The biotech industry can bring investors some truly lucrative gains – but these stocks are not for the faint of heart. The companies bring to the table a combination of famously high overhead and long product lead times, so investors will need to be patient with firms that regularly show long-term quarterly losses. But the rewards in biotech can change the game completely.
A few catalysts – positive results from a clinical trial, approval from a governmental regulatory agency, or a new product launch – can easily push up prices on biotech stocks. So, while these companies typically face long periods in pre-revenue stages, the share price jump when one of these catalysts comes in. And for investors, the best part may be that biotech’s catalysts usually function independently of economic conditions. These are stocks that can skyrocket even if the overall market is tanking.
With this in mind, we used TipRanks’ database to take a closer look at two biotech stocks currently trading for under $10 apiece ahead of their upcoming FDA approval decisions. Both tickers boast massive upside potential and have earned overwhelmingly bullish support from analysts, enough so to score a “Strong Buy” consensus rating. Let's take a closer look.
TG Therapeutics (TGTX)
First up is TG Therapeutics, a biopharma research firm working on new treatments for B-cell diseases. These are serious autoimmune conditions featuring a loss of B-cell tolerance along with inappropriate production of various antibodies. Diseases in this category include multiple sclerosis (MS) and rheumatoid arthritis (RA). TG has a wide ranging pipeline, featuring several drug candidates in early investigational or clinical stages – and one drug on the cusp of FDA approval.
That leading candidate, ublituximab, is a glycoengineered monoclonal antibody designed to target ‘a unique epitope on CD20-expressing B-cells.’ This drug action is used in the treatment of relapsing forms of MS.
Ublituximab has recently completed two Phase 3 trials, Ultimate I and Ultimate II, and based on those results the company has submitted the Biologics License Application (BLA) to the FDA. The regulatory agency has accepted the BLA and given TG a PDUFA goal date of December 28 this year.
The ublituximab FDA process is the main news for TG, and the company is preparing for a commercial launch of the drug early next year. While this will lead to increased G&A expenses in 4Q22, the company is confident that its current cash resources, $197.7 million as of the end of Q3, can carry operations – including the ublituximab commercial launch – into 2024.
Among the bulls is Ladenburg analyst Matt Kaplan, who believes ublituximab shows potential to lead its niche once approved.
"We look forward to the FDA approval of ubli for treating MS in December 2022... During the 3Q22 conference call, TG noted they have already completed a late-cycle meeting with the FDA, and labeling discussions recently commenced. We are encouraged by the commencement of labeling discussions and currently expect a 1Q 2023 market launch. We continue to be impressed with the safety and efficacy profile ublituximab has demonstrated in the R-MS setting and believe it represents a best-in-class profile,” Kaplan opined.
Kaplan puts a Buy rating on TGTX shares, and matches that with a $22 price target indicating confidence in a one-year upside of 168%. (To watch Kaplan’s track record, click here)
Overall, with 4 recent analyst reviews on record here, all positive, TGTX shares get a Strong Buy consensus rating. The stock is selling for $8.20, and its $19.75 average price target implies a gain of ~141% by the end of next year. (See TGTX stock forecast on TipRanks)
Acer Therapeutics (ACER)
The next biopharma with an advanced drug candidate well into the regulatory process is Acer Therapeutics. The company's research is focused on serious metabolic diseases that are also exceedingly rare, and lack effective medical treatments. The company’s pipeline currently features three research tracks, with the leading drug candidate, ACER-001, being the farthest along.
ACER-001 is underdevelopment as a treatment for serious ‘inborn errors of metabolism,’ including urea cycle disorders, UCDs, and maple syrup urine disease (MSUD). Acer resubmitted the new drug application (NDA) on -001 to the FDA in July of this year, and is looking at a PDUFA date from the regulatory agency of January 15, 2023.
In June 2022, the FDA already turned down Acer's application to get ACER-001 approved for the treatment of UCDs. The Complete Response Letter (CRL) stated that the FDA field investigator "could not complete inspection" of ACER's third party contract packaging manufacturing location because "the facility was not ready for inspection." The FDA also had one comment in the CRL that was "not an approvability issue" pertaining to a request for additional nonclinical information.
On the insider front, we see a clear case of confidence ahead of the upcoming PDUFA date. First, CEO Steven Lisi laid down $1 million for a bloc of 819,672 shares in his company. The second large buy was from Chairman Steve Aselage who’s 409,836 share purchase cost $500,000.
5-star analyst Vernon Bernardino, covering Acer for H.C. Wainwright, doesn’t hide his optimism for the stock as well. Bernardino is clear on why Acer has sound prospects ahead, and lays it out in unambiguous prose.
“With no further approvability concerns, we are positive on ACER-001’s prospects for FDA approval on or before January 15, 2023. Thus, we look for ACER-001 to achieve commercial success, and estimate ACER-001 can achieve approximately $750M in annual sales as a treatment for UCDs by 2028. We believe Acer’s accomplishments in meeting the challenges of advancing its NDA, and the potential for ACER-001 to achieve near-term commercial success, are underappreciated,” Bernardino wrote.
Going forward from these comments, Bernardino gives ACER shares a Buy rating, and his $12 price target implies a hefty upside of 664% for the coming year. (To watch Bernardino’s track record, click here)
Turning now to the rest of the Street, other analysts are on the same page. With 3 Buys and no Holds or Sells, the word on the Street is that ACER is a Strong Buy. The stock has a $9.67 average price target and a share price of $1.57, for a one-year upside potential of ~516%. (See ACER stock forecast on TipRanks)
To find good ideas for biotech stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.