Healthcare stocks have a reputation of keeping investors on their toes. The possibility of surging price action, or conversely, earth shattering drops is very real, but these movements can come and go in the blink of an eye.
As a result, these stocks need constant monitoring ahead of key catalysts, as they can affect the price dramatically. Additionally, the price movement is usually dependent on one of the following: either a regulatory approval or trial data. Once either is announced to the public, these stocks either kiss the sky or moan painfully as they crash into the ground. Any healthcare investor must be vigilant, as the rise or drop can occur in minutes.
With this in mind, we set out on our own search to find compelling plays in this volatile industry. Given the sheer size of the market, we used TipRanks’ Stock Screener tool to uncover 3 healthcare stocks with catalysts coming up in the near term. In fact, each has attracted enough support from Wall Street to earn a “Strong Buy” consensus rating. Let's take a closer look.
Baudax Bio (BXRX)
First up is Baudax Bio. The acute care-focused pharmaceutical name has been trading publicly only since November following the spin-off from its former parent company, Recro Pharma. All eyes should be on BXRX tonight, when a decision will be made by the FDA on the company’s New Drug Application (NDA) for intravenous (IV) meloxicam (Anjeso), its non-opioid alternative for the management of moderate to severe pain.
Meloxicam has some baggage. The upcoming decision will be the third time the drug has been submitted for approval, following previous rejections in May 2018 and March last year. The first CRL (complete response letter) suggested the analgesic effect of the drug did not meet FDA expectations. Last year’s rejection focused on the onset and duration of the drug, explaining that the delayed onset fails to meet the prescriber expectations for intravenous (IV) drugs.
Oppenheimer’s Leland Gershell believes third time’s a charm. The 5-star analyst said, "We met with BXRX last week to discuss Anjeso's anticipated FDA label and commercial plans, as well as the company's initial launch expectations. Management has its sights on a late February/early March approval following YE19 NDA re-submission. While we project just $3.1 million in 2020 net sales as formulary wins are secured, we forecast $32.4 million in 2021 and see Anjeso ramping to ~$200 million in 2025-26 via a modest sales organization.”
To this end, Gershell reiterated an Outperform rating on BXRX. Gershell’s confidence in a positive ruling is conveyed in his new price target, which was raised from $8 to $12. The updated figure could provide investors with a 53% gain over the coming months. (To watch Gershell’s track record, click here)
Baudax’s Strong Buy consensus rating breaks down into Buys only – 3, in fact. The average price target of $11.67 implies possible upside of 42%. (See Baudax's price targets and analyst ratings on TipRanks)
Blueprint Medicines (BPMC)
Let’s move on to a company expecting the second type of common healthcare catalyst: updates from clinical trials.
Blueprint Medicines designs precision therapies that specifically target the underlying cause of genomically defined diseases.
The company has a portfolio of drugs in various stages. It recently gained FDA approval for Ayvakit (avapritinib) as a treatment of unresectable or metastatic gastrointestinal stromal tumor (GIST), a rare form of cancer. This marks BPMC’s first FDA approval for any of its pipeline candidates. It is also the first time the FDA has approved a precision therapy for treating genomically defined patients with GIST, a population that until now had hardly any treatment options.
The next catalyst, though, is due next month from the Phase 2 trial of avapritinib in patients with systemic mastocytosis (SM). In December 2019, the company reported initial data from part 1 of the PIONEER trial of avapritinib in patients with indolent SM at the American Society of Hematology Annual Meeting. The drug was well tolerated, and additionally, the results showed rapid and robust reductions in serum tryptase, a measure of mast cell burden, at all dose levels tested. Updated data from part 1 of the trial will be presented at the American Academy of Allergy, Asthma & Immunology’s (AAAAI) annual meeting on March 14.
Following a meeting with Blueprint’s CMO, Raymond James’ Dane Leone believes the updates from Blueprint are positive on the whole for the systemic mastocytosis efforts.
The 5-star analyst adds that the change in timing of filing for avapritinib in advanced SM, or ASM, doesn’t alter his view on the success of the drug, noting he did not model sales for that indication until 2021. Leone, therefore, reiterated a Buy rating on Blueprint. The analyst, though, did not provide a price target. (To watch Leone’s track record, click here)
Overall, the stock’s $99.33 average price target implies an excellent upside of nearly 51%, while the analyst consensus of Strong Buy is based on 10 "buy" ratings vs. 3 "holds." Clearly, this is a stock that is starting to attract attention from Wall Street’s analysts. (See Blueprint's price targets and analyst ratings on TipRanks)
Heron Therapeutics (HRTX)
Completing our list is Heron Therapeutics, a biotech developing novel therapies for patients suffering from cancer or postoperative pain.
The company already has two products approved by the FDA and out on the market. The focus now turns to the PDUFA date of June 26, as investors await an approval decision for HTX-011, an experimental post-operative pain medication.
HTX-011 is a dual-acting, fixed-dose combination of the local anesthetic bupivacaine and a low dose of the nonsteroidal anti-inflammatory drug meloxicam. In a Phase 3 trial, the drug exhibited significantly reduced pain and opioid use compared to bupivacaine solution, currently the accepted local anesthetic for postoperative pain control. Should HTX-011 gain approval, it could capture a big chunk of a market that’s currently lacking in less addictive pain management solutions.
Back in May, HTX-011 was rejected by the FDA on account of a lack of Chemistry, Manufacturing and Controls (CMC) data. In October, the FDA accepted Heron’s NDA resubmission. The company now expects to get the go ahead and is already preparing to launch HTX-011 shortly thereafter.
Stifel’s Derek Archila expects HTX-011 to be approved and believes that ahead of the launch, investors should own a position in HRTX. The 4-star analyst reiterated a Buy rating on Heron, though he did not set a price target. (To watch Archila’s track record, click here)
All in all, the Street sees good things ahead for HRTX. All 7 analysts that have published a call in the last three months see the stock as a Buy, making the Street consensus a Strong Buy. Should the average price target of $37.83 be met, a twelve-month gain of 75% could be in the cards. (See Heron's stock-price forecast and analyst ratings on TipRanks)