Top BioHealth Investor Calls of the Month

Top BioHealth Research Calls of the Week (MNKD, PDLI, ILMN, CLDA, MRK, PFE, LLY, BMY, ALXN, SVNT, AMGN)

January 22, 2011 · Filed Under Financial, analyst calls, fda · Comment 
There were some key research calls in biotech and biohealth shares this week.  Over in our “top five analyst calls of the week” at 24/7 Wall Street we noted how one firm came out in defense of MannKind Corporation (NASDAQ: MNKD) on its implosion this week and another call was highlighting the potential upside value that remains in PDL BioPharma, Inc. (NASDAQ: PDLI) despite its patent fight concerns.  There were many other standout calls though in analyst coverage this last week in biohealth:

Illumina Inc. (NASDAQ: ILMN) has remained impressive after having been one of our “Best of Big BioHealth in 2010″ and was also at the start of the year listed as “an overvalued biohealth names with peers.” This week brought an analyst duel.  Citigroup raised its rating to BUY from Hold and the new price target is $85.00 per share.  Thomson Reuters has a consensus price target of $66.87 and the Citi target appears to be the street-high price target.  Elsewhere, RBC Capital Markets lowered the rating to Sector Perform from Outperform due to valuation.  Illumina’s 52-week range is $34.25 to $71.07, and at $68.75 it has a market cap now of $8.6 billion.

Clinical Data Inc. (NASDAQ: CLDA) will be one to watch this coming week after the FDA approved its antidepressant drug to be sold under the brand name Viibyrd.  Shares closed at $15.03 on Friday but were much higher after the news and the 52-week trading range is $10.87 to $22.39.  What is interesting is that analysts already see peak sales above $2 billion as this antidepressant is believed to not interfere with sexual desire as much as in some rival drugs. The consensus price target is already $29.67 per Thomson Reuters data.

This week came a standout call in Big Pharma from Wells Fargo as the firm raised the sector to “Overweight.”  Wells Fargo raised Merck & Co. (NYSE: MRK) and Pfizer Inc. (NYSE: PFE) to Outperform ratings and also noted Eli Lilly & Co. (NYSE: LLY) and Bristol-Myers Squibb Company (NYSE: BMY) in the call.

Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) closed the week out at $84.43 and has a 52-week range of $44.86 to $87.14.  There was an analyst duel this week.  Gleacher & Co. raised its rating to Buy while UBS cut its rating to Hold.

Savient Pharmaceuticals, Inc. (NASDAQ: SVNT) hit new 52-week lows this last week and closed at $10.20 versus a 52-week range of $10.16 to $23.46.  Its shares were downgraded to “Underperform” over at Bank of America Merrill Lynch after previous news in its business update of reports of batch failures with its new gout medication called Krystexxa.

Amgen Inc. (NASDAQ: AMGN) is set to report earnings on Monday and Thomson Reuters has estimates of $1.10 EPS and $3.8 billion in revenues; for the next quarter estimates are $1.31 EPS and $3.67 billion in revenues. At $56.97 shares are actually down slightly from 90-days ago and the 52-week range is $50.26 to $61.26.  This stock is getting toward its higher end of a 3 year trading band, so we expect that analyst will have to make some adjustments after earnings.  Thomson Reuters has an average price target above $65.00 currently.

At the end of December, we gave a list of Big Biotechs With the Most Upside in 2011.

Those are definitely not all of the research calls of the week in biotech and biohealth names, but this was a fairly busy week.
Stay Tuned!

What To Expect After MannKind’s Implosion (MNKD)

January 19, 2011 · Filed Under Diabetes, fda · 3 Comments 
MannKind Corporation (NASDAQ: MNKD) is currently not looking kind nor like a very nice man(n).  Shares of the already-controversial MannKind are getting crushed after the FDA sent the company a ‘Complete Response Letter’ regarding its inhalable Afrezza for diabetes.  The FDA has requested two new clinical trials with its next generation inhaler.  One test is for Type I diabetes and the other is for Type II diabetes.

The FDA request also wants more data the performance characteristics, as well as the usage, handling, shipment, and storage.

