elevated LDL-C.

Its lead product candidate is ETC-1002, or Bempedoic acid, an inhibitor of ATP Citrate Lyase, an enzyme on the cholesterol biosynthesis pathway, that is in Phase 3 long-term safety and tolerability study to treat patients with hypercholesterolemia whose LDL-C is not adequately controlled with low- and moderate-dose statins. Bempedoic acid inhibits cholesterol synthesis in the liver, decreases intracellular cholesterol and up-regulates LDL-receptors, resulting in increased LDL-C clearance and reduced plasma levels of LDL-C.

The Stifel analysts are focused on the upcoming data for ETC-1002 and statin studies, which they expect to be posted next month. They also noted in their report:

The company has two ongoing studies of ETC-1002 + statin therapy with top-line results expected during September. One trial is studying incremental LDL-lowering on top of high dose statin therapy as well as PK and PD. The other trial is studying ETC-1002 with four commonly prescribed statins to study drug-drug interaction, safety/tolerability, and PK. The resulting data from the two upcoming trials studying ETC-1002 with statin therapy are potentially an important de-risking event for the stock.

The gigantic $64 Stifel price target is well above the consensus target of $24.21. Shares closed Monday at $10.98. Even a trade just to the lower consensus figure is a 100% gain.

These are extremely aggressive and potentially volatile stocks and trades. They are only suitable for speculative accounts with a very high risk tolerance. With that caveat in mind, some big gains could be there for biotech traders.