Just in time for Easter,themarket delivered twoconsecutivesessions of gains.All three of the major U.S. stock indexesclosed in the greenonthe last two days oftheholiday-shortened trading week, rallying on theU.S.government’s additional interventionstomitigate COVID-19's economic impact.Whilethe most recent surge wasa welcome piece of good news,itcameas somewhat of a surprise asthe deadly virus continues to rampage parts of the U.S. andbusinesses remain shut down indefinitely.
As a result, Wall Street prosarguethat while we might not be out of the woods just yet,those ready to take on some risk have been presented with excitingopportunities. Specifically pointing tothebiotech space, severalcompellingnamesare trading at low levels,making it affordable to snap up shares beforea particular stocktakes off.
Seemingly at the drop of a hat, biotech companies can see their share prices soar on a single positive catalyst like favorable clinical data or regulatory approvals.
With this in mind, we used TipRanks’ database to zero in on three biotech stocks trading for under $2 per share. After conducting our research, we found out that each is Buy-rated and boasts some serious upside potential.
Trevena,Inc. (TRVN)
Focusedon developing therapiesto improve the lives ofpatients with central nervous system (CNS) disorders,Trevenahas an impressive development pipelinethat could potentially help itdo just that.While shares havefallen 37% year-to-date, putting the current share price at $0.51, some analysts believe its lead candidate,oliceridine, can drive massive upside.
Oliceridine, an IV injection designed as an alternative to IV morphinefor moderate to severe acute pain management,could be granted approval this summer, asthe FDArecentlyaccepted TRVN’s resubmission for review and set anAugust 7 PDUFA date.Based ona key opinion leader’s evaluation, JMP Securities analystJason Butlerthinks there’s a strong likelihood the drug will ultimatelybe approved.
While TRVN received a Complete Response Letter(CRL)in November 2018, new data from the QT trialaddressed the safety concerns. Additionally,Dr. Timothy Beard, M.D., Chair of the Department of Surgery at Summit Medical Group,seesoliceridineas being an innovative drug.
Butler wrote, “Dr. Beard stated that he is very familiar with the clinical data foroliceridineand believes the drug represents a truly novel advancement in pain management. He is impressed by the pain relief achieved with the drug and views the side effect profile as differentiated. He also commented that the data from the open-label extension trial is encouraging as it included a diverse range of patient populations.”
On top of this, the candidate has demonstrated a clear role in higher-risk patients as well as thepotential toimprove patient experience and time to discharge in outpatient procedure centers.This is significantbecauseperforming procedures in an outpatient setting rather than in a hospital results insubstantial savings for insurance companies.
With three other candidates in development, it’s no wonder Butler is optimistic about TRVN. In line withthistake,thefour-staranalyst maintained a Market Outperform rating and $4 price target. Should this target be met, shares could be in for a 684% twelve-month gain.(To watch Butler’s track record,click here)
Looking at the consensus breakdown, it has been relatively quiet when it comes to other analyst activity. Only one other analyst has published a review recently,but it was also bullish,makingthe consensus ratinga Moderate Buy. At $3.75, the average price target implies 635% upside potential. (See Trevenaprice targets and analyst ratings onTipRanks)
ZosanoPharmaCorporation(ZSAN)
Anotherbiotechtargeting CNSconditions,Zosanohas developed an intracutaneous microneedle patch system todeliver therapeutics and other bioactive molecules. At $0.60 apiece, the share price could represent the ideal time toacquire aposition.
Weighing in for H.C. Wainwright, analystRaghuramSelvarajucommented, “In our view,Zosanolooks like a sleeper that investors would be wise to assess carefully—the company's sole clinical-stage product candidate,Qtrypta, has completed pivotal development in acute migraine therapy with what we consider to be stellar results and is the subject of a potential October 20, 2020, U.S. approval decision.”
The candidate is a formulation ofan existing anti-migraine drug, zolmitriptan, inZSAN’spatentedmicroneedle array-containing, patch-based delivery device.According topivotal data, the drug was able to produce fast onset pain relief, with 23% of patients experiencing results within 15 minutes andmore than 80%of patientswithin two hours.Qtryptaachieved a strong result in terms of pain freedom andworks well for patients withnausea whocan’tswallow oral tablets andpatients with a fear of visible needles, and thus,can’tuse injectable triptans.
Selvarajuadded, “Only about 2% of patients in the Phase 3 trial reported triptan-like side effects (i.e., dizziness and paresthesia), indicating thatQtryptamay have a substantial safety and tolerability edge vs. other triptan-class drugs.”
WithSelvarajuexpecting the company to targetthe roughly 5,000 specialist prescribers who routinely treat migraines andpredictingit will be priced comparably to Eli Lilly’s drug, he estimatesthatQtryptacould generate $30 million in sales during 2021 and peak sales ofalmost$300 million in 2026.Adding to the good news, COVID-19's effect on the company should be relatively limited asQtryptahas already wrapped up pivotal testing and is under FDA review.
To this end,Selvarajukicked off his ZSAN coverage by issuing a Buy rating. Along with the bullish call, he set a $4 price target, suggestingshares could skyrocket 567% in the next year.(To watchSelvaraju’strack record,click here)
Given that the biotech has received 2 Buy ratings compared to no Holds or Sells in the last three months, the word on the Street is that ZSAN is a Moderate Buy.Thanksto the$3 average price target, shares could potentially climb 400% higher in the next twelve months.(See Zosano price targets and analyst ratings on TipRanks)
MoleculinBiotech, Inc.(MBRX)
Last up, we have biotech companyMoleculin, which hasused itsthree core technologiesto developtherapies for variousforms ofcancer.Unlike the other two names on our list, shares are up 143% in the last month, and at $1.14, its pricetagstill presents investors with an attractive entry point.
The excitement surrounding MBRX is partly related to its potential treatment for COVID-19.The company announced that the University of Frankfurt’s research indicated2-deoxy-D-glucose, “2-DG”, reducesCOVID-19 replicationby 100% in vitro. Even though this is promising,2-DG metabolizes too quickly to be delivered to patientseffectively,andthus, can only be used in vitro.That’s where MBRX comes in.It designed its candidate, WP1122, as a 2-DG pro-drugthat could possibly address the metabolic challengesassociated with 2-DG.
Explaining the therapy’s implications, Maxim Group analystJason McCarthystated, “WP1122 solves this problem with a modification to make a pro-drug which significantly increases the molecule's stability and permeability. Once WP1122 gets into a cell, the pro-drug acetyl groups are cleaved byesterasesin the cytoplasm, and the active 2-DG molecule is released. This process induces 10X-plusuptake into tissues, something that standard 2-DG cannot achieve...WP1122 could change that for viral diseases, including COVID-19, as well as cancer indications.”
Sure,additionalclinical testing needs to take place, but McCarthy believes that early data is encouraging and he expects anIND filing for the candidate to come very soon. It should also be noted that MBRXhas a research agreement with the University of Texas Medical Branch atGalvastonto studythe efficacy of itscompounds, including WP1112,in battlingseveral viruses.
Based on all of the above, McCarthy stayedwith the bulls, reiterating a Buy recommendation and $3 price target. This implies shares could soar 165% in the next twelve months.(To watch McCarthy’s track record,click here)
MBRX’s Moderate Buy consensus rating breaks down into only Buys, 2 to be exact. With a $2.50 average price target, the upside potential lands at 121%.(See Moleculin price targets and analyst ratings on TipRanks)
