The coronavirus pandemic has cast the spotlight on the world of biotechnology stocks as researchers search for not only a vaccine, but for additional drugs that can help in the treatment of the virus. The combination of hydroxychloroquine and the antibiotic azithromycin has been used as a treatment and has shown some very positive results.

While the coronavirus pandemic will remain on the front page nationally, many of the top biotechs are working on other pipeline clinical studies. In a new series of RBC reports, the analysts refresh their thesis on many of the top companies they cover in an attempt to look past the current issues.

These five well-known companies have shares rated Outperform, and some have gigantic upside to the RBC price targets. All make sense for aggressive growth accounts looking to add biotech positions now.

Gilead Sciences

This stock is trading a very reasonable 9.36 times estimated 2020 earnings and may have a coronavirus treatment. Gilead Sciences Inc. (NASDAQ: GILD) is a biopharmaceutical company that discovers, develops and commercializes therapies for the treatment of HIV/AIDS, liver disease, cancer and inflammation. The acquisition of Kite Pharmaceutical in 2017 allowed for entry into the CAR-T space, indicating a renewed focus in oncology.

The company’s products include Stribild, Complera/Eviplera, Atripla, Truvada, Viread, Emtriva, Tybost and Vitekta for the treatment of human immunodeficiency virus (HIV) infection in adults; and Harvoni, Sovaldi, Viread and Hepsera products for the treatment of liver disease.

The company’s remdesivir may prove to be a promising COVID-19 treatment, and the World Health Organization labeled it as “the most promising” antiviral during the early days of the outbreak. But its effectiveness won’t be known until a slate of clinical trials reads out, with the first expected from China in the coming weeks.

Investors receive a 3.70% dividend. RBC has an $85 price target on the shares. The Wall Street consensus target is $75.24, and Gilead Sciences stock closed Monday’s trading at $75.28.

Intercept Pharmaceuticals

This biotech story has stayed out front on Wall Street for years. Intercept Pharmaceuticals Inc. (NASDAQ: ICPT) is a biopharmaceutical company focused on the development of treatment for chronic liver disease using its expertise in bile acid chemistry.

The lead product candidate, obeticholic acid (OCA), is approved for the treatment of primary biliary cirrhosis (PBC) and in Phase 3 trials for the larger nonalcoholic steatohepatitis (NASH), a common but often “silent” liver disease.

In the late fall of 2019, the U.S. Food and Drug Administration (FDA) accepted Intercept’s New Drug Application (NDA) for obeticholic acid (OCA) seeking accelerated approval for the treatment of fibrosis due to NASH and granted priority review. The FDA grants priority review to drugs that have the potential to treat a serious condition, and if approved, would provide a significant improvement in safety or effectiveness.

RBC noted this about the blockbuster NASH potential:

Although Intercept’s highly anticipated first-to-market OCA NASH launch may take some time to play out, especially given pandemic-related challenges, based on feedback and epidemiology we see a multi-billion dollar out-year opportunity not nearly accounted for in current valuations. We believe patience will be rewarded, and if shares remain depressed even after likely de-risking events such as the upcoming AdComm approval, and label, we believe the company could become a merger and acquisition target.

The RBC price target is a strong $117, but the consensus target is much higher at $151.45. The last trade on Monday was posted at $69.35.

This smaller cap biotech has huge upside potential for aggressive investors. Intra-Cellular Therapies Inc. (NASDAQ: ITCI) is a biopharmaceutical company that focuses on the discovery and clinical development of innovative, small molecule drugs that address underserved medical needs in neuropsychiatric and neurological disorders by targeting intracellular signaling mechanisms within the central nervous system.

The company announced it has successfully initiated its promotional activities associated with the launch of Caplyta (lumateperone), an oral, once-daily medicine recently approved for the treatment of schizophrenia in adults. The company’s sales organization is now actively engaging health care providers with the goal of providing comprehensive education on Caplyta. The sales force is fully equipped with remote product presentation and sampling capability. These activities are complemented by expanded digital outreach programs.

The RBC team is very positive on the product rollout:

We believe Caplyta will emerge over time as a treatment of choice in schizophrenia given its meaningfully differentiated tolerability profile, and with a long-term market opportunity that we believe is underappreciated even with potential for coronavirus-related launch headwinds this year; its bipolar indication (data in the third quarter of 2020) could enable additional upside optionality. As long as near-term Street launch expectations are kept in check, we see appreciation potential given disconnect between valuation and revenue prospects, as well as potential as an M&A target.

The $36 RBC target price is lower than the $45.63 consensus figure. The shares closed at $16.66 on Monday.

Karyopharm Therapeutics

This company has an approved cancer therapy that could push shares higher. Karyopharm Therapeutics Inc. (NASDAQ: KPTI) engages in the discovery, development and commercialization of various drugs directed against nuclear export and related targets for the treatment of cancer and other diseases. The company is developing small molecule selective inhibitors of nuclear export compounds that inhibit the nuclear export protein exportin 1.

The company develops the following:

• Boston, in Phase 3 clinical trial for the treatment of patients with multiple myeloma
• Storm, in Phase 2b single-arm clinical trial for evaluating oral selinexor in combination with standard, low-dose dexamethasone in heavily pretreated patients, relapsed or refractory myeloma
• Seal, in Phase 3 clinical trial for the treatment of liposarcoma
• Siendo, on Phase 2/3 clinical trial for treatment of endometrial cancer
• King, in Phase 2 for the treatment of glioblastoma multiforme brain tumor

RBC said this about the company:

We believe its approved cancer therapy Xpovio should garner significant utilization as an oral option with a novel MOA in the well-established MM market, with additional revenue potential in Diffuse large B-cell lymphoma and other cancers. We see a substantial long term sales opportunity that seems to be disconnected from current valuations, with shares trading well off their recent highs.

RBC has set a $34 price objective. The posted consensus estimate is $33.25, and shares last closed at $20.17 apiece.

Ovid Therapeutics

This is a small cap play for super aggressive accounts looking for a potential home run. Ovid Therapeutics Inc. (NASDAQ: OVID) is a biopharmaceutical company that develops impactful medicines for patients and families with neurological disorders in the United States. The company is developing OV101, a drug candidate, which has completed Phase 2 clinical trial for adults with Angelman syndrome, as well as Phase I clinical trial for adolescents with Angelman syndrome or fragile X syndrome.

Ovid Therapeutics is also developing OV935, a drug candidate that has completed Phase 1b/2a trial for rare epileptic encephalopathies. The company has a collaboration agreement with Takeda Pharmaceutical and a license agreement with H. Lundbeck.

The analysts said this:

We see an attractive reward/risk for OVID Therapeutics shares into the second half of 2020 data given prior signals of activity for OV101 and OV935. We reiterate our Outperform and Speculative Risk rating.

RBC keeps a $12 price target, above the $11.33 consensus target. Monday’s final trade hit the tape at $3.15, which was up almost 11% on the day.

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These five top companies range from a large-cap leader with a potential coronavirus treatment to a small-cap company with massive upside potential. All these stocks are only suitable for growth accounts with higher risk tolerance.

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