While MannKind said it remains committed to working with the FDA, it is also disappointed.  That is an understatement of the year.  At 6:30 PM EST the after-hours reaction had shares down a whopping 43.5% at $5.15 on more than 2 million shares in the after-hours session alone.

So, what now?  MannKind already has some late-stage studies underway and it hopes to be able to offer more insight at its fourth quarter report date.  Unfortunately, MannKind has declined to comment on when the company can resubmit the application and it is also now going to be far less optimistic about ultimate approval if its legal team gets to have its way.  The dream of inhalable insulin is so far more like the Boulevard of Broken Dreams.

With shares at $5.15, the 52-week trading range is $4.76 to $11.12.  That will put the new market cap closer to $600 million than the $1.14 billion listed as of the $9.11 last price today.

The company CEO just recently spent $6 million or so to buy shares of the company and it was just about a month ago that the prior delay had been sent to the company without the indication of more tests being needed.  Today’s news delays the time line and cuts it cash balances ahead while it has to keep spending money in R&D without any revenues.  The company has raised cash but the September 30, 2010 balance sheet showed that it had just under $100 million in cash and investments at the time.
It is safe to assume that the lawyers will have filed class action suits against the company by Thursday morning, and there will almost certainly be some analyst downgrades in the morning as well.  Things are not likely going to be much better at MannKind until more clarity is available.

Opexa’s Surge Brings More MS Treatment Hope (OPXA, BIIB, NVS)

January 5, 2011 · Filed Under Financial, fda, multiple sclerosis, stem cells · Comment 

Opexa Therapeutics, Inc. (NASDAQ: OPXA) is on fire this morning with investor interest. The company announced that it has successfully completed two End-of Phase 2 meetings with the FDA over its Tovaxin.  This is the company’s lead-product candidate and is said to be the first ever personalized T-cell therapy aimed as multiple sclerosis.
The company believes that these FDA meetings put Opexa in position to move forward with a pivotal Phase 3 study of Tovaxin, which Opexa preparing for to being the Phase III study.

A Phase 2b study of Tovaxin demonstrated overall clinical and disability benefits over the placebo group, including a clinically relevant decrease in the Annualized Relapse Rate and improvement in disability score.  Another benefit beyond the efficacy measures that the FDA will ultimately evaluate is the safety profile.  Opexa notes an “excellent safety profile” with no serious adverse events related to the Tovaxin treatment.

There are MS drugs on the market.  Biogen Idec Inc. (NASDAQ: BIIB), which we recently covered as having risen above analyst expected targets, has the great MS drug called TYSABRI.  Unfortunately, the adverse effects that have greatly limited TYSABRI are rare instances of the potentially fatal brain infection PML.

It is probably too soon to call for a change of treatment regimens based upon already approved drugs against drug-candidates that still have to go through Phase III trials for broader data before the application process can even begin.  That being said, what makes Tovaxin different from current MS treatments is that it is a personalized cellular immunotherapy treatment.  It is derived from T-cells isolated from a patient’s peripheral blood, which is then expanded ex-vivo, and ultimately reintroduced into the patient by injection. This process then triggers an immune response against specific subsets of autoreactive T-cells known to attack myelin, which reduces the relapse risks through time.

Opexa noted, “The second meeting was a face-to-face End of Phase 2 clinical meeting in which Opexa presented its rationale and trial design for a Phase 3 pivotal study with Tovaxin in Relapsing Remitting-MS (RR-MS) patients. The FDA concurred with Opexa regarding its proposed clinical trial protocol including the patient population, end points, patient numbers and trial design. The FDA also offered several recommendations to further enhance a Phase 3 trial.”

Opexa is one we highlighted before on positive stem cell safety profiles.  Opexa is also one that has not been without controversy and has not been without financial liquidity measures.  Novartis (NYSE: NVS) put the company on the map on news in 2009 that it was acquiring the company’s stem cell technology.

