Biopharmaceutical Summer Highlights: Intercept Pharmaceuticals, Receptos, and XOMA

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By Sarah Roden

Last week, Liana Moussatos of Wedbush released a report highlighting a list of upcoming catalysts for biopharmaceutical companies. Specifically, she noted forthcoming events for Intercept Pharmaceuticals Inc (NASDAQ:ICPT), Receptos Inc (NASDAQ:RCPT), and XOMA Corp (NASDAQ:XOMA). Moussatos has a 51% success rate recommending stocks with a +32.6% average return per rating.

Intercept Pharmaceuticals will release second quarter earnings in mid-August. On June 29, the biopharmaceutical company announced it had completed a New Drug Application for OCA in PBC. Obeticholic acid, or OCA, is a treatment for patients with the liver disease PBC. Now, the FDA has about two months to review the application and Moussatos is 80% confident the application will be approved by the end of August. The analyst notes 80% confidence that OCA in PBC will receive full approval in the U.S. by the end of 2015 or the first quarter of 2016. Moussatos views the NDA submission as an important regulatory milestone and anticipates FDA acceptance of the application because “the data package for OCA for the treatment of PBC is robust and is likely to support first pass approval.” She added, “Should OCA be approved, we believe the barriers to commercial adoption will be relatively low as many patients have been identified and are receiving treatment. Moreover, we see upside potential to our estimates of the eligible patient population as well as pricing.”

Moussatos reiterates an Outperform rating on Intercept Pharmaceuticals with an acquisition value of $493.

Receptos Inc is scheduled to release second quarter financial results in mid-August. Moussatos explains that the company finished the first quarter with over $640 in cash and cash equivalents, and she projects runway into mid-2018. The analyst partially attributes these financials to the “top tier” management team. Beyond that, Moussatos is 80% confident that the biopharmaceutical company will be acquired by 2015 or 2016. She explains, “As the emerging clinical profile for ozanimod in RMS [relapsing multiple sclerosis] and UC has become best-in-class in our view, we [anticipate] Receptos to become an acquisition target.” The analyst goes on to highlight several past articles that have mentioned potential partnerships or acquisitions involving Receptos. Ozanimod, the company’s lead product, is in Phase 2 and 3 clinical trials.

The company is currently trading at approximately $195, but Moussatos believes it can achieve $350 per share. Moussatos reiterates an Outperform rating on the stock with a $358 twelve-month price target.

XOMA Corp is expected to release top-line results from the EYEGUARD-B trial in mid-July, which is testing its pipeline treatment gevokizumab. Moussatos considers this pending announcement to be “the most material catalyst for XOMA in 2015—especially since the stock has not run-up with the group.” She anticipates positive results “mostly due to the fact that every patient in both Phase 2 Behçet’s uveitis trials responded to a single dose of gevokizumab.” The analyst projects gross peak worldwide sales of the drug to be over $500 million by 2021 after it launches in 2016. Furthermore, Xoma received orphan drug status of Xoma 358, a pipeline treatment for congenital hyperinsulinism. Based on preliminary results, Moussatos believes the treatment is “likely to be effective.”

Moussatos reiterates an Outperform rating on XOMA with a $17 price target.

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1 COMMENT

  1. Receptos stock is being manipulated by stock analysts who have a vested interest in the outcome. Stocks of 3D printers and many stocks in the DOT COM era were greatly inflated based upon so called “potential in their market segment” until they came down crashing once these so called analysts had taken their profits. 3D Systems (DDD) today has lawsuits by investors for the stock manipulation that took place.

    Some analysts such as Liana Moussatos and Cramer (who I am convinced is a paid infomercial ) have already declared this stock is going to provide even greater returns when Receptos has ZERO dollars in revenues. Should any of its drugs not meet FDA approval this stock crashes to a $5 stock. At the current stage of the drug approval Receptos is worth a maximum of $30. Also a major institutional investor has recently sold off stock which indicates they understand it is “irrational exuberance” on the part of investors to continue to invest in RCPT.

    I would urge individual investors to be cautious about this stock – this stock is akin to the Tulip mania in the Dutch Golden Age in 1637. At the peak of tulip mania, in March 1637, some single tulip bulbs sold for more than 10 times the annual income of a skilled craftsman. Some tulip bulbs were reportedly changing hands ten times in a day. No deliveries were ever made to fulfil any of these contracts, because in February 1637, tulip bulb contract prices collapsed abruptly and the trade of tulips ground to a halt.

    Until Receptos gets FDA approval which is expected in 2017, begins to market its product in 2018 and gets market acceptance to generate revenues. There is no real value in this stock today other than “Cramer fluff”

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