Amid a tumultuous economic landscape, investors are looking for stocks that can heal their portfolios. Many analysts argue that some biopharma stocks have the potential to do just that. Biopharma refers to drugs and treatments that are produced using biological methods.
With IQVIA Institute for Human Data Science forecasting that global spending on medicine will increase by 50% from 2014 to reach $1.5 trillion by 2023, it’s clear that this space is only going to grow. However, analysts point out that some biopharma stocks are more poised for long-term gains than others. It should also be noted that while biopharma stocks offer substantial upside, they come with plenty of risk as a negative catalyst like poor results from a study can send shares plummeting.
Bearing that in mind, we narrowed in on the top 3 biopharma stocks in terms of growth prospects, with each boasting more than 50% upside potential. Not to mention the stocks on our list haven't received any Hold or Sell ratings in the last three months, making each a "Strong Buy".
Let’s take a closer look.
Celyad specializes in CAR-T cell therapy to threat severe diseases with poor prognoses such as cancer. With it already boasting two technological platforms in immuno-oncology (autologous and allogeneic), analysts claim its assets in development could drive even more upside.
CYAD’s primary asset, CYAD-01, is progressing through the Phase 1 THINK and DEPLETHINK clinical trials for the treatment of patients with relapsed/refractory (r/r) acute myeloid leukemia (AML) or myelodysplastic syndrome (MDS). Preliminary data presented at the European Hematology Association (EHA) in June suggests the drug is well-tolerated. Data on the drug’s treatment of metastatic colorectal cancer (mCRC) also demonstrated promising results back in July.
The good news doesn’t stop here. After the r/r AML and MDS program for CYAD-01 goes through additional tests, Celyad plans to treat the first patient using the recently accepted OptimAb manufacturing process for patients with tumor activity.
Not to mention the FDA accepted the investigational new drug (IND) application for CYAD-02, its new autologous NKG2D-based CAR-T candidate.
All of these positive developments played into H.C. Wainwright analyst Edward White’s conclusion that CYAD will be a winner in the long-run. “Our probability-adjusted revenue forecasts for CYAD-01 in r/r AML and third-line metastatic for metastatic CRC have led us to believe that there’s strong growth potential for CYAD,” he explained. On August 26, the five-star analyst reiterated his Buy rating and $48 average price target, implying 292% upside.
Wall Street appears to mirror White’s sentiment as the stock received 5 Buy ratings and no Holds or Sells in the last three months. CYAD boasts a ‘Strong Buy’ analyst consensus and a $45 average price target, suggesting 263% upside potential.
Dicerna Pharmaceuticals (DRNA)
This biopharma stock develops treatments for diseases involving the liver, including rare diseases, viral infectious diseases, chronic liver diseases and cardiovascular diseases using RNAi therapies. RNAi refers to the biological process in which small RNA molecules inhibit gene expression by neutralizing targeted mRNA molecules.
According to its August 8 Q2 earnings release, investors have reason to be excited about DRNA. Management stated that it received Breakthrough Therapy Designation for DCR-PHXC for the treatment of primary hyperoxaluria type 1 (PH1) and dosed the first patient in the Phase 1 clinical trial of DCR-HBVS for the treatment of chronic hepatitis B virus (HBV). HBV is a viral infection that attacks the liver, with the disease being transmitted through contact with blood or other body fluids. According to the World Health Organization, 27 million people (10.5% of all people estimated to be living with hepatitis B) were aware of their infection as of 2016.
It should be noted that the company reported a $23.8 million net loss in the quarter. However, this is down from the $35.6 million loss DRNA reported in the prior-year quarter.
The company claims that the dosing of its first patient in the pivotal PHYOX2 trial and the initiation of a multi-center Phase 1/2 trial of DCR-A1AT which is expected in the third quarter of 2019 should drive an improvement in its capital position.
H.C. Wainwright analyst Ed Arce highlights DRNA’s HBV treatment as a must-watch area in the company’s developing product pipeline. As a result, the four-star analyst reiterated his Buy rating and $22 price target on August 26. He believes shares could surge 58% over the next twelve months.
All in all, the Street remains bullish on DRNA. With 6 Buy ratings vs no Holds or Sells received in the last three months, the biopharma has a ‘Strong Buy’ analyst consensus. Its $22 average price target suggests 60% upside potential.
Ascendis Pharma (ASND)
The last biopharma stock on our list has three independent, rare disease endocrinology product candidates in clinical development.
While investors originally expressed concern following the August 28 news that net loss increased to €58.9 million in its second quarter, analysts argue that recent positive developments have put ASND back on the right track.
During the most recent quarter, ASND published results from the phase 3 program for its TransCon hGH, a long-acting prodrug of human growth hormone (hGH) in development as a once-weekly therapy for pediatric growth hormone deficiency (GHD). The findings demonstrated statistically significant levels of efficacy and safety levels that are comparable to a daily hGH.
Enrollment in its phase 2 trial of TransCon PTH, its long-acting prodrug of parathyroid hormone (PTH) in adult subjects with hypoparathyroidism, is also currently ongoing.
One four-star analyst, Alethia Young, believes that based on all that ASND has going for itself, she sees a good near-term setup for shares. “We think investors continue to underappreciate Ascendis' potential opportunity from parathyroid hormone if its therapy is able to greatly reduce the need for vitamin D and calcium,” she explained. As a result, the Cantor Fitzgerald analyst reiterated her Buy rating and $185 price target on August 29. Based on the price target, Young believes shares have the potential to soar 65% in the next twelve months.
With no Hold or Sell ratings received in the last three months, the consensus among analysts is that ASND is a ‘Strong Buy’. Its average price target of $173 suggests 54% upside potential.