These biotech firms have carved out unique niches in the medical research field, and are worth a closer look. They are each working to develop new drugs or treatments for specific medical conditions, based on cutting edge science, or in one case, a new twist on an established technique.
The niche approach to research allows them to focus their efforts for best effect. From an investor's point of view, it's an approach that promises results and a market when the development pipeline is complete. We'll unpack the TipRanks analyst data on these companies, to see where they stand as market investments.
Moderna (MRNA) just went public on Dec 7, to an immediate "Strong Buy" rating from eight market analysts. In an impressive open, and the biotech sector's largest IPO, the company raised over $600 million to reach a total value of about $7.4 billion.
The company takes a novel approach to the creation of new drugs, basing its research on mRNA, the genetic material that transfers instructions from DNA into completed proteins. The goal is to create drugs tailored to specific diseases by creating mRNA molecules that will instruct the patient's body to create the exact therapeutic proteins needed to treat each condition. The treatment should "trick" the body's natural protein-making machinery into manufacturing medicine inside affected cells.
This promising research approach led to investor optimism about the new stock. All of MRNA's initial ratings were "Buys," giving the company a "Strong Buy" analyst consensus. With a current share price of $16.29, the $24 average price target yields a 43% upside potential.
Among the analysts weighing in on MRNA's market debut were Salveen Richter of Goldman Sachs and Matthew Harrison of Morgan Stanley. Richter gave a price target of $25, translating to a 47% upside, while Harrison gave the stock its highest target -- $29 -- for a 71% upside.
Writing from Needham, Alan Carr gave a clear comment justifying MRNA's high ratings and strong market entry: "Moderna is leveraging an mRNA drug/drug-delivery platform to generate an extensive pipeline across oncology, infectious diseases, cardiology and rare diseases. The company and collaborators have generated preclinical and clinical proof of concept of the technology and we expect the first Moderna mRNA drug to reach the market around 2024." Carr set a $28 target for MRNA, suggesting an upside potential of 65%.
Heart disease is a leading cause of death in the United States, and MyoKardia (MYOK - Get Report) works to cut it down. The company focuses developing treatments for heritable cardiomyopathies, genetic diseases that cause defects in the formation and function of cardiac muscle.
MyoKardia currently has five drugs in the pipeline, including two that are fairly far along. Mavacamten is in a Phase 3 trial for patients with symptomatic obstructive hypertrophic cardiomyopathy (HCM) and Phase 2 trials for patients with non-obstructive HCM. Another drug called MYK-491 is in Phase 2 trials.
The company was in the news last week when it ended a four-year collaborative agreement with the large French pharmaceutical firm Sanofi. With the end of the agreement, MyoKardia retains the global rights to products in its development pipeline.
Markets reacted to the MyoKardia-Sanofi break with a sharp sell-off of MYOK shares. The stock dropped 14% from Dec. 31 to Jan. 2. It is now trading at $48.07 per share.
Several market analysts commented on MYOK stock on Jan 3, just after the Sanofi announcement and the share selloff. Jeffrey Hung of Morgan Stanley said, "MyoKardia will find another partner after more mature data are reported, and shares have been oversold following [the Sanofi] announcement." He set his price target to $70, suggesting a 65% upside to MYOK.
Citigroup's Mohit Bansal also gave MYOK a $70 target. In his comments, he pointed out that "Sanofi's decision was related to wanting U.S. control over Mavacamten, and is not related to the profile of the products."
Also taking note of MyoKardia's split from Sanofi was Alethia Young from Cantor Fitzgerald. She views the end of the collaboration as a net benefit for the company, saying "We view MyoKardia having all assets in house as a positive. Besides supplying cash, we don't really know what other strategic benefit SNY could provide ultimately." Her price target of $90, with its 112% upside, shows her confidence in MYOK's outlook.
The analyst consensus on MYOK is "Strong Buy," based on six "Buy" ratings. The average price target is $76, giving this stock an 80% upside. MYOK currently sells for $42.
Of the companies reviewed in this article, ViewRay (VRAY - Get Report) is the smallest, with a market cap of $588 million and a current share price of $7. ViewRay is developing new MRI technology, to allow MRI machines to both image the patient and target radiation therapy for cancer treatment in real-time. In simpler terms, the company is developing technology to use MRI as a target scanner for cancer patients' radiation therapy. The new technique will improve the safety and efficacy of radiotherapy, by using more precise, lower doses. ViewRay currently holds the exclusive global license for the combination of MRI and radiotherapy technologies.
ViewRay has just announced the enrollment of the first patient in its SMART Trial (Stereotactic MRI-guided On-table Adaptive Radiation Therapy) for patients with locally advanced or borderline pancreatic cancer. The trial's primary purpose is to measure gastrointestinal toxicity in the first three months after treatment, and overall survival after two years.
Market analysts are taking a positive view of VRAY stock. The consensus is a "Strong Buy," based on six "Buy" ratings and one "Hold," with an average price target of $13.11. At a current share price of $7, this gives ViewRay an 85% upside potential.
The analyst ratings and comments are worth a closer look. After ViewRay's third-quarter report in November gave mixed results, Difei Yang of Mizuho Securities set out a case for patient optimism: "We believe management is making the right investments and we expect the efforts to pay-off over time with two to three quarters of lag." The effort Yang refers to is the SMART Trial referenced above, which has just begun. By her reading of the company plans, ViewRay should start reporting results in the third quarter of 2019. Anticipating that, she sees a $12 price target.
The next review was the single "Hold" rating, from Jonathan Demchick of Morgan Stanley. As it was his initial rating on the stock, it represented a cautious start to his coverage. His price target, $7, is where the shares are trading today.
More recently, Craig Bijou, at Cantor Fitzgerald, set a $13 target after a call with VRAY management. He said, "We came away from the call confident that the investments new management is making should allow VRAY to capitalize on building MRIdian momentum in 2019." His price target suggests a 85% upside to the stock.
(This article has been updated to correct the status of MyoKardia's drugs under development.)