Top Biotechs With Upside Ahead of Earnings (GILD, AMLN, ARIA, INCY, JAZZ, DNDN, HGSI, ILMN, AMGN, CELG, BIIB, BMRN, LIFE, REGN, AMLN, CBST, ONXX, THRX, VPHM)
Earnings season is afoot and we wanted to see how the analysts are ranking the top biotech stocks before these companies begin their earnings reports. We pulled the top biotech and biohealth related stocks which have market caps of $1 billion and higher and we broke these out into three separate groups by size. The large-cap biotechs are ranked in descending order by size. The stocks under $10 billion in market cap and then under $3 billion were broken out in alphabetical order.
We have compiled some color on selected names, but we also listed the current trading prices, the implied price targets from Thomson Reuters, gave multiples of earnings estimates (from Thomson Reuters) for the forward year (2012 in most cases), showed the trading history and listed a price-to-book ratio. We did not take any merger news into consideration so that we could just show an as-is model here.
Of the large cap stocks in biotech, Gilead Sciences, Inc. (NASDAQ: GILD) was the leader. Several other standouts in the biotechs under $10 billion with a high degree of expected upside were as follows: Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN), ARIAD Pharmaceuticals, Inc. (NASDAQ: ARIA), Incyte Corporation (NASDAQ: INCY), and Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ). Other biotechs such as Dendreon Corporation (NASDAQ: DNDN), Human Genome Sciences, Inc. (NASDAQ: HGSI) , and Illumina, Inc. (NASDAQ: ILMN) also screen out as those with the most upside, but that is because of huge share price drops of late.
THE $10 BILLION AND OVER IN MARKET CAP
Amgen Inc. (NASDAQ: AMGN) is the largest of the independent biotechs and it remains stuck like Chuck. At $56.71, the consensus target is $64.85 and the stock trades at a mere 10-times 2012 earnings estimates. Its 52-week range is $47.66 to $61.53 and its market cap is north of $52 billion. It is also worth about 2-times book value. Implied Upside: 14.3%.
Gilead Sciences, Inc. (NASDAQ: GILD) trades around $40.37 and estimates have a consensus price target of $47.96. This forward earnings multiple is only about 9.0 now. The 52-week range is $35.28 to $43.49, the market cap is $31.1 billion and the company trades at more than 5-times book value. Implied Upside: 18.5%.
Celgene Corporation (NASDAQ: CELG) trades at $64.97 and the consensus price target is about $71.86. This one is more expensive than many of the established biotech players at more than 15-times forward earnings. Celgene’s 52-week range is $48.92 to $67.01, its market cap is $29.8 billion, and it trades at nearly 5-times book value. Implied Upside: 9.8%.
Biogen Idec Inc. (NASDAQ: BIIB) remains the big-cap recovery stock of biotech. At $102.00, its consensus price target is $110.36, and it trades at close to 16-times forward earnings. The market cap is about $24.7 billion, the 52-week range is $57.58 to $109.63, and the company is worth about 4-times book value. Implied Upside: 8.5%.
UNDER $10 BILLION IN MARKET CAP
BioMarin Pharmaceutical Inc. (NASDAQ: BMRN) trades at $33.05 and analysts have a consensus price target of $36.25. Unfortunately, this one is expected to lose money this year at -$0.31 EPS and next year’s earnings are expected to be -$0.04. The 52-week range is $21.70 to $34.50, its market cap is $3.7 billion, and it is listed as trading at close to 5.0-times book value. Implied Upside: 9.6%.
Illumina, Inc. (NASDAQ: ILMN) trades around $26.56 and the consensus price target is about $42.90. The company trades at more than 18-times next year’s earnings estimates, its 52-week range is $25.57 to $79.40, its market cap is about $3.3 billion, and it trades at almost 2.9-times its book value. Implied Upside: 62%.
Life Technologies Corporation (NASDAQ: LIFE) may be difficult to compare after a huge run higher followed by a recent tank in the share price. It is also on the equipment side. Shares are back down around $37.24 and the consensus analyst price target is now down to $52.66. The company now trades at barely 9-times forward earnings, if you trust the “E” in that P/E ratio. LIfe’s 52-week trading range is $35.30 to $57.25, its market cap is about $6.7 billion, and the stock is worth about 1.5-times the stated book value. Implied Upside: 41%.
Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) trades around $60.00 after a large drop due to a $400 million convertible note offering. The consensus price target is about $66.14. The company is also expected to lose as much as $2.00 per share in 2012. It has a 52-week trading range of $24.29 to $79.90, its market cap is $5.5 billion, and it trades at more than 12-times its previously stated book value. Implied Upside: 10.1%.