The war against MS is a large one.  The National Multiple Sclerosis Society lists on its site that there are approximately 400,000 people with multiple sclerosis in the United States alone, with 200 more new cases diagnosed every week. The Society also noted that MS is thought to affect more than 2.1 million people on the planet.

It is still too soon to know if Tovaxin will be the next big MS treatment.  The FDA is a tricky institution and approvals have been more scrutinized of late.  So you know the good news, and you have at least some of the caveats.
The market is voting this one as a success today.  Opexa shares are up almost 60% at $2.49 on almost 6 million shares as of 11:30 AM EST.  The high for the day is $2.90 and the 52-week trading range is $1.02 to $3.07.

Even after the big gain, Opexa has a micro-cap value of only $45.9 million.  The company’s cash and equivalents was listed as only $4.73 million as of September 30, 2010.  Another round of funding is probably a safe assumption for the near future.  The company has noted funding and partner searches and the press release today noted: “Moving forward we are focused on implementing the necessary steps to advance toward a Phase 3 clinical trial, continuing discussions with potential development partners for Tovaxin and attempting to secure appropriate financing.”

If the company’s new MS treatment is as good as the investor reaction is signaling today, that funding should be easy enough to secure.  The question to ask on funding is probably “how much and when?” over other issues.
Stay tuned.

2011′s Overvalued Big BioHealth Names (AMLN, BIIB, EXEL, ILMN, JAZZ, MDVN, OSIR, SQNM)

January 4, 2011 · Filed Under Cancer, Financial, Sleep Disorder, analyst calls, stem cells · 2 Comments 

It is already 2011 and we have begun the coverage of our annual outlook series.  We covered the best of 2010 and an outlook for big-biotech stocks with the most implied upside already. Sometimes it is important to know also which of the big biotech and biohealth names may be overvalued when it comes to analyzing the current price and valuation data.  We have compiled data on the active biotech stocks which have at least five analysts making price target calculations for a year ahead. What we found was that a whole slew of companies were trading above the Thomson Reuters mean consensus price target objectives.  That does not assure that the analysts are right, but it means that either the analysts will have to play catch-up with price hikes or that they will be considering downgrading their expectations.

Our screen generated the following names: Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN), Biogen Idec Inc. (NASDAQ: BIIB), Exelixis, Inc. (NASDAQ: EXEL), Illumina, Inc. (NASDAQ: ILMN), Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ), Medivation, Inc. (NASDAQ: MDVN), Osiris Therapeutics, Inc. (NASDAQ: OSIR), and Sequenom, Inc. (NASDAQ: SQNM).

Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN) is way off its highs but may still be overvalued.  The company is seeking expanded approval for its BYETTA along with Basal insulin for diabetes but it may not be enough unless the analysts are missing the boat here.  At $14.80 and with a market cap of $2.1 billion, its 52-week trading range is $9.51 to $24.21.  The unfortunate issue is that Amylin’s consensus price target is $13.21 and the great huge hope here has yet to pay off for the company.  For whatever it is worth, Amylin’s CEO Dan Bradbury was given the honor of “The worst biotech CEO in 2010″ just last month.

Biogen Idec Inc. (NASDAQ: BIIB) has handily recovered from its past woes, perhaps recovered too much if analysts are anywhere close.  Shares are now trading at $67.20, with a market cap of $16.01 billion and a 52-week range of $45.96 to $68.60.  The consensus analyst target is listed as $62.83.  In early December Credit Suisse only gave a neutral rating but did assign a $68 target.  Biogen Idec was also reiterated Neutral but its target was raised to $70 at BofA/Merrill Lynch.

Exelixis, Inc. (NASDAQ: EXEL) may be overvalued to formal targets and maybe not… It came back in focus in November-2010 on news that Phase II clinical trial data on XL184 in ovarian and prostate cancer showed that the drug appears to be a help in both tumor types after it was effectively given back rights to the drug by Bristol-Myers Squibb earlier.  Share shave jumped and jumped and now trade at $8.49 with a market cap of $925 million and a 52-week trading range of $2.86 to $9.20.  Unfortunately, its consensus price target is $7.75 and there have been shares registered for sale by insiders over the last month.

