Biotech Stocks Bottom: Buffett Says Buy When Others Are Fearful

June 30, 2022
Soumit Roy, Ph.D., is Vice President, Healthcare Analyst of Jones Trading Institutional Services specializing in biotech stocks

Soumit Roy, Ph.D., Vice President, Healthcare Analyst, Jones Trading Institutional Services

As biotech stocks hit multi-year lows, it is helpful to re-visit the pre-COVID 19 predictions of prominent, award winning biotech stock pickers and see if their investment advice has held up.

Soumit Roy, Ph.D., is Vice President, Healthcare Analyst of Jones Trading Institutional Services LLC. Dr. Roy is responsible for research coverage on biotechnology companies within the healthcare sector for Jones Trading.

Prior to joining Jones Trading in 2018, Dr. Roy was a senior research associate at SunTrust Robinson Humphrey, covering small- and mid-cap biotechnology companies with innovative technologies, notably T-cell therapy, targeted medicines, gene editing and next-generation immuno-oncology.

He was a postdoctoral fellow at the Icahn School of Medicine at Mount Sinai, New York, in the Clinical Immunology Department, and his research was focused on understanding and discovering novel agents to improve vaccines.

He earned his Ph.D. from the Albert Einstein College of Medicine, New York, where he helped to develop a novel drug candidate that targets the powerhouse of cancer cells to stop cancerous growth. He holds two master’s degrees, in developmental biology and biochemistry, and has published in the highest-rated scientific journals.

“For the rest of 2019, my coverage is quite catalyst-rich, as we have Phase III and a bunch of mature Phase II data coming out.

ASCO, or American Society of Clinical Oncology, looks like the richest catalyst so far for this year.

Deciphera’s (NASDAQ: DCPH) Phase III top line reads out at ASCO, Mirati’s (NASDAQ: MRTX) competitor Amgen (NASDAQ:AMGN) will likely present clinical data on its KRAS inhibitor at ASCO and Mirati clinical data likely at ESMO, or European Society for Medical Oncology.

Scientists have been trying for the last two to three decades to come up with a targeted KRAS inhibitor, and it finally looks like Mirati and Amgen have cracked the code. Any positive updates from Amgen will likely be read as positive for Mirati.

BerGenBio (OTCMKTS: BRRGF) has second-line lung cancer and second-line AML — acute myeloid leukemia — data at ASCO.

Celyad (NASDAQ: CYAD) is also presenting mature Phase I data in AML and colorectal cancer, Neon [n.b.:  acquired by BioNTech] will be presenting 52-week mature data in melanoma and lung cancer at ASCO, and Forty Seven Inc. [n.b.: acquired by Gilead (NASDAQ:  GILD)] will provide an update on mature Phase II data with 5F9 in relapse/refractory NHL.

So ASCO looks like a very data-rich event.

Then, there are some data at ESMO and at year-end 2019. It is going to be a busy year.

And as these companies mature, the biggest catalyst in biotech is M&A.

Last year was duller, but this year is starting to pick up on the M&A front.

As large pharma is following a growth-by-acquisition model, we will see how M&A pans out toward the end of the year and into early 2020 as a lot of these companies present mature data.”

David Nierengarten, Ph.D., is Managing Director and Head of Healthcare Equity Research at Wedbush Securities specializing in biotech stocks

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. 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.

“Looking back, rising interest rates haven’t really correlated well to biotech small/mid-cap performance, except in the context of a recession. So if interest rates go up too far and cause a recession, then the biotech market gets hit, just as the entire stock market gets hit.

What has affected our companies a bit more than the broad market is that we saw a real decrease in clinical trial readouts over the past year due to the aftereffects of clinical trial start delays.

We saw a slowdown in recruiting due to COVID, and the FDA slow to sign off on INDs or clinical trials or manufacturing sites. And those delays in data readouts have affected our companies even more than the perceived threat of increased interest rates over the near term.

Will that change? Yes, I think it will change. It will change more towards the latter part of this year, Q3, Q4. Then, we see at least a pickup in our estimates guided to data points for companies under coverage.

And generally speaking, in the small/mid-cap space, we expect to see a bit of a recovery in data readouts. And if they’re positive of course, that overwhelms any negative effect from a couple interest rate hikes, or again a tightening of the financial conditions.”

“The next one or two quarters look a little bit challenging. Mainly because there have been a lot of trial delays. But one company that will have a data readout in the next couple quarters, and that has also weathered this downturn relatively well, is Cogent. They’re developing a kinase inhibitor that could have applications in both a rare disease called mastocytosis, and also GIST.

Their first data readout, probably in the next four to six months, will be an initial readout in a mastocytosis study. So for an aggressive mastocytosis showing hopefully a reduction of a biomarker called tryptase.

And that biomarker is very related to response rate in aggressive mastocytosis. And so if they can reduce that, and show that in their next set of data, I would expect the stock to do well. So COGT is one that should have data in the relatively near term.”

Read the complete interviews from these biotech stocks research analysts and become a better investor today.

David Nierengarten, Ph.D., Managing Director & Head of Healthcare Equity Research

Wedbush Securities,


Soumit Roy, Ph.D., VP, Healthcare Analyst

Jones Trading Institutional Services LLC