Biotech Stock Buy List as Business Bounces Along Bottom

April 6, 2023

Biotech stock equity analysts see a mixed bag with a few highlights for 2023.  This sort of pessimism is often a sign of a biotech stock sector bottom and investors could begin to build their biotech stock buy list now.

Biotech stock expert David Nierengarten, Ph.D., is Managing Director and Head of Healthcare Equity Research at Wedbush Securities.

David Nierengarten, Ph.D., Managing Director and Head of Healthcare Equity Research, Wedbush Securities.

David Nierengarten, Ph.D., is Managing Director and Head of Healthcare Equity Research at Wedbush Securities and is a bioteck stock expert.

He mainly covers development-stage therapeutic companies. He began his career on the financial side of biotechnology at a venture capital firm that focused on early-stage therapeutic and medical device companies.

Additionally, prior to joining Wedbush, he worked in a clinical-stage, venture-backed biotechnology company, in business development and clinical trial operations.

He received his bachelor’s degree in biochemistry from the University of Wisconsin-Madison and his Ph.D. in molecular and cell biology from the University of California-Berkeley.

His biotech picks are embedded in a 2,903 word interview recently conducted at the Wall Street Transcript.

“In terms of the regulatory and other environment, what we’re watching is a continued, we think, shift back to maybe more normal, shall we say, for the FDA in terms of approval behavior and questions and CRLs for manufacturing defects and things like that that existed before the pandemic.

So people might say it’s more restrictive, but I think it’s a return to where we were for, frankly, most of the last decade, from 2011, 2012 to 2020.

And one last thing of note is, I think there’s a diminishing possibility that things like the Inflation Reduction Act will be modified or revoked in terms of the drug pricing.

And in fact, of course, the president is insisting on adding more drugs to the list in his next budget proposal, and I think that is playing out as I expected, which is the initial proposal that they would have price controls for only a few drugs, the biggest-selling drugs was, frankly, a lie.

The plan was to open it up there and to expand it to as many drugs as they felt like to try to balance the books for Medicare.

So that’s a net negative for the industry and will continue to be an overhang until or unless that changes because the push is definitely for lower prices on drugs and expanding it to encompass more of the industry.”

One of the more esoteric supply chain issues for the biotech industry is a a monkey shortage which has affected pre-clinical testing.

“The latest one is there’s a shortage of non-human primates for preclinical testing.

And no one would have guessed there’d be a monkey shortage, but there’s currently a monkey shortage, and hopefully that will work itself out over the next few months.”

M&A activity may be a harbinger of a biotech bottom.

“…You’ll be hearing about reverse mergers a lot more.

A reverse merger is when a private company essentially takes over a public company and acquires that public company’s cash balance and public listing.

So it’s a different way to go public.

And so, that’s been utilized in the past. It’s been utilized for a long time as a technique for private companies to go public different from an IPO.

There will be more of that happening over the next year or two because there are plenty of companies that have cash balances but not a lot of clinical programs.

They feel they’ve been unable to raise money and they’re essentially shell companies. And so, we will be seeing a lot more of these reverse mergers in the next year, year and a half, at least.

So that’s how Disc became public.

In terms of acquisitions of biotech companies, biopharma in particular, we’ve seen a bit of a tick up.

There were some out of the gate at the New Year. Of course, the biggest acquisition was last year, at the end of the year, when Amgen (NASDAQ:AMGN) bought Horizon Therapeutics (NASDAQ:HZNP).

But since the beginning of the year, there have been a few companies buying. And surprisingly a couple private companies getting bought by public companies.

So we’re seeing a little bit more of that because valuations are resetting on the private company side.

And then on the public company side, we saw Ipsen (OTCMKTS:IPSEY) buy Albireo, which is a decent-size acquisition.

And Sun Pharma (NSE:SUNPHARMA) bought Concert Pharmaceuticals, which is also a little unusual because not too many people saw Sun Pharma as an acquirer of companies.

Then, these private companies getting bought — like InstaDeep by BioNTech (NASDAQ:BNTX) and such.

So those have been some of the recent acquisitions.”

Matt Phipps, Ph.D., a biotechnology analyst, joined William Blair & Co, L.L.C. in November 2014, after working as a postdoctoral research fellow at Texas Scottish Rite Hospital for Children. In the 2019 StarMine Analyst Awards from Refinitiv, Dr. Phipps was ranked the No. 1 earnings estimator in biotechnology and No. 3 across all industries.

Matt Phipps, Ph.D., biotechnology analyst, William Blair & Co, L.L.C.

Matt Phipps, Ph.D., a biotech stock expert analyst, joined William Blair & Co, L.L.C. in November 2014, after working as a postdoctoral research fellow at Texas Scottish Rite Hospital for Children.

In the 2019 StarMine Analyst Awards from Refinitiv, Dr. Phipps was ranked the No. 1 earnings estimator in biotechnology and No. 3 across all industries.

