Health and Healthcare

4 Biotech Stocks With Up to 300% Upside Potential and Upcoming Catalysts

Lee Jackson

Published: August 3, 2016 9:55 am

Last Updated: January 13, 2020 4:59 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. 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.

The XBI biotech index was up 13% over the past month, versus 5% for the S&P 500, and some on Wall Street contend that the political chatter and overhang worry is going away. It is also notable that at the recent party conventions there was little mention of drug pricing.

A new report from Wedbush focuses on upcoming catalysts for stocks in the firm’s coverage universe. We found four rated Outperform with monster potential upside to the posted price targets. All the companies will be presenting at the Wedbush Healthcare conference this month.

Aimmune Therapeutics

This company has big Phase 3 enrollment and results over the next year. Aimmune Therapeutics Inc. (NASDAQ: AIMT) is a clinical-stage biopharmaceutical company engaged in the development of desensitization treatments for peanut and other food allergies. The company’s Characterized Oral Desensitization Immunotherapy includes AR101, a product in Phase 3 registration trial for the treatment of peanut allergy in children and adults.

The Wedbush team note that the complete enrollment for the Phase 3 PALISADE trial and the data from the trial will be forthcoming. Needless to say, a positive result would be huge as peanut and other food allergy issues can be extremely dangerous. The enrollment should be completed this year and the results in the second half of 2017.

The Wedbush price target for the stock is a gigantic $48, and the Wall Street consensus target is $37.75. Shares closed most recently at $12.29.

Catabasis Pharmaceuticals

This stock has been crushed over the past year and is offering a very solid entry point. Catabasis Pharmaceuticals Inc. (NASDAQ: CATB) is a clinical-stage biopharmaceutical company that focuses on the discovery, development and commercialization of therapeutics to treat inflammatory and metabolic diseases. Its product pipeline includes CAT-1004, an oral small molecule that has completed Phase 1 clinical trials for the treatment of Duchenne muscular dystrophy.

Other clinicals include CAT-2054, which is in Phase 1 clinical trial for the treatment of hypercholesterolemia in patients for whom existing treatments are insufficient, and CAT-2003, which has completed Phase 2a trials to the treatment of patients with elevated triglycerides or hypertriglyceridemia. It is also developing CAT-4001, which is in preclinical stage for the treatment for severe, rare neurodegenerative diseases, such as Friedreich’s ataxia and amyotrophic lateral sclerosis.

The Wedbush team expects part B results from the Phase 1 and 2 CAT-1004 results for Duchenne muscular dystrophy by the end of this year.

The $17 Wedbush price objective compares with the consensus target of $16. The shares closed most recently at $4.06.
Pacira Pharmaceuticals

This stock has been on a roller-coaster for years and is now trading where it was in 2013. Pacira Pharmaceuticals Inc. (NASDAQ: PCRX) is a specialty pharmaceutical company that develops, commercializes and manufactures proprietary pharmaceutical products primarily for use in hospitals and ambulatory surgery centers in the United States. The company develops pharmaceutical products based on its proprietary DepoFoam drug delivery technology. Its lead product includes, Exparel, a liposome injection of bupivacaine, an amide-type anesthetic indicated for infiltration into the surgical site to produce postsurgical analgesia.

The company also markets DepoCyt(e), a liposomal formulation of the chemotherapeutic agent cytarabine indicated for the intrathecal treatment of lymphomatous meningitis, a life-threatening complication of lymphoma, a cancer of the immune system. Its development pipeline comprises DepoMeloxicam, a long-acting non-steroidal anti-inflammatory drug, which is in preclinical development for the treatment of acute postsurgical pain, and DepoTranexamic Acid, a pre-clinical development product for the treatment or prevention of excessive blood loss during surgery by promoting hemostasis.

The Wedbush team notes that the company still has a since-rescinded FDA warning letter pall hanging over the stock, but they think that the new promotional strategy for Exparel will yield solid results. They noted in a recent report:

The Symphony Health (SH) EXPAREL estimated sales per day in May increased 0.8% over April and Q2 is tracking about -1.24% below consensus. Symphony Health sales and volume estimates for May were more than $21 million (WAC$) and over 68 thousand pack units. On a selling day basis May sales and volume were 0.8% over April. We count 21 selling days each in April and May and 22 in June and 64 for Q2. Recent quarterly capture rates for SH EXPAREL estimates have been close to 100% (Q4 100.1%; Q1 99.8%) but remain cautious on accuracy as historical capture rates have been variable (68.5%-108%).

Wedbush has a stunning $105 price target. The consensus is also huge at $79.67. The stock closed most recently at $38.08.

United Therapeutics

Wedbush is also very positive on this large cap company. United Therapeutics Corp. (NASDAQ: UTHR) develops and commercializes products to address the unmet medical needs of patients with chronic and life-threatening diseases worldwide. The company’s principal therapeutic products and product candidates include Remodulin, an injection used for the treatment of pulmonary arterial hypertension (PAH); Tyvaso, an inhaled prostacyclin therapy for PAH; Adcirca, a once-daily oral therapy for PAH; Orenitram, a prostacyclin analog for PAH; Unituxin, an antibody that binds to cancerous tumors and destroys the cancer cells; and engineered lungs and lung tissue that can be transplanted into patients suffering from PAH and other lung diseases.

Wedbush highlights the FREEDOM-EV and BEAT enrollment this year, with data to follow in 2017, and the potential new drug application (NDA) approval for a Remodulin implantable pump next year as top catalysts for this outstanding company.

The Wedbush price target is a huge $229. The consensus is much lower at $129.50, and shares closed near that level at $125.85.

Four big opportunities for aggressive investors. There are also substantial risks should the outcomes not play out favorably. With that in mind, some smaller speculative positions could be the right play for aggressive, risk-tolerant accounts.