Investors have focused on profit-making companies, which has left companies in the pre-revenue phase on the sidelines. As a result, more and more biotech stocks are trading below cash value on their balance sheets. Over the past year, the SPDR S&P Biotech ETF is down nearly 44%, while the iShares Biotech ETF has lost nearly 23% over the same period. The sharp drop in prices, plus a potential increase in M&A, could spark renewed interest in the sector, but analysts say it may be wise to remain defensive in the sector. this. While some of the biotech companies are working on will certainly yield valuable results, it is of interest to separate the winners from the losers. Jared Holz, a healthcare equity strategist at Oppenheimer told CNBC’s “Fast Money” earlier this week that the biotech sector needs to go through a “self-cleaning process” to redefine. itself because there are too many companies that are “uninvestable or unviable.” This would include companies that had to pause testing or present data that was not viewed favorably. Holz said. Piper Sandler analyst Christopher Raymond expects that the real bottom of the industry has yet to be reached. Like in other cycles, investment in the pool will be marked by tough signals such as fund closure and outflow of funds, which is yet to be seen, he said. Instead, there has been a flight to quality that has driven valuations of large-cap biotech and pharmaceutical stocks, he said. Even with that, Raymond sees a number of reasonable entry points for the stock, including large-cap Abbvie and Argenx and Ultragenyx Pharmaceutical, while Cogent Biosciences is his favorite “under the radar” small-cap pick. he. He has excess ratings on all four stocks. “I was amazed by the fact that so many real, high-quality stocks, when you look at their stock charts, appear to have had some kind of failure or catastrophic event,” says Raymond. there. That may be the case with Ultragenyx. Its shares are down about 40% so far, but without any significant changes at the company, which is focused on finding treatments for rare genetic diseases. The company may have an update on an early-stage beta for the GTX-102 to treat Angelman Syndrome, a genetic disorder that causes developmental delays, speech and balance difficulties. Raymond set a price target of $135 for the stock, well above its current value of around $51. “If successful, [GTX-102] will totally remake this company,” he said. Abbvie’s stock chart reflects industry trends. Target is at $160. Raymond’s optimism stems from his expectations for Rinvoq , a treatment for rheumatoid arthritis His predictions for the drug’s sales are in line with the Wall Street consensus view for both the long and short term. In this environment, Morgan Stanley analyst Matthew Harrison said his focus is on mid-cap growth names that already have one or two products approved or are in the product launch phase. BioMarin Pharmaceuticals, Argenx and Seagen are three examples that Harrison cited,” Harrison said. BioMarin stock is down about 12% since the start of the year, and the stock is now trading at the lower end of the 52-week range. The company is starting to see the benefits of launching Voxzogo, the only approved therapy for children with achondroplasia, the most common form of dwarfism. In April, BioMarin raised its sales forecast for the drug. Its other key product, Roctavian, is a gene therapy for patients with hemophilia. The product has had some setbacks, with the Food and Drug Administration requesting more information from the company. The application for resubmission is expected to be submitted in September. In Europe, the therapy is expected to be approved this summer. Key for investors: BioMarin is expected to report a profitable 2022 and will bring in over $2 billion in revenue this year. Morgan Stanley has a share price target of $113, implying a gain of more than 46% for investors. Shares of Argenx, which focuses on treatments for autoimmune diseases, have recouped losses. It is now down 10% less than the previous year. The company is in the process of launching Vyvgart to treat myasthenia gravis, a rare neuromuscular disorder. In addition, the company is hoping to get approval to use the drug for 10 other indications. In its latest quarterly report, Argenx said several trials are underway, with aggregate data from five trials expected by the end of the first quarter of 2023. Harrison said: “You’ve got it all. all these catalyst lines to scale the potential market size of this drug, but the top indication is a billion dollar plus sign and they are off to a very strong start. He has a price target of $375 for Argenx, about 18% above where the stock is currently trading. Piper’s Raymond has set its price target even higher, at $415, with the expectation that Argenx will continue to hit top estimates. Shares of Seagen are also down less than 10% year over year. The company was recently made news due to the departure of co-founder and CEO Clay Siegall, who resigned in mid-May following allegations of domestic violence against