Dr. Phipps earned a Ph.D. in cellular and molecular physiology from the University of Alabama at Birmingham and a B.S. in physics in medicine from the University of Notre Dame.

Biotech stock picks for 2023 are highlighted in his 3,858 word interview, exclusively in the Wall Street Transcript.

“…We first added two companies that were involved in what we call the bispecifics, and this is really in the immune-oncology space, but specifically looking at a type of antibody, or how they design an antibody to try to activate the immune system.

And so those companies were Genmab (NASDAQ:GMAB) and Janux (NASDAQ:JANX), and they’re very different in terms of stage of development and all that.

Genmab is clearly a leader in developing bispecifics, and just antibodies, more broadly.

They should be getting approval very soon for a bispecific to treat different types of lymphoma, and so have had success there.

The stock has rewarded them for that, but we are cautious on where consensus estimates sit at currently.

Janux, on the other hand, is earlier stage, but at the next-generation approach for these immune-oncology drugs that we call bispecifics.

And they recently got into clinics with their first two programs, and so will start to get data by the end of this year.

And we do see more upside potential, but of course there is still clinical risk for their next-generation approach.”

Biotech stock recommendations are often hedged with caveats but not this one:

“…Our top pick for this year is a company called Chinook Therapeutics (NASDAQ:KDNY).

We think they’re really well positioned and going to be a leader in a newer disease space — I say newer in the sense of therapies getting approved, not that the disease itself is new.

It’s called IgA nephropathy, and it’s IgAN for short.

It’s a rare but not ultra-rare kidney disease.

It affects younger people in their 20s and 30s, and it’s where you develop an autoimmune condition against your kidney.

And so, historically, patients had to be given steroids, corticosteroids, and the like.

And those are not well tolerated, have a lot of side effects that especially younger patients don’t want.

And so now we’re seeing a wave of innovation for bringing in new medicines that don’t carry the side effects of steroids and actually are probably much more effective at the same time.

So we’ve had two already receive FDA approval from competitors, but we think Chinook will have their first Phase III readout later this year, towards the end of this year.

And then also, they have a second program that’s complementary or additive to their first that’s entering Phase III trials.

So a combination of those two assets that makes them very well positioned in this space…

Their valuation is around $1.5 billion, maybe $1.3 billion. So it is a small-cap, but it’s not a tiny-cap. ”

This former Marine Colonel and Wall Street Journal “Best on the Street” analyst picks his 2023 biotech winners in a 2,145 word interview in the Wall Street Transcript.

Steve Brozak is the Managing Partner and President of WBB Securities,

Steve Brozak, Managing Partner and President, WBB Securities,

Steve Brozak is the Managing Partner and President of WBB Securities, LLC.

In 2013, Dr. Brozak was selected as a top analyst in the pharmaceuticals sector by the StarMine/Financial Times Industry Analyst Awards.

He also was named to The Wall Street Journal’s “Best on the Street” list in the category of medical equipment and supplies.

Earlier, this biotech stock expert worked in finance at Alex. Brown & Sons, Cowen & Company, Dean Witter and Salomon Brothers.

Dr. Brozak has written for NatureThe British Medical Journal and Brain Stimulation.

He is also a contributor to Forbes and ABC News.

He received a B.A. degree and an MBA from Columbia University and a Doctorate in Medical Humanities — DMH — from Drew University.

He served in the United States Marine Corps, retiring as a lieutenant colonel.

The ex-marine officer minces no words in his 2,145 word exclusive Wall Street Transcript interview regarding biotech and drug company stocks.

“Big Pharma is responding to rising costs by divestiture. Some pharmaceutical companies are now breaking apart so they can, “Get a leaner business model in a much more difficult environment.”

In other words, shed the losers and retain the winners. It is a response for CEOs or CFOs who can no longer announce sequential double-digit earnings increases based only on price increases rather than additional value.”

His bioteck stock pick is the owner of an anti-fungal treatment in desperate demand today.

“I believe Cidara Therapeutics (NASDAQ:CDTX) and its CEO, Jeff Stein, represent a prime example of the managerial resilience needed to succeed in biotech today.

Cidara developed a critically needed antifungal treatment from research to product candidate in a very short time.

The product, rezafungin, received an overwhelmingly positive vote from an FDA advisory panel and should receive positive approval from the FDA shortly.

But product approval does not always translate to product profitability.

Cidara took steps to maximize short-term revenue as soon as approval is granted by negotiating licensing agreements with companies like Melinta Therapeutics, which will market rezafungin in the U.S., and Mundipharma, which will sell rezafungin in all markets outside the U.S. and Japan.

These agreements are expected to provide Cidara with many years of resourcing for other programs like an influenza therapeutic platform, partnered with Janssen (NYSE:JNJ).

All of this, so they can resource and advance a next-generation immuno-oncology therapeutic platform.

These are examples of how biotechs will survive — by understanding their technology and understanding how to get revenue, even before a product is approved, with little additional investment or managerial time required.”

Get more top biotech stock picks from these award winning equity analysts and more, only in the Wall Street Transcript.