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Cantor Fitzgerald's 7 Buys For 7 Biotechs

Elizabeth Balboa

Cantor Fitzgerald has high hopes for patients with rare and orphan diseases. 

“We believe that biotech has entered a golden age of innovation and productivity across many therapeutic areas,” the firm said in a Friday note. Cantor expanded its portfolio with seven new neuro-innovator and platform-enabled therapeutics companies.

The Ratings

Analysts Charles Duncan and Pete Stavropoulos initiated coverage on the following firms with Overweight ratings:

  • Adverum Biotechnologies Inc (NASDAQ: ADVM) with a $12 price target;
  • Cara Therapeutics Inc (NASDAQ: CARA) with a $27 target;
  • Catalyst Pharmaceuticals Inc (NASDAQ: CPRX) with an $8 target;
  • Cytokinetics, Inc. (NASDAQ: CYTK) with a $14 target;
  • electroCore, Inc (NASDAQ: ECOR) with a $30 target;
  • Kalvista Pharmaceuticals Inc (NASDAQ: KALV) with a $32 target; and
  • Zynerba Pharmaceuticals Inc (NASDAQ: ZYNE) with a $21 target.

The Thesis

The analysts expect continued momentum in innovation for the treatment of rare and orphan diseases, particularly since just 10 percent of the 7,000 identified rare diseases have approved therapies.

At the same time, “improved understanding of etiology allows for drug target identification; and a shifting therapeutic paradigm for orphan/rare disease is occurring where initial therapeutics consisting of plasma-derived products and biologics is now evolving to small-molecule drugs [with] improved outcomes and lower costs,” Duncan and Stavropoulos said in the initiation note. 

The analysts consider Zynerba in particular a “deep value long” with upside north of 175 percent.

Zynerba will release data on its cannabinoid-based platform, which has garnered significant interest in the maturing cannabis sector, in the back half of 2019.

“We focus our valuation on FXS, where we are encouraged by the open-label long-term data, with meaningful and durable improvements that we see having predictive value for the pbo-controlled pivotal CONNECT-FX trial,” the analysts said. “On epilepsy indications, we await further data after a disappointment in focal epilepsy, but we note positive competitor results in childhood epilepsy, in addition to literature data, suggesting good outcomes in these trials.”

The other biotechs have similar near-term catalysts: Adverum’s Phase 1/2 fourth-quarter data release; Catalyst’s fourth-quarter PDUFA date; electroCore’s fourth-quarter trial launch; and Cytokinetics’ Phase 2 data release in the first half of 2019.

Kalvista is set to report Phase 2 data in the middle of 2019, and Cara plans to report Phase 3 results in the back half of the year. 

Price Action

Adverum shares were up 3.04 percent at the time of publication Friday; Cara was down 2.97 percent; Catalyst was down 1.27 percent; Cytokinetics was up 3.37 percent; Kalvista was soaring 19.33 percent; and Zynerba was up 4.37 percent. 

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