As biotech valuations and share price remain muted versus historic trends, investors have been evaluating which of the best biotech companies are offering the most upside. Other investors are looking for which ones have the least implied downside. An RBC Capital Markets report issued in late June looked at which biotechs were being given almost a zero valuation for their future drug pipelines. Now a new report from Credit Suisse signals which biotechs have the least amount of downside based on their pipeline valuations being close to zero.

Considering the recent weakness in the biotech space, Credit Suisse took a look at which companies in its coverage have the least credit given to pipeline potential at current levels. The brokerage firm used its revenue builds to create valuations for all commercial stage companies in coverage, excluding all pipeline assets.

The firm looked at its covered companies with over $10 billion in total market cap. Based on the analysis, the companies which screened the best were: Amgen Inc. (NASDAQ: AMGN), Gilead Sciences Inc. (NASDAQ: GILD), Vertex Pharmaceuticals Inc. (NASDAQ: VRTX), Celgene Corp. (NASDAQ: CELG) and Alexion Pharmaceuticals Inc. (NASDAQ: ALXN).

However, on a macro basis, Credit Suisse is still cautious and thinks biotech may remain under pressure until after the elections. The firm also doesn’t view this note as a bullish call on the space, but more of a perspective on what’s in the stocks based on estimates.

Credit Suisse detailed in its report:

In this analysis, all things considered, we think Celgene, Alexion and Vertex are the winners based on downside from base business and pipeline opportunity upside over the next 12-18 months. ——– Similar to worst case in our Alexion upgrade note, this analysis suggests base business is worth $101/share (downside of 19%) and includes Soliris erosion starting in 2021. Pipeline opportunities for Alexion include next generation Soliris success, MPS IIIB, MG and NMO expansion. Our base business NPV for Celgene is $87/share (downside of 16%). Pipeline opportunities for Celgene are Revlimid lymphoma expansion, ozanimod, and mongersen (GED-301). Our base business NPV for Vertex is $82, representing 9% downside with key 2017 pipeline opportunities in both 661 and triplet data.

Separately, Gilead and Amgen valuations screen the best suggesting little credit given to the pipeline, and that confirms where the discussion is for both stocks. The Amgen and Gilead base business net present value (NPV) are $166 (3% upside) and $84 per share (3% downside). This is not very surprising to the firm since most common feedback is around whether these companies will do deals to enhance their pipelines. Credit Suisse also thinks there is reasonable debate about long-term base business estimates for Amgen’s Kyprolis and Repatha and Gilead’s hepatitis C vaccine (HCV) franchise sales. In 2021 for Amgen, the firm’s estimates for Kyprolis sales are $2.5 billion, and Repatha is at $2.3 billion. The consensus estimates are $2 billion and $3 billion, respectively. The Gilead HCV sales are estimated at $11.5 billion in 2022, versus the consensus of $10.6 billion.

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Shares of Amgen were last seen trading at $160.18 on Tuesday, with a consensus analyst price target of $184.06 and a 52-week trading range of $130.09 to $181.81.

Gilead shares were trading at $86.25. The consensus price target is $110.42, and the 52-week range is $77.92 to $120.37.

Vertex was at $90.10, in a 52-week range of $75.90 to $143.45. The consensus analyst target is $109.11.

Shares of Celgene were at $103.41. Its consensus price target is $135.76, and it has a 52-week range of $92.98 to $140.72.

Alexion was last seen at $125.30, with a consensus price target of $181.71. The 52-week range is $110.56 to $208.88.

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