The bottom is in for these 2 stocks? Analysts say “buy”
Today we’re looking at two small-cap biotech companies whose stocks have stalled. Every company has recently suffered a clinical setback that caused its stock price to fall, obliterating previous earnings and bringing it back down to a low. Setbacks of this kind are not uncommon in the biotech industry and underline the risk and speculative nature of the industry. What should investors do when a stock collapses? Is it bad fundamentals? And has the share price already bottomed out? This is where the Wall Street pros come in. Some 5-star analysts see an attractive entry point for both, as they find that everyone will return on an uptrend. Using TipRanks’ database, we found that these two tickers received consensus ratings from the analyst community of medium or strong buy and had strong upside potential. Cortexyme, Inc. (CRTX) The first seedy name we look at is Cortexyme, a clinical-stage biopharma company focused on degenerative diseases, especially Alzheimer’s. The company’s main candidate is COR388, also known as atuzaginstat. Atuzaginstat is currently being investigated in the GAIN study, an effectiveness study against Alzheimer’s disease. The study is fully enrolled with 643 patients and the company has moved towards an open label enrollment (OLE) portion of the Phase 2/3 study. During a routine regulatory update, Cortexyme announced that the OLE phase would be stopped, although the primary GAIN study continues. The results are to be published in the fourth quarter of 2021. The announcement of the partial stop triggered a price decline of 35%. The partial hold was triggered by adverse events in the liver during the atuzaginstat study. The liver symptoms were reversible and had no long-term effects. The FDA reviewed these records and, in collaboration with Cortexyme, a decision was made to hold the OLE while GAIN continued. This decision makes it possible to continue the main focus of the program while developing a new protocol for the OLE. The purpose of the OLE is to test the long-term effectiveness and tolerability of the drug. In a post-announcement review of Cortexyme, 5-star HC Wainwright analyst Andrew Fein noted, “Cortexyme’s announcement of a partial clinical discontinuation of the OLE trial of atuzaginstat is disappointing, but the reversible nature of the liver toxicity may offer a glimmer of hope for Cortexyme . We believe that the continuation of the pivotal study suggests that the drug-induced liver damage may not be severe enough to halt the program. “In the short term, Fein adds:” The continuation of the GAIN study is encouraging despite the partial holding of OLE. It is suggested that the FDA plans to wait for the additional data from the pivotal study before coming to a conclusion. Management said nearly a third of GAIN patients have completed the study and are well past the 12 week time point, suggesting they are no longer at risk. “To that end, Fein is rating CRTX for a buy and its target price of $ 76 shows confidence in 147% growth potential. (To see Fein’s track record, click here.) Overall, Cortexyme has a moderate buy rating from analyst consensus, with 6 recent ratings breaking down 4 to 1 to 1, buy-hold-sell. The stock’s average target price of $ 83.60 suggests that Wall Street sees high potential here on the order of ~ 170% versus the trading price of $ 30.74. (See CRTX stock analysis on TipRanks) Immunovant (IMVT) Next up is Immunovant, a clinical-stage biopharmaceutical research company focused on developing therapies for patients with autoimmune diseases, a class of diseases that affect the immune system’s own body Attacks patient. The company’s lead drug candidate, IMVT-1401, is currently being tested for the treatment of thyroid disease, myasthenia gravis, and warm autoimmune hemolytic anemia. The drug is described as a “novel, fully human anti-FcRn monoclonal antibody” that is administered by subcutaneous injection. Immunovant stock fell 42% on February 2 and has fallen since then. The triggering factor was an announcement by the company that IMVT-1401 has temporarily suspended its Phase 2b clinical trial in thyroid eye disease because patients experienced dangerous increases in their LDL levels. LDLs are the potentially harmful form of cholesterol that has been linked to cardiovascular disease. Despite the clinical setback, Stiffel’s 5-star analyst Derek Archila reiterated a buy rating on IMVT shares and a price target of $ 28. This number indicates an upside potential of 52% from current levels. (To view Archila’s track record, click here.) “Interestingly, elevations were only seen in TED patients, and our review of the literature suggests a few things: (1) Given the biology, this is likely TED specific – see below for details but we believe not that similar LDL elevations are seen in other indications outside of TED. and (2) other anti-thyroid therapies used in Graves / TED also see similar increases in LDL that end up being transient. We believe that IMVT-1401 is replicating this mechanism in the absence, “noted the analyst. Archila summarized,” While we will need additional company data to confirm … we do not believe this program is dead. “Overall, Strong Buy’s analysts’ view of IMVT would suggest that Wall Street is broadly in line with Archila’s view. This rating was derived from 8 recent ratings, including 7 purchases and only one hold. The average price target here is USD 40.38, which means an upward trend of ~ 121% for the next 12 months. (See IMVT stock analysis on TipRanks.) To find great ideas for trading stocks at attractive valuations, visit TipRanks ‘Best Stocks to Buy, a newly launched tool that brings together all of TipRanks’ stock insights. Disclaimer: The opinions expressed in this article are solely those of the presented analysts. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.