“There is no worse tyranny than to force a man to pay for what he does not want merely because you think it would be good for him.”― Robert A. Heinlein, The Moon is a Harsh Mistress
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The biotech sector was largely flat yesterday to start the holiday shortened trading week. The small biotech sector is up some six percent now over the past two weeks despite a continued dearth of M&A activity across the industry. I expect both deal and trading volume to pick up now that summer is officially over for Wall Street.
Before the bell, here are four small cap biotech concerns garnering some positive analyst mention this Wednesday morning.
Micro-cap Cyclacel Pharmaceuticals (CYCC) gets a 'shout out' from Roth Capital this morning. Roth initiates the stock as a Buy with a $8 price target and the following color.
"We believe that Cyclacel, its clinical CDK inhibitor CYC065, and its indirect target MCL-1 should all go into the watchlist of anyone interested in CLL. While the checkered past of the prior pipeline has left the company trading at cash in a penalty box, we believe that it is now time for the Street to revisit Cyclacel’s clinical prospects and valuation as the new lead candidate CYC065 begins expanding its clinical footprint. We are initiating with Buy and $8 PT. In our view, CYC065 is active, and going places. Phase 1 data from the last AACR painted the picture of a targeted agent with potentially broad applicability (clinical response in Cyclin-E tumors). Up next, CYC065 is headed at least into Phase 1b studies in R/R CLL (in combination with the BCL-2 inhibitor venetoclax), and advanced leukemias.”
"Our $69 price target is based on a sum-of-the-parts (SOTP) analysis of TESARO. We include a value of $33.34/share, based on 40x our 2021 non-GAAP EPS estimate of $0.98; $31.65/share, based on the present value of our 2026 Zejula sales estimate of $2.5 billion, adjusted for a 3x P/S multiple, discounted at 15% and $4.45/ share for TESARO’s early-stage immuno-oncology pipeline. Our 40x P/E multiple is within the range of 20-50x of midcap biotech companies. Our P/S multiple of 3x is in line with TESARO’s peers that range between 2-5x."
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“Yesterday’s announcement by REPH that it plans to resubmit its NDA for IV meloxicam by the end of September effectively removes the largest overhang on the stock, in our view, which had been the concern that another Phase 3 trial would be needed for FDA approval. We assume a six-month review, placing potential approval in ~April 2019, an outlook which may prove conservative. Although there is some risk of further delay should the FDA not accept REPH’s proposed labeling language, we believe the company is taking the right steps toward addressing the agency’s concerns as raised in May’s CRL. We maintain our Outperform rating and $18 PT.”
The stock of Recro plunged in May when the original NDA was rejected by the FDA, but roared ahead by over 25% in trading Tuesday on news of the pending re-submission.
Finally, late yesterday, another analyst at Oppenheimer assigned a new Buy rating on VistaGen Therapeutics (VTGN) based on events a larger drug concern. The 'Thumbs Up' came with a $8 price target and the following commentary.
"JNJ filed an NDA for esketamine nasal spray—an event we view as a potentially important read across to VTGN’s AV-101, which is oral and works on the same NMDA receptor. JNJ is seeking FDA approval of esketamine for treatment-resistant depression (TRD) in adults. Esketamine is a single-enantiomer version of ketamine which is thought to help restore connections between brain cells in patients with TRD resulting in rapid improvement of symptoms. The FDA granted for esketamine nasal spray in TRD and major depressive disorder (MDD) at risk for suicide. JNJ completed five Ph3 studies in TRD and is conducting Ph3 studies in MDD patients at risk for suicide. AV-101 is in two Ph2 studies.”
And those are four small cap concerns seeing recent analyst activity before the market opens for the second trading day of the week. Happy Hunting.