You can't be a rebel without the scars that come with it. Truth is, some days scars are just as ugly as they are beautiful.” ― Criss Jami, Killosophy
The biotech sector suffered a setback on Thursday after a major shareholder at Bristol-Myers Squibb (BMY) announced they are trying to scuttle the $74 billion dollar takeover of Celgene (CELG) announced earlier this year. If successful, Celgene would be entitled to a $2.2 billion but shareholders were prefer the buyout on current terms.
This will be a story to watch in coming weeks. In the meantime, here are four small cap concerns getting some positive analyst mentions this Friday to end the trading week.
Oppenheimer still believe in Catalyst Pharmaceuticals (CPRX) after the stock fell six percent in trading yesterday on a perceived adverse action. They reiterated their Buy rating and and $6 price target this morning with the following commentary
CPRX traded down sharply yesterday following a Reuters article that discussed a letter from Senator Bernie Sanders (I-VT) to HHS and FDA Commissioner Scott Gottlieb. The shares closed down 5.8% on relatively heavy volume. While Sanders’ call to effectively allow compounded forms of 3,4-DAP may have spooked the market, we view this merely as headline noise, as we ascribe a near-zero likelihood that the agency would act in contradiction to its own recent guidance (issued under Gottlieb/Azar). We continue to expect Firdapse’s launch in LEMS to at least meet expectations, and view the current weakness as an attractive buying opportunity.”
Needham is maintaining its Buy rating and $39 price target on Atricure (ATRC) after Q4 results. Here is their view on the fourth quarter.
ATRC’s 4Q18 revenue was consistent with its preannouncement while its EBITDA missed consensus. Management maintained its 2019 revenue guidance and updated its adjusted EBITDA guidance. Gross margin expanded Y/Y by 200 bps while operating margin contracted Y/Y by 30 bps given investments in SG&A. We believe recent society guidelines, new products including the cryoSPHERE Probe, and surgeon training activities should drive strong growth and that CONVERGE could be a significant longer-term tailwind (management indicated that the data is unlikely to be made public until just before an FDA panel sometime in 2020) and we reiterate our Buy rating.”
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Next up is Aimmune Therapeutics (AIMT). It is reiterated as a Buy with a $80 price target at Roth Capital today (the shares currently trade under $25.00 a share). Here is how they see the rest of 2019 playing out for the company.
We expect to hear whether the AR101 BLA will be accepted for filing by the FDA at the end of March, and whether it will receive expedited review in line with its Breakthrough status despite its PDUFA-exempt status. Importantly, we highlight that the clinical efficacy and commercial value proposition of AR101 have not changed, and despite any potential volatility in shares in the next few months (see scenarios below), we expect AR101 to be commercial in 2020. Scenario A. The BLA is accepted, but the FDA gives no indication of expedited review due to Breakthrough status. The BLