September’s been a terrible month for biotech stocks with the Nasdaq Biotech Index lower by around 5.7% since the close of August. Increasing interest rates is the top reason for the concern, but that is not a good reason to lose all faith in this sector.
Analysts who watch these two biotech stocks believe they are trading for much less than they should. Here is why they could be great bargains right now.
BioCryst shares have already doubled this year, and the analysts who follow this rare disease drugmaker believe it can go much higher. The consensus target for BioCryst at the moment is a 44% premium.
Shares of BioCryst leaped after the FDA approved their first drug, Orladeyo, to treat a rare blood condition known as hereditary angioedema (HAE) in December. The biotech company has been keeping steady for a few months as investors take a wait-and-see approach about the Orladeyo launch.
Sales of Orladeyo in Q2 came in about 161% higher than the past three-month time frame to get to an annualized run rate of about $114 million. That is encouraging, but still is miles behind the current leader Takhzyro, an injection for HAE from the company Takeda that got approval in 2018.
Global Takhzyro sales increased just 6% y/y to a yearly $916 million during Takeda’s recent quarter. Another round of quarterly reports reveal Orladeyo pushing Takhzyro out of the number one spot could push BioCryst stock a lot higher.
CRISPR Therapeutics is lower by around 44% since the gene-editing company peaked in Jan. While the stock might have gotten ahead of itself, analysts are now expecting it to come right back. The consensus target is for a 45% gain very soon.
At recent prices, the company’s market cap is still higher by around $8.5 billion. That is an awfully large valuation for a firm that does not have any commercial products producing revenue jet yet.
In April, Vertex Pharmaceuticals agreed to spearhead the development of the drug CTX001, CRISPR Therapeutics’ top candidate. This is a gene therapy for sickle cell disease. In order to increase its share of possible profits from 50% to 60%, Vertex gave CRISPR Therapeutics $900 million upfront in addition to another $200 million payment if CTX001 gets approval in the United States or the EU.
Author: Steven Sinclaire