Goldman Sachs analyst Salveen Richter this week began providing research on small- and mid-cap biotech stocks.
While he placed a “neutral” rating on the industry group, he did select four stocks that may provide better returns, according to Investor’s Business Daily.
4 Top Biotech Picks
• Bluebird Bio
(BLUE): Richter put a price target of $165 on the company, or 107 percent higher than Tuesday's closing price. "Bluebird is also developing Lenti-D, a gene therapy for the rare fatal neurological disease childhood cerebral adrenoleukodystrophy (CCALD), with interim pivotal data expected in 2016," Richter says. "Beta-thalassemia and CCALD appear somewhat priced in (peak $1 billion and $176 million sales in 2026, respectively), but the sickle cell disease opportunity is upside to current levels (peak $3 billion sales)."
• BioMarin Pharmaceutical
(BMRN): Richter’s price target is $158 a share, a 47 percent premium to Tuesday's close. "We believe the event is likely to be positive, based on data totality (including new analyses), BioMarin's ability to explain the limitations of the failed phase three study (with two controlled phase two trials having shown benefit), the unmet need of the disease, precedent of prior approvals and strong lobbying efforts from patient advocacy groups," according to the report.
• Kite Pharma
(KITE): Richter’s target is $111 a share for a 39 percent gain. “Focus will be on whether Kite can reproduce prior efficacy/safety data in its ongoing pivotal study, having brought manufacturing in-house, and in the competitive landscape," Richter writes. "In 2016, we expect KTE-C19 interim data in (the second half) to support a regulatory filing by year-end 2016."
(INCY): Richter provided a price target of $135 for 19 percent upside. "The lead drug, Jakafi, is on track for $2 billion in U.S. sales (Novartis partnership ex-U.S.), and we expect revenue stream diversification with baricitinib (Lilly partnership) with market entry in rheumatoid arthritis (RA) likely in late '16/early '17," Richter says.
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