Investment bank analysts are convinced these three biotech stocks are worth a lot more than their current market values. All have recently been given price targets that suggest they could double your money, or better.
Here's why analysts are willing to stick their necks out and predict huge gains ahead for these fledgling drugmakers. Just remember, huge potential rewards usually come with a great deal of risk.
|Company (Symbol)||Bank||Recent Price Target||Implied Upside at Recent Prices|
|Tocagen Inc. (NASDAQ: TOCA)||Citigroup||$27||141%|
|Vital Therapies, Inc. (NASDAQ: VTL)||Cantor Fitzgerald||$18||142%|
|Rigel Pharmaceuticals, Inc. (NASDAQ: RIGL)||Citigroup||$8.50|| |
Data source: Analyst notes, Yahoo! Finance.
Tocagen: Brain cancer hopeful
Senator John McCain's recent passing has drawn attention to a disease badly in need of new treatment options: brain cancer. Tocagen has an experimental gene therapy aimed at this underserved group, and success could send the stock screaming higher.
Last year, Tocagen excited the medical community when its lead candidate, Toca 511, helped six out of 56 patients with recurrent high-grade glioma achieve complete remission. Brain tumors have a tendency to come roaring back following initial responses, so it was encouraging to see all six that responded early were still alive at follow-up observations that occurred between 21.4 months and 52.2 months after treatment began.
Tocagen's gene therapy candidate employs a crude but effective delivery method that involves dozens of injections directly into the wall of a patient's tumor resection cavity. Toca 511 is actually a virus that's supposed to selectively infect leftover tumor cells and get them to produce modified yeast cytosine deaminase (CD). Patients then take Toca FC, which is a chemotherapy prodrug that remains inactive until it contacts CD accumulating around infected tumor cells.
Investigators recently completed an interim analysis of the ongoing pivotal trial and allowed the study to continue. If investigators observe a significant overall survival benefit at the next assessment, this stock could more than double.
Image source: Getty Images.
Vital Therapies: Liver support
Cantor Fitzgerald thinks this company's experimental liver support system, branded ELAD, could be a big winner for people with acute liver failure. The ELAD System is essentially a pound of healthy liver cells that are steadily infused into a patient's bloodstream over five days. During a previous pivotal trial, it failed to produce a significant survival benefit for the intent-to-treat population, but investigators noticed a strong benefit in a subgroup of patients under 50 years old who didn't have multiple failing organs, just bad livers.
Vital Therapies is running another pivotal trial with a group of severe alcoholic hepatitis patients under 50 years old who don't have multiple organ failure, and odds of success seem awfully high given the results from the previous subgroup. We'll know for sure when the company releases top-line results for the 151-patient pivotal study later this month.
Each year, around 100,000 Americans are hospitalized for severe alcoholic hepatitis, and around 80,000 suffer from other acute forms of liver failure that might be treatable with the ELAD System down the road. With donor organs in chronically short supply, demand for a new solution could drive sales of the system into blockbuster drug territory and help the stock climb toward the clouds.
Image source: Getty Images.
Rigel Pharmaceuticals: Solo launch jitters
This company earned its first FDA approval in the spring, and everyone's still holding their breath while the initial sales figures for its platelet protector Tavalisse roll in. The drug fills an unmet need, but new drug launches from smaller biotechs tend to disappoint.
Around 65,000 American adults have a condition called immune thrombocytopenia (ITP), which means their immune system chews up platelets for no apparent reason. Tavalisse is the first new treatment ITP patients have seen in a while, and it could carve out a nice niche worth around $400 million annually at its peak.
Tavalisse's addressable patient population could also expand to include another chronic condition called autoimmune hemolytic anemia, which affects around 40,000 people in the U.S. There aren't any FDA-approved therapies that prevent widespread destruction of red blood cells for these patients. Successful results from an ongoing pivotal trial with data expected this fall, coupled with encouraging initial launch figures for Tavalisse, could help this stock more than double.
They could also get cut down
All three of these stocks have what it takes to double your money, but they could also lead to swift and heavy losses. Experimental new brain cancer drugs have a terrible tendency to appear effective in single-arm studies, then strike out when compared to standard care. Toca 511 is the only candidate Tocagen has in clinical trials at the moment, and if its pivotal trial flops, the stock will collapse.
Vital Therapies is in a similar situation to Tocagen. Showing a strong survival benefit for severe alcoholic hepatitis patients treated with its ELAD System would more than double investors' money. With limited cash reserves and no products to sell, though, Vital Therapies will have to tap investors for more money soon. If investigators can't present a clear pivotal trial success this time, raising enough to stay afloat will be a challenge.
As the only company here with a product to sell, Rigel is the safest bet by a mile. That said, the stock could easily get cut in half if initial reports of Tavalisse's commercial launch disappoint.
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