him. On an interim basis, Siegall has been replaced by the company’s chief medical officer, Roger Dansey. Seagen has four approved products in its portfolio, including Tukysa, a breast cancer treatment that is also being considered for other types of cancer, including colorectal. Harrison expects the release of results from Seagen’s Cohort K study to be a potential catalyst for the stock. The study hopes to expand the use of another compound, Padcev, to treat bladder cancer. If successful, the drug could be used on newly diagnosed patients. Currently, the drug is being used on patients with metastatic carcinoma who have not had success with previous treatments. “That newly diagnosed market is obviously a lot bigger,” says Harrison. “And so if that data is successful, sometime in the second half of the year, it opens up for them… a new billion-dollar sales potential.” Morgan Stanley has a $173 price target for Seagen, 23% above where it is currently trading. M&A prospect Seagen is also a name that comes to mind as the discussion turns to M&A in the biotech sector. But so far this year there have been very few deals. One factor hanging over the industry is the regulatory environment. The Federal Trade Commission and the Department of Justice are hosting a two-day workshop in mid-June to discuss the impact of M&A on competition and innovation in the pharmaceutical industry. Analysts hope the meeting will shed more light on how regulators will view consolidation in the space. Raymond said he will oversee the workshop. “There is an oversupply of companies and so M&A is part of the maturing process of any industry,” he said, adding that “distorting the market” to hinder consolidation. Pfizer recently signed an agreement to acquire migraine drug developer Biohaven Pharmaceutical for $11.6 billion. On Friday, Bristol-Myers Squibb announced plans to acquire Therapeutics Turn for $4.1 billion, in a bid to boost its portfolio of cancer treatments. Bristol said it hopes Turning Point’s lead drug, repotrectinib, will become standard care for patients being treated for non-small cell lung cancer when it is approved, which could happen. out in the second half of next year. The possibility of M&A is one of the reasons investors generally prefer the biotech sector, so it is encouraging to see some action on that front. Oppenheimer’s Holz said larger pharmaceutical companies looking to buy biotech companies have shown consistent revenue growth over a five- to 10-year period. With that in mind, he expects 15 to 30 companies with biotech universes to be targeted. Holz said the list will include companies such as Vertex Pharmaceuticals, Seagen, Horizon Therapeutics, Incyte and Neurocrine Biosciences. The tricky part is that the valuations of some of these larger biotech companies are still quite high compared to the rest of the consortium. For example, Vertex has seen its stock rise 23% year-to-date, while Neurocrine stock has gained about 12% since January. Tight funding Without a deal, investors may be more interested in funding needs. There has been a huge drop in the rate of secondary service delivery now. In March, Morgan Stanley analyzed 380 biotech companies to approach their cash needs. In the report, Harrison said he expects 30% of the group to have one year of cash or less by the end of 2022. As most investors prefer companies with two years of cash on the balance sheet. accountants, meeting this standard often triggers a need for fundraising. Harrison estimates that the companies as a whole will need about $36 billion. The 2018-2021 period is the peak of investment in the biotech sector, and that pace is unlikely to repeat any time soon. Harrison said the number of companies that need to raise capital is similar to the period before 2018, but the amount needed is more. Another highlight of the group was the lively discussion of potential policy changes that could affect drug prices. In a research note on Thursday, RBC Capital analysts warned that it is likely that drug price controls will be discussed as the Senate considers a regulatory package within the next two to four weeks. . This debate could affect the industry as stocks attempt to recover. The RBC expert said there is a “better 50-50 chance” that the drug pricing bill will be passed the September 30 deadline. The risks of the rollback of drug pricing would be underestimated on the Street and could have an impact on biotechnology (and possibly even pharmaceuticals).”
Last, News URF sent you details about the topic “Searching for value in the battered biotech sector, which may not have hit bottom yet❤️️”.Hope with useful information that the article “Searching for value in the battered biotech sector, which may not have hit bottom yet” It will help readers to be more interested in “Searching for value in the battered biotech sector, which may not have hit bottom yet [ ❤️️❤️️ ]”.
Posts “Searching for value in the battered biotech sector, which may not have hit bottom yet” posted by on 2022-07-12 02:15:49. Thank you for reading the article at Newsurf.info
