5 Biotech Stocks That Could Be Worth a Look – Barron’s

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Newly-hired analyst Danielle Brill launched coverage at Raymond James this week with a 490-page survey of her favorite biotech stocks. Atop the list are hematology drugmaker Acceleron Pharma and the gene therapy developer uniQure.

Brill thinks Acceleron (ticker: XLRN) could rise at least 60%, while uniQure (QURE) could nearly double. Shes also partial to the neurology stock Acadia Pharmaceuticals (ACAD), the hematology stock Global Blood Therapeutics (GBT), and Sarepta Therapeutics (SRPT).

Acceleron has two potential blockbusters, writes Brill in her Monday report. In partnership with Bristol Myers Squibb (BMY), the company recently launched sales of an anemia drug Reblozyl. An investigational drug called sotatercept did well in Phase 2 trials for pulmonary arterial hypertension, a serious congenital disease that can require lung transplants.

After its November 2019 launch, sales of Reblozyl rose to $55 million in the June 2020 quarter as a treatment for beta thalassemia and for a particular type of blood cancer. Brill thinks that the drugs annual sales could exceed $3 billion by the end of the decade, yielding annual royalties of over $750 million for Acceleron. As for sotatercept, she thinks its annual sales could hit $2 billion.

So Raymond James rates Acceleron a Strong Buy, and Brill believes its $92 stock could hit $155.

She also has a Strong Buy on uniQure, saying that its stock could rise more than 90% from its recent price of $39, to at least $75. The shares sold off this year after uniQure licensed its investigational treatment for a kind of hemophilia at a price some investors thought was too low. But Brill thinks the deal made commercial sense and gave uniQure cash to advance its just-started clinical trials of a gene therapy for the deadly neurological disorder Huntingtons disease, which killed songwriter Woody Guthrie, among others.

The first couple of Huntingtons patients were dosed with the gene therapy in June and suffered no safety problems. Brill expects uniQure to have efficacy data in 2021. If the Huntingtons gene therapy succeeds, she predicts a $7 billion annual market for uniQure.

Acadia Pharmaceuticals gets an Outperform rating from Brill. The stock sank from $57 to its current level of $38, after the June news that Acadias drug Nuplazid failed a pivotal trial as a treatment for depression. Nuplazid is already approved as a treatment for psychosis from Parkinsons disease and it allowed Acadia to have 2019 revenue of $340 million, with a loss of $235 million, or $1.60 a share.

By April of next year, the U.S. Food and Drug Administration will decide whether to approve Nuplazid for the large market of dementia patients who suffer psychosis. If approved, the added sales could ultimately exceed $3 billion a year, predicts Brill, while bringing Acadia to profitability by 2022. Good news on Nuplazid would lift Acadia stock to her target of $65.

Global Blood is one of a number of companies bringing long-overdue treatments to the blood disorder known as sickle cell disease. Brill rates its stock an Outperform. In December 2019, the company launched the drug Oxbryta and sales have taken off nicely. If the drugs adoption continues, Brill predicts that it could accrue more than 30,000 patients worldwide, brining annual sales close to $2 billion. That would bring in more than $9 a share in earnings by 2025, she says, and merits her price target of $115 for Global Bloods stock, which currently goes for $64.

Another Outperform rating goes to Sarepta Therapeutics, which aims to add a gene therapy to its approved treatments for Duchenne muscular dystrophy. Data on the gene therapys Phase 2 study will come out in the first quarter of 2021. Brill is optimistic, based on improvements seen in the three of the four patients treated in the Phase 1 trial. The stock market reaction to next years Phase 2 results will be dramatic, she predicts, sending Sarepta shares up or down by $100. Shes a believer and has a $200 price target on the $149 stock.

Write to Bill Alpert at william.alpert@barrons.com

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5 Biotech Stocks That Could Be Worth a Look - Barron's