Anywhere you turn, COVID-19's impact can be seen. The deadly virus’ romp around the world and the lockdowns that ensued have had a devastating effect on the economy, with this made abundantly clear by the decline in GDP as well as the high unemployment rate. What else came out of the global pandemic? The crisis has thrust biotechs into the spotlight, with the companies racing to find solutions being cheered by investors. To this end, share prices are flying sky-high and valuations have gone through the roof. This, however, begs the question, are these stocks running on empty? According to the pros on the Street, for two biotechs, the answer is no. To get the full scoop, we ran the tickers through TipRanks’ database, discovering that both Buy-rated stocks boast massive upside potential from current levels. Novavax (NVAX) Working around the clock to develop a vaccine against COVID-19, Novavax has already seen its share price skyrocket over 4,000% since the turn of the year. Following the release of Phase 1 results for its candidate, some analysts believe that this stock isn’t done surging just yet. Representing J.P. Morgan, four-star analyst Eric Joseph tells clients he was “pleasantly impressed by the initial immunogenicity/safety profile for NVX-CoV2373 in the Phase 1 vaccine results.” He added, “While we’d still caution against reading too concretely across the various CoV2 vaccine datasets, we believe it’s not too far a stretch to conclude the nAb activity of NVX-CoV2373 looks best-in-class, particularly when anchored to one of the more (if not most) stringent human convalescent sera (HSC) cohorts reported to date.” Looking more closely at the data, with the focus on relative neutralizing antibody (nAb) activity rather than HCS, mean Day 35 titer among patients treated with repeat 5μg injections was roughly 4x higher than HCS. Reported nAb activity was based on 100% neutralization of COVID-19 versus 50% virus neutralization with most of competitive datasets thus far. “In that context, were all else equal, we believe the 4x titer increase for NVX-CoV2373 likely understates its relative immunogenicity when compared with the ~2-4x titers over HCS seen across the competitive field,” Joseph commented. On top of this, the analyst argues that the reference HCS samples in the Phase 1 dataset are “comparative high bar, having drawn predominantly from moderate-to-severe COVID-19 patients.” It should also be noted that while qualitative in nature, adjuvanted NVX-CoV2373 patients demonstrated functional, Th1 biased CD4+ T cell responses at Day 28. When it comes to the candidate’s safety profile, Joseph is comfortable with the tolerability levels witnessed thus far. All of this is incredibly promising, but there are multiple challenges in the COVID vaccine landscape, namely the outstanding question of how protective anti-S antibodies will be in the broader and/or higher risk population. However, with the experimental vaccine “looking every bit the contender in Phase 1,” Joseph believes “relative valuations favor NVAX over the near-term ahead of the first of the competitor Phase 3 vaccine efficacy readouts.” Everything that NVAX has going for it convinced Joseph to join the bulls. In addition to upgrading the rating from Neutral to Overweight, the analyst bumped up the price target from $105 to $275. This target suggests shares could climb 61% higher in the year ahead. (To watch Joseph’s track record, click here) The bulls represent the majority on this one. Out of 5 total reviews published in the last three months, 4 analysts rated the stock a Buy while 1 said Sell. So, NVAX gets a Moderate Buy consensus rating. With a $227.60 average price target, shares could surge 34% in the next twelve months. (See Novavax stock analysis on TipRanks) Sorrento Therapeutics (SRNE) Also scoring plenty of headlines recently, Sorrento Therapeutics is developing several potential weapons to aid in the battle against COVID-19. Based on a recent announcement made by the company, the news could get even better for this healthcare name, which has already soared 327% in 2020. SRNE revealed that it entered into a licensing agreement with Columbia University for the rights to a rapid, one-step diagnostic test that detects SARS-CoV-2 virus in as little as 30 minutes from a saliva sample. According to Dawson James analyst Jason Kolbert, part of what makes the product, COVI-TRACE, so appealing is that it is self-contained, meaning that all of the testing materials are in a single tube and require no specialized laboratory equipment, so it is easily deployable for point of care, on-site, or potentially at-home testing. On top of this, its COVI-TRACK test could drive substantial upside. In order to conduct analytical validation, sample cohorts from healthy donors and COVID-19 patient samples were tested, with the assay showing specificity of over 97% and diagnostic sensitivity of more than 94%. “Upon issuance of an EUA, the COVI-TRACK test will be available for distribution to clinical testing sites nationwide. Sorrento has secured manufacturing capacity to support the production of up to five million test kits per month,” Kolbert mentioned. If that wasn’t enough, SRNE inked a deal to acquire SmartPharm Therapeutics, providing it with access to gene-encoded therapeutics. Weighing in on the move, Kolbert stated, “The capability to develop non-viral DNA (and RNA), gene delivery platforms for COVID-19, and rare diseases, has broad potential for application in enhancing antibody-centric therapeutics, including against COVID-19. In other words, it provides the company with the ability to drive the body to produce (continuously) antibodies. Continuous antibodies may be a critical factor in defeating COVID.” Representing yet another positive, SRNE has evaluated billions of antibodies and identified a small group that can block the S1 protein's interaction with human