September 8, 2016
By Mark Terry, BioSpace.com Breaking News Staff
While investors are waiting patiently (some) or impatiently (many) for Gilead Sciences (GILD)’s stock to make a real comeback, George Budwell, writing for The Motley Fool, looks at three other stocks that might be better buys.
Amarin Corp , headquartered in Dublin, Ireland, focuses on cardiovascular drugs. The company’s 12-month price target has a 144 percent upside potential, which seems to be based on the success of a clinical trial of its drug Vascepa. Described as a “highly refined fish-oil pill,” the trial is to determine if it cuts the rate of cardiovascular events, which would pretty much guarantee a blockbuster.
Budwell says, “At a minimum, this would lend credence to the notion that Amarin’s shares really are trading at a mere three times the company’s 2017 revenue estimate. The flip side is that if Vascepa flames out in this large cardiovascular-outcomes trial, doctors may be hesitant to continue prescribing it, causing the drug’s sales to crater.”
Amarin is currently trading for $3.21.
Kite Pharma is based in Santa Monica, California and is hammering away at the immune-oncology market. It uses its engineered autologous cell therapy (eACT) technology to focus on chimeric antigen receptor (CAR) and T cell receptor (TCR) engineered T cells. It has four pivotal studies for KTE-C19 ongoing.
At least some data on KTE-C19 in aggressive non-Hodgkin’s lymphoma is expected this month. If it should be positive and move on to approval sometime in 2017 or 2018, it is expected to bring in $1.7 billion in peak sales.
Budwell writes, “One major downside risk, though, is that this entire class of therapies has been plagued by serious safety concerns, which may limit their use to later lines of treatment where patients have few, if any, options remaining. And the scalability of these therapies on a commercial level is far from a certainty at this point.”
He also points out that Novartis (NVS) recently shut down the unit that housed its CAR-T program. It plans to keep developing CTL019, its CAR-T candidate, for acute lymphoblastic leukemia, but Novartis ’s apparent cold feet over CAR-T has made some investors wary.
Kite Pharma is currently trading for $61.
Novavax , headquartered in Rockville, Maryland, focuses on vaccines for infectious diseases. The company is headed toward a late-stage clinical trial readout of its vaccine for syncytial virus (RSV) F in older adults. That has the potential of generating $6 billion in sales. It also is conducting a late-stage trial of the same vaccine and whether it can transfer immunity to newborn babies. It also has hopes of merging the RSV vaccine with an internally developed flu vaccine. Budwell says, “Depending on its pricing structure and clinical results, this experimental RSV vaccine could end up usurping Prevnar 13 by a wide margin.”
Prevnar 13 is Pfizer ’s vaccine for pneumococcus that brought in $6.25 billion last year.
Novavax is currently trading for $7.38.
Since these stocks’ future success are largely hinged on upcoming trial data, they are considered high risk. As was Gilead early on. Budwell writes, “Yet the brave souls who bought Gilead around this pivotal event have enjoyed something along the lines of 300 percent return in less than five years. In short, risk is inherent when unusual growth opportunities abound.”