Illumina, Inc. (NASDAQ: ILMN) was one of the best of the best in 2010, but that was then and this is about valuations.  The most recent price of $64.34 generates an $8.05 billion market cap and its 52-week trading range is $29.76 to $66.59.  We’ll be looking for analysts to catch up or for the stock to back off because the consensus target is listed as $60.34 still.  This is on the instrument side of the biohealth sector in integrated systems for the analysis of genetic variation and biological function.

Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ) appears on the list of ‘overvalued’ biohealth names apparently just over extreme end of year performance in November and December.  Jazz shares rocked higher from under $11.00 per share to right at $20.00 for its most recent $19.96 close.  The market cap is about $776 million and the 52-week range is $6.38 to $20.28.  The consensus target is $16.80. Its sleep-disorder treatment Xyrem recently won a new patent for narcolepsy and it has seven other Xyrem patents that expire between 2019 and 2024. It also raised guidance in November after swinging to a better profit.  Jazz is still greatly under-followed by analysts with only 5 real targets out there.  This may be a situation of catching-up that is needed by analysts rather than a major concern that something is wrong at Jazz.

Medivation, Inc. (NASDAQ: MDVN) imploded early in 2010 on an Alzheimer’s disappointment.  Shares are now around $16.09 with a $556 million market cap and a very wide trading range of $8.43 to $40.49.  Unfortunately, its consensus price target is $14.50 per share.

Osiris Therapeutics, Inc. (NASDAQ: OSIR) is tricky considering that it aims for the stem cell therapeutic segment.  At $7.77, its market cap is $255 million and its 52-week trading range is $5.39 to $9.24.  Unfortunately, its consensus target is $5.88.  Shares have been in a trading range for more than a year after a big sell-off and there is just an information gap that implies that Osiris could end up like “Ra” or “Rat” if you forgive the Egyptian mythology pun.

Sequenom, Inc. (NASDAQ: SQNM) is currently back up off its post-implosion lows.  The investing public has no idea how lucky they are that it is even still a public and traded company because it could have disintegrated entirely.  Shares are trading around $7.85 and have a market cap of almost $600 million and a 52-week trading range of $3.91 to $8.65.  The consensus price target is unfortunately $7.13

Sequenom was an interesting name in the screen even if it is more into diagnostics rather than cures.  It recently raised capital at $6.00 per share, so it has popped rather well.  The $7.85 price is trading above the $7.13 consensus price target.  Piper Jaffray initiated coverage with an Overweight rating in mid-December and gave it a $8.00 price target.

As you can see, being screened as ‘overvalued’ may be no fault of the company and may not even matter in the long-term development plans of a company.  Sometimes stocks outperform the market and they can outperform enough that the analysts have either not updated their coverage or maybe it was ‘too much too fast’ in that performance.

Big Biotechs With The Most Upside for 2011 (AMGN, GILD, CELG, HGSI, DNDN, INCY, ACOR)

December 29, 2010 · Filed Under Cancer, Financial, Lupus, M&;A, analyst calls, fda, genomics · 2 Comments 
Bioheath Investor is creating some ongoing outlook pieces as 2010 ends so we have an outline of what to expect for 2011.  We have already given the “Best of Big Biotech in 2010″ and now we want to focus on “The Big Biotechs With The Most Upside for 2011.”  Using “Big Biotech” implies market caps of those with a market cap of $1 billion or higher.  It was surprising that many of those big biotechs are actually trading much higher than their projected price targets.
Our screen generated 7 of the pack with implied upside of more than 15% for 2011.  Those making the screen were Amgen Inc. (NASDAQ: AMGN), Gilead Sciences, Inc. (NASDAQ: GILD), Celgene Corporation (NASDAQ: CELG), Human Genome Sciences, Inc. (NASDAQ: HGSI), Dendreon Corporation (NASDAQ: DNDN), Incyte Corporation (NASDAQ: INCY), and Acorda Therapeutics, Inc. (NASDAQ: ACOR) made the grade for those with the most implied upside to the average analyst price targets with a one-year horizon.

We did create a brief table showing the tickers, the current price, the implied analyst consensus price target from Thomson Reuters, the implied upside to that target, and the 52-week trading range.  More importantly, we gave an added breakdown on each with supporting data and color for building such an outlook.
StockCurrentTargetImplied Gain52-Week Range
AMGN$56.13$65.3916.5%50.26 – 61.26
GILD$36.54$44.6722.2%31.73 – 49.50
CELG$60.28$70.4816.9%48.02 – 65.79
HGSI$24.63$35.1742.8%20.56 – 34.49
DNDN$35.81$52.7347.2%25.78 – 57.67
INCY$16.81$21.0825.4%8.50 – 17.48
ACOR$27.60$33.5821.6%24.99 – 40.48

Amgen Inc. (NASDAQ: AMGN) has been range-bound for so long that we have called it a Big Pharma company masquerading as a biotech.  It is THE largest of all U.S.-based biotechs out there.  The 16.5% implied upside to a consensus target of $65.39 would mean a multi-year high as this one has been greatly range-bound in a $50 to $60 range.  We’ll be looking forward to more data on its prostate cancer indication possibilities.  The market cap here is well over $50 billion and it has so far survived its political risks and reimbursement risks from Washington D.C.  What else is there really to add?

Gilead Sciences, Inc. (NASDAQ: GILD) has a high implied upside of more than 22% and it ranks among the biggest biotechs in the world with its $29.6 billion market cap.  The implied target of $44.67 has already been breached before as the 52-week high is $49.50.  Gilead even peaked at $55 back in 2008 before the meltdown.  Its recent loss may have become InterMune’s gain.
Celgene Corporation (NASDAQ: CELG) has become harder and harder to evaluate on its valuation versus growth, but grown it has… even if shares have been range-bound.  Its market cap is north of $28 billion based on REVLIMID, THALOMID, and others.  If it makes that near-17% upside to $70.48, that will be a new 52-week high and will be within striking distance of the 2007 and 2008 highs.

Human Genome Sciences, Inc. (NASDAQ: HGSI) is the #2 stock of the implied upside stocks worth more than $1 billion.  The implied event is the FDA review of Benlysta for lupus in March 2011 and if approved it would be the first lupus treatment in the last 50 years.  While the implied upside is almost 43% to $35.17, Human Genome shares have already traded as high as $34.49 over the last year.  Two recent analyst calls could not have been more opposite.

Dendreon Corporation (NASDAQ: DNDN) won the pole position as #1 with the most implied upside.  Dendreon is a 2011 story as it telegraphed that its Provenge is likely to see a later in the ramp up and back-ended growth cycle as more capacity comes on line.  The company is also seeking expanded Provenge manufacturing approval.  While the implied upside is 47% to the $52.73 target, shares have traded north of $57.00 this year.  We recently saw a very bullish outlook from a research report here.

Incyte Corporation (NASDAQ: INCY) is expected to have some 25% upside to its $21.08 consensus target, and it should be noted that it has a 52-week high of only $17.48.  Thomson Reuters expects a decline in 2011 revenues and the story is still one that can go either very well or could backfire as its losses mount.  Incyte’s market cap is still north of $2 billion and its cash is in excess of $400 million as of its September 30, 2010 balance sheet.  Keep in mind that at the time of that balance sheet, debt and deferred liabilities already offset that cash balance.  Incyte is one that could be a huge wild card ahead.

Acorda Therapeutics, Inc. (NASDAQ: ACOR) is one that is close enough to the 52-week lows that the implied upside may not be believed by many investors.  The implied upside to the $33.58 target is still over 21%, but shares have come off the yearly highs by more than 30% so far in 2010.  Its market cap is barely over the $1 billion line at $1.08 billion and we’d rate this another wild card for biotech investors.

As far as how these big biotech targets compare with a fresh initiation from Credit Suisse, that can be seen here.  Keep your eyes out for both Human Genome Sciences and Dendreon in 2011.  Those are both exponential winners and were up for review in late 2010 as they were among the field of ten-baggers with implied gains of 1,000% or more.
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