angiotensin-converting enzyme 2 (ACE2), the receptor used for viral entrance into human cells. The hope is that the cocktail will remain effective even if the virus mutates. “Through the U.S.'s Project Warp Speed, it's possible we could see this cocktail move rapidly to commercialization. Sorrento plans to accelerate the development of multiple candidates for in vivo gene-encoded expression of Sorrento's antibodies, starting with Sorrento's previously announced STI-1499, or COVI-GUARD, which is currently moving through preclinical and manufacturing requirements with an IND submission targeted for August 2020,” Kolbert commented. So far, in vitro results have demonstrated that STI-1499 can completely neutralize SARS-CoV-2 infection at low doses, and therefore, STI-1499 is Sorrento's lead candidate “for potential cost-effective passive protection against COVID-19.” Kolbert also points out that if clinical trials are successful, a single dose of STI-1499dpi (DNA plasmid injection) could allow the patient's own muscle cells to produce the antibody for an extended period of time after a single injection, potentially providing prolonged protection against COVID-19. In line with his optimistic take, Kolbert left his Buy recommendation and $24 price target unchanged. Should his thesis play out, a potential twelve-month gain of 66% could be in the cards. (To watch Kolbert’s track record, click here) Looking at the consensus breakdown, it has been relatively quiet when it comes to other analyst activity. Only one other analyst has posted a recent review, but it was also bullish, so the consensus rating is a Moderate Buy. In addition, the $27 average price target is more aggressive than Kolbert’s and indicates upside potential of 87%. (See Sorrento Therapeutics stock analysis on TipRanks) Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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Amarin announced on Friday that Kaiser Permanente Northern California (KPNC) is initiating a trial to study the potential of its lead product Vascepa to be used as a treatment to prevent or reduce the risk of complications from viral respiratory illnesses such as COVID-19 in older adults with heart disease.Biotech Amarin (AMRN) said that that the MITIGATE COVID-19 study, will test the effects of Vascepa on viral upper respiratory infection (URI) rates and clinical outcomes, especially involving acute respiratory SARS-CoV-2 infection, in adults with atherosclerotic cardiovascular disease (ASCVD) who are at elevated risk of experiencing moderate to severe COVID-19.The trial will involve 1500 US patients aged 50 years or older with ASCVD and no prior history of confirmed COVID-19, who will receive 4 grams per day of Vascepa for a minimum of 6 months. The co-primary study endpoints are the rate of moderate to severe laboratory-confirmed viral URI, including COVID-19 and influenza, prompting urgent care encounters, emergency department visits, or hospitalization. A control group will consist of 15,000 adults meeting the same eligibility criteria who will be passively followed through KPNC’s electronic health record system for outcome ascertainment.“Most prior clinical trials for COVID-19 have focused on treating patients hospitalized for moderate or severe COVID-19 with experimental agents,” said KPNC’s Andrew Ambrosy. “MITIGATE COVID-19 is novel in that we will study the effects of pre-treatment with IPE, an FDA-approved therapy for primary and secondary prevention with putative anti-inflammatory as well as antiviral properties, in high-risk outpatients with ASCVD on subsequent risk of viral URI-related morbidity and mortality.”Amarin’s lead drug Vascepa was initially launched in the US in 2013 as an adjunct therapy to diet to reduce triglyceride levels in adult patients with severe hypertriglyceridemia. A new, cardiovascular risk indication for the fish-oil derivative was approved by the FDA in December 2019 based on the results of the landmark Reduce-It trial.Year-to-date shares in Amarin have plunged 67%, as the biopharma’s Vascepa suffered from a sales decline with many patients remaining at home, as well as many physician offices closed amid the coronavirus pandemic. In addition, the company is currently appealing to the US Court of Appeals a March 2020 patent invalidity ruling in favor of generic companies, Hikma Pharmaceuticals USA Inc. and Dr. Reddy’s Laboratories, Inc.H.C. Wainwright’s Andrew Fein reiterated a Buy rating on the stock put his price target under review as the analyst cautions that “Amarin’s elephant in the room continues to be the Vascepa patent litigation”. (See Amarin stock analysis on TipRanks)“We believe physician and patient education on the benefits of Vascepa remains paramount for widespread adoption, and our concern is that this educational and promotional push could be greatly reduced or eliminated with introduction of a non-branded generic competitor,” Fein wrote in a note to investors. “With the potential future ruling allowing for the launch of generic Vascepa, little is accomplished by way of generic entrants actually being capable of launching at scale.Overall, Wall Street analysts retain a cautiously optimistic Moderate Buy outlook on the stock. This breaks down into 4 recent Buy ratings versus 4 Hold ratings. Meanwhile the average analyst price target of $14.17 translates into 102% upside potential.Related News: Moderna Secures $400M In Deposits For Supply Of Covid-19 Vaccine Candidate Teladoc To Snap Up Livongo In $18.5B Virtual Care Merger Deal Amazon Gets UK Nod To Buy 16% Stake In Food Delivery Platform Deliveroo More recent articles from Smarter Analyst: * Billionaire Buffett Buys Back $5.1B In Berkshire Stock As 2Q Profit Beats * Twitter Held Early Talks To Buy TikTok's US Operations – Report * FedEx Gains 7% On Delivery Rate Hikes, Stephens Lifts PT * Mizuho Lifts NortonLifeLock’s PT After Strong 1Q Results