UNDER $3 BILLION IN MARKET CAP
Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN) trades around $10.14 and the consensus price target from analysts is $13.44. The 52-week trading range is $8.03 to $21.23, its market cap is about $1.5 billion, and it is worth about 4.6-times book value. Implied Upside: 32.5%.
ARIAD Pharmaceuticals, Inc. (NASDAQ: ARIA) trades around $10.25 and the consensus price target is $15.44. The company is expected to have losses this year and next. Its 52-week trading range is $3.51 to $13.50, its market cap is $1.35 billion, and the book value at the last report was barely positive. Implied Upside: 50%.
Cubist Pharmaceuticals, Inc. (NASDAQ: CBST) was another big winner earlier in the year and its shares are now at $36.71 versus a consensus price target of $40.82. This used to be a value stock but now trades at closer to 22-times next year’s earnings estimates. The 52-week range is $20.81 to $39.29, the market cap is $2.24 billion, and it trades at just over 3-times book value. We once considered this a biotech buyout target, but that is in the past. Implied Upside: 11%.
Dendreon Corporation (NASDAQ: DNDN) shares are now around $9.40 and the consensus analyst target has come down all the way to $13.72. The company has no forward P/E ratio now as it is expected to lose money. The 52-week range is $7.81 to $43.96, its market cap is down to $1.4 billion, and it is listed as being worth more than 3-times its own stated book value. Implied Upside: 45%. Shares have fallen far from grace, so analyst targets and the ratios may all look a bit off. We also cannot count on estimates since the analysts and the company got this one so wrong on the end demand for Provenge. Now we have to hope that Provenge can have many more expanded uses outside of prostate cancer or this is a hard one to follow. What is odd is that Provenge is being tested for other uses and those could reignite interest if more promising data ever comes out. If not, let’s just say this was a painful lesson in biotech.
Human Genome Sciences, Inc. (NASDAQ: HGSI) is now up around $12.81 after buyout rumors and the consensus target is still listed as being roughly $24.00. The company trades at about 24-times next year’s earnings estimates, its 52-week range is $10.40 to $30.15, its market cap is now under $2.5 billion, and it is worth about 5.3-times its book value. Implied Upside: 87%.
Incyte Corporation (NASDAQ: INCY) trades around $14.04 and anlaysts have a consensus price target of $22.92 on the stock. It is expected to lose money this year and next year and the 52-week range is $12.58 to $21.15. While there is a $1.77 billion market cap, Incyte’s is listed as having a negative book value as laibilities exceed assets. Implied Upside: 63%.
Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ) trades around $40.00 after a sharp drop due to an FDA warning. That may make the figures a bit distorted. The consensus price target is $54.00 but that does not include the FDA impact. Jazz trades at only about 10.6-times next year’s earnings estimates. Its 52-week range is $10.51 to $47.88, its market cap is almost $1.7 billion, and the company trades at close to 16-times an implied book value. Implied Upside: 35%.
ONYX Pharmaceuticals, Inc. (NASDAQ: ONXX) trades at close to $34.50 and the consensus target is closer to $44.60. It is one which is also expected to lose money this year and next year. The 52-week trading range is $26.17 to $45.90, its market cap is $2.2 billion, and the stock trades at close to 3.5-times its book value. Implied Upside: 29.2%.
Seattle Genetics, Inc. (NASDAQ: SGEN) trades around $20.50, above the $19.15 consensus analyst price target. The company is expected to lose money in 2011 and 2012. With a 52-week range of $12.29 to $22.37, its market cap is $2.35 billion, and it trades at close to 9-times book value. Implied Upside: NEGATIVE by -6.5%.
Theravance, Inc. (NASDAQ: THRX) trades around $21.40 and analysts have a price target of $27.43 for the stock. The company is another one expected to lose money this year and next. The 52-week range is $16.44 to $28.95, the market cap is $1.8 billion, and it is another one that trades with a negative tangible asset level. Implied Upside: 28%.
ViroPharma Incorporated (NASDAQ: VPHM) trades around $19.00 and the consensus price target is $23.54. Due to an expected drop in royalties, its earnings are expected to be halved in 2012 versus 2011. Its 52-week range is $14.39 to $22.16, its market cap is about $1.45 billion, and it trades at about 1.5-times its stated book value with a large portion of assets as intangible assets. How this one looks on a standalone basis through time is a guess. Implied Upside: 24%.
On all of these implied upsides, please be sure to do your own research. We encourage our readers to challenge Wall Street analysts rather than merely following them blindly. Many cases have been there before were the analysts were just dead wrong. We also cannot help but notice how the biotech sector often has two very same observations based upon the exact same set of data, yet one analyst will say “Buy” and the other will say “Sell.”
JON C. OGG
Onyx Pharmaceuticals, Inc. (NASDAQ: ONXX) is delaying its New Drug Application filing with the FDA for carfilzomib. The delay is based on a recent meeting with the FDA’s Chemistry, Manufacturing and Controls review division where it requested additional information related to commercial-scale manufacturing of carfilzomib.
The company had previously expected to make its application by the end of this year for accelerated approval of carfilzomib. The new target date for its NDA filing for accelerated FDA approval “could occur as early as mid-year 2011.” In short, this is a half-year delay by the sound of it. Maybe more.
While trying to lessen fears, Onyx noted that the clinical profile of carfilzomib has not changed and it further noted that no new safety signals have been observed. It further stated, “The Phase 3 trials are on schedule and actively enrolling patients, and this change is not expected to impact any of the carfilzomib trials or other development plans.”
The company “observed minor variations that are believed to be primarily related to equipment temperature variances.” The complete data set from the Phase 2b 003-A1 clinical trial of carfilzomib in patients with relapsed and refractory multiple myeloma, along with new data on carfilzomib from additional studies, will be presented at the American Society of Hematology Annual Meeting in December 2010.
Delays are rarely a good thing. That is being confirmed in the after-hours session of trading. While the stock rose 4.25 to $27.50 today, the after-hours session right after 5:00 PM EST has shares trading down 7.1% at $25.55. The 52-week trading range is $19.54 to $33.48.
JON C. OGG
Onyx Pharmaceuticals (NASDAQ: ONXX) recently announced positive clinical trial results for their multiple myeloma therapy carfilzomib. The cancer drug was successful for many patients who failed to respond to other drugs, leading the company to believe that the drug may win an accelerated approval. This is extremely significant as the drug is believed to have clear blockbuster potential. The company plans to apply for FDA marketing approval by the end of 2010.
Onyx pharmaceuticals is a biopharm company which makes products that deal with the molecular mechanisms which cause cancer. They are most well known for the kidney and liver cancer drug Nexavar. The company acquired carfilzomib last year when it bought Proteolix Inc.
-Michael B. Sauter
Top 2010 Established Biotech Stock Picks for Upside (MNKD, THRX, DNDN, INCY, ILMN, ALNY, GILD, SVNT, AMGN, ONXX, PDLI, OSIP, CELG)
BioHealthInvestor.com wanted to put together a list of key biotech and BioHealth-related stocks that had the most upside for 2010 according to consensus analyst price targets. This is of course no exact science for many reasons, but getting a lot of consensus price targets together is often a sign of at least where to start when looking for upward price targets in stocks. And we all know that BioHealth and biotech stocks often offer the upside of the century as these companies all hold a bit of your own personal lottery ticket in all of their share prices.
After taking a look at our normal universe of biotech and biohealth related stocks. it was obvious that MannKind Corp. (NASDAQ: MNKD) still has the most upside from the consensus price targets IF it is hit. Then in order of expected share price appreciation comes Theravance Inc. (NASDAQ: THRX), Dendreon Corp. (NASDAQ: DNDN), Incyte Corporation (NASDAQ: INCY), and then came Illumina Inc. (NASDAQ: ILMN), Alnylam Pharmaceuticals, Inc. (NASDAQ: ALNY), and Gilead Sciences Inc. (NASDAQ: GILD).
The stocks above all had upside of over 25%. The other stocks here are the ‘lower rung’ of upside expectations but are all still offering over 20% upside to the consensus analyst price targets (again IF they are hit). Of the 13 stocks with markets caps of $750 million (or almost $750 million) which we cover, these still had upside of over 20% except a few: Savient Pharmaceuticals, Inc. (NASDAQ: SVNT), Amgen Inc. (NASDAQ: AMGN), Onyx Pharmaceuticals Inc. (NASDAQ: ONXX), PDL BioPharma, Inc. (NASDAQ: PDLI), OSI Pharmaceuticals Inc. (NASDAQ: OSIP), and Celgene Corporation (NASDAQ: CELG).
Some of today’s top movers in biotech and the world of BioHealth are Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN), Bristol-Myers Squibb Co. (NYSE: BMY), Dendreon Corporation (NASDAQ: DNDN), DepoMed Inc. (NASDAQ: DEPO), MDRNA, Inc. (NASDAQ: MRNA), and Onyx Pharmaceuticals, Inc. (NASDAQ: ONXX).
Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN) has seen little reaction after an activist investors has exited from the position in Amylin. A weekend SEC filing showed that Eastbourne Capital has liquidated its Amylin stake after having previously held a 9.5% stake. Reports put the reason as frustration with management. The positive read is that this one will no longer have at least one group publicly pushing it. And the bad is that this is a show of force of a loss of confidence. Shares are effectively flat at $14.20.
Bristol-Myers Squibb Co. (NYSE: BMY) is trading higher this morning after Goldman Sachs listed it as one of its top candidates for a drug merger out there. Be advised that after a 1.2% gain to $22.75 today this one has a market cap of some $45 billion. Even if a billion isn’t what it used to be and even if a foreign buyer might perceive a 20% currency discount opportunity today, that is a very large number.
Dendreon Corporation (NASDAQ: DNDN) is running again on new solid board member additions to help it transition from an R&D company to a manufacturing company. These are Ian Clark, the CEO of Roche’s Genentech unit, and Pedro Granadillo, a former Eli Lilly (LLY) manufacturing executive. These are viewed as top brass to help the company transition from pre-revenue into a revenue generator (when and if its PROVENGE gets approved). Shares are up almost 8% at $29.58 on over 3 million shares as of 11:30 AM EST.
DepoMed Inc. (NASDAQ: DEPO) has been hit very hard on mixed news that its Phase III clinical data for its menopausal hot-flash treatment Serada was a disappointment. The study for hot flashes drug met only 1 goal at 12 weeks. Despite the results, Depomed remains hopeful about the program and said it plans to discuss these results with the FDA. It seems as though that traders are shooting DepoMed first and may or may not ask questions later. Around 11:30 AM EST we have seen 6.9 million shares, and DepoMed is down over 38% at $3.90.
MDRNA, Inc. (NASDAQ: MRNA) is trading up substantially higher on news that UsiRNA reduces tumor growth in vivo, where the company showed data demonstrating continued progress in the advancement of its oncology program. MDRNA’s UsiRNAs is delivered by the company’s DiLA2 platform that showed subsequent reductions in tumor growth in models of liver and bladder cancer. Shares are up 29% at $1.60 on over 5.5 million shares.
Onyx Pharmaceuticals, Inc. (NASDAQ: ONXX) has been one of the long-standing stocks in the rumor mill that has been noted as a possible buyout candidate. Today the company made a deal of its own and shares are up despite the notion that acquirers usually trade off. Onyx signed a definitive agreement to acquire Proteolix, Inc., a privately held biotech focused on discovering and developing novel therapies that target the proteasome for the treatment of hematological malignancies and solid tumors. The deal is valued at $276 million, but could ultimately end up being worth some $851 million. Onyx shares are up 7% at $28.81 on over 3.3 million shares.
JON C. OGG
October 12, 2009
Price snapshots all taken as of 11:30 AM EST
It is common that when mergers are announced that some shareholders are either unsatisfied or want more. Sepracor Inc. (NASDAQ: SEPR) and its proposed $2.6 billion sale to Dainippon Sumitomo Pharma Co. might not be enough to satisfy everyone involved in the shareholder side of the deal. That is the case if you read a Bloomberg report from Tuesday night and this could be the first of many such suits.
It appears that the allegations are that the terms of the merger are detrimental to shareholders because of a break-up fee and shopping provisions. This is an effort either to block the merger or to secure a higher price and better terms. So here is how the $23.00 stacks up… It was a 27.6% premium to the September 1 price, but was a 48% premium to the 6-month average.
This deal does make-whole anyone who bought shares over the last year. But it comes with a huge hit for many investors who have been in it for the long-term. From the end of 2004 to mid-2007 this was generally a $40 to $60 stock. Then it was a $30 stock and the stock was in the low $20′s to $30 for most of the period from mid-2007 to mid-2008.
If you look at the deal on a valuation basis, it seems very cheap. The Thomson Reuters figures for 2010 are $2.91 EPS and $1.26 billion in revenues for 2009 and $2.99 EPS and $1.31 billion in revenues for 2010. In short, The company is selling for less than 8-times a blended earnings estimate and just over 2-times revenues for a blended time horizon.
Any time a merger is seemingly based upon a 52-week high, it is hard to feel too sorry for investors. At least until you start looking at the multiple of earnings being so low. We screened recently for all of the low P/E stocks in drug and biotech and there are still many other low P/E multiples in there.
We also are putting together another piece right now containing the following stocks as merger candidate discussions:
- Cubist Pharmaceuticals Inc. (NASDAQ: CBST)
- Onyx Pharmaceuticals Inc. (NASDAQ:ONXX)
- Geron Corporation (NASDAQ: GERN)
- Vanda Pharmaceuticals, Inc. (NASDAQ: VNDA)
- Regeneron (NASDAQ: REGN)
- Seattle Genetics Inc. (NASDAQ: SGEN)
- Alnylam (NASDAQ: ALNY)
JON C. OGG
SEPTEMBER 9, 2009
This week came a merger of at least one of the drug and biotech players we expected to occur. That was in Sepracor (NASDAQ: SEPR). We will be putting together a list of much more detailed picks in teh sector this coming week.
Some of these are our own picks which we think should be acquired, and some are current biotech-drug targets which others feel are on deck. To see the full deal on how this related, BioMedReports.com has a full breakdown on teh Spreacor terms and we used this for determining value on some of our other picks….
Among the picks being presented in detail next week are as follows:
Cubist Pharmaceuticals Inc. (NASDAQ: CBST)
Onyx Pharmaceuticals Inc. (NASDAQ:ONXX)
Geron Corporation (NASDAQ: GERN)
Vanda Pharmaceuticals, Inc. (NASDAQ: VNDA)
Regeneron (NASDAQ: REGN)
Seattle Genetics Inc. (NASDAQ: SGEN)
Alnylam (NASDAQ: ALNY)
Have a great weekend and stay tuned for the full details on these and others next week.
JON C. OGG
SEPT. 4, 2009
Onyx Pharmaceuticals Inc. (NASDAQ: ONXX) and partner Bayer Healthcare announced Wednesday an unexpected Phase II trial result for Nexavar in combination with chemotherapy for advanced breast cancer patients. More trials are likely, but the seemingly new opportunity in the very large breast cancer market is captivating the Street.
The company’s randomized Phase II trial of Nexavar in combination with chemotherapy met its primary endpoint of statistically significant progression-free survival extension, as compared to a placebo. The company expects to offer complete data from the study at a yet-to-be-determined scientific meeting.
More trials are likely, as only 299 patients were in the Phase II trial. Another larger trial will likely have to be organized. Also, the extension of progression-free survival was about four months; scientists and analysts may want to see better efficacy than that in a Phase III.
Existing markets for Nexavar are in liver and kidney cancer. It was known that Onyx was looking at Nexavar for a potential treatment for patients with breast cancer, as well as melanoma. But analysts were not expecting the Phase II trial results in breast cancer so soon.
The reason the stock is up roughly 25 percent in early trading is that progression-free survival is one of the keys to getting a cancer drug on the market. And breast cancer is the No. 1 cancer in women, with an expected 192,370 cases this year, according to the National Cancer Institute. It is second in total number of cancer cases only to prostate cancer in men.
Breast cancer may represent a way for Onyx to diversify, especially since new competitors may be coming in the liver cancer market. GlaxoSmithKline (NYSE: GSK), in particular, poses a potential market share threat with its candidate pazopanib.
There are many existing breast cancer drugs, with the leader being Genentech Inc.’s (NYSE: DNA) Herceptin. It blocks chemical signals that can stimulate breast cancer growth. Expected sales are $4.4 billion in 2009.
But Herceptin, like virtually all drugs in the class, does have side effects. Flu-like symptoms are common in 40 percent of patients who take it. And some patients have had lung problems, as well as a drop in heart function.
In cancers that Nexavar is approved to treat, a rare but serious effect reported in studies was heart problems and heart attacks.
In addition to how well it works, the safety data in late-stage trials may be important to potential Nexavar adoption in breast cancer. Even without outstanding efficacy, it may become an option for patients that are not good candidates for existing drugs.– Mike Tarsala
These are some of the analyst calls that have been seen in medical and biotech this Friday morning:
- Bristol-Myers (NYSE: BMY) raised to Outperform at Bernstein.
- EHealth (NASDAQ: EHTH) Raised to Overweight at Thomas Weisel.
- ImClone Systems (NASDAQ: IMCL) Started as Overweight at Thomas Weisel.
- Natus Medical (NASDAQ: BABY) Started as Buy at UBS.
- NuVasive (NASDAQ:: NUVA) Raised to Overweight at Thomas Weisel.
- Onyx Pharmaceuticals (NASDAQ: ONXX) Started as Market Weight at Thomas Weisel.
- OSI Pharmaceuticals (NASDAQ: OSIP) Started as Overweight at Thomas Weisel.
- Zimmer (NYSE: ZMH) Downgraded to Market Weight from Overweight at Thomas Weisel.
Jon C. Ogg
June 27, 2008