JP Morgan’s Cory Kasimov is making bullish bets on these two gene therapy stocks. This is an area with the potential to completely transform the healthcare landscape. It involves making changes to DNA to help treat, or potentially even cure, a disease. Although it is still early days, there are an estimated 10,000 diseases caused by a single mutation that can theoretically be corrected with a targeted gene therapy.
These are known as monogenic diseases. “Though relatively rare, they affect millions of people worldwide” writes the World Health Organization, adding that in Canada monogenic diseases may account for up to 40% of the work of hospital based paediatric practice (Scriver, 1995).
Here we take a closer look at two gene therapy stocks JP Morgan’s Kasimov believes is primed to outperform. Note that both these stocks also score a ‘Strong Buy’ consensus from top-performing analysts. That’s based on all the ratings received by each stock over the last three months. Let’s take a closer look now:
BioMarin is a world leader in developing innovative therapeutics for rare genetic diseases. “We believe BioMarin’s depth and breadth of orphan disease assets present a unique opportunity in biotech” cheers Kasimov. Indeed, the company has seven products on the market, and a growing product pipeline of multiple clinical and preclinical candidates.
Excitingly, this includes valrox gene therapy for the treatment of Hemophilia A. This genetic disease is caused by the deficiency of clotting factor VIII. It is the most common type of hemophilia, with an estimated 90,000 patients in the territories where BioMarin operates.
Currently the standard of care for severe hemophilia A patients is intravenous infusions three times a week. However many patients still experience spontaneous bleeding events- which can prove fatal. In contrast, gene therapy has the promise of delivering, in as little as a single administration, the missing gene needed to produce factor VIII.
BioMarin has now revealed plans to submit valrox for regulatory approval in US/EU in 4Q19. Kasimov calls the news “an incremental positive that could serve to help firmly establish valrox in the commercial setting well ahead of any potential competitors.”
He sees the stock as ‘undervalued’ at current levels and writes: “BMRN remains a high conviction long-term idea between its orphan-focused, diversified base business (>$1B in sales), growing commercial portfolio, and potentially disruptive late-stage pipeline.” Kasimov has a $133 price target on the stock (65% upside potential).
In total, eleven top analysts have published buy ratings on the stock in the last three months. So no hold or sell ratings here. Meanwhile the $133 average analyst price target suggests sizable upside potential of 60% lies ahead.
Bluebird Bio (BLUE)
Bluebird Bio is a clinical-stage company that, like BioMarin, is developing potentially transformative gene therapies for severe genetic and rare diseases. In particular, the company has just released updated results for LentiGlobin- a potential treatment and cure for sickle cell disease (SCD).
Investors are keeping a close eye on the sickle cell opportunity, as this is a severe life-shortening blood disorder affecting around 110,000 patients in the US. Kasimov describes the latest results as ‘consistent’ and ‘incredibly profound’, adding that “the SCD data, in particular, reaffirms our prevailing view that… LentiGlobin is going to be exceedingly hard to beat by earlier-stage competition.” Bluebird expects filing and approval for LentiGlobin for SCD to take place in 2022.
At the same time, it’s the company’s broad focus that really sets BLUE apart. “One particularly attractive yet underappreciated aspect of Bluebird is all the different technologies it has at its disposal”, says Kasimov. For BLUE that means using the right tools/ combinations to effectively design novel therapeutic- be it gene therapy, gene therapy, CAR T capabilities or even gene editing. For example, the company has also demonstrated encouraging initial data for bb2121, a CAR-T therapy for the potential treatment of multiple myeloma, that it is developing with Celgene (CELG).
Net-net “We remain intrigued by an innovative company that has the potential to go 4-for-4 with its lead assets and has a multitude of tools in the shed (an anti-pure-play) to fuel the pipeline for a long time to come” says the analyst. He has a Street-high price target on BLUE of $195 (52% upside potential), and concludes: “In our opinion, BLUE is well positioned for long-term success.”
Overall, top analysts agree with this upbeat outlook. Three out of four analysts rate the stock a ‘buy.’ We can also see that the $153 average analyst price target indicates upside potential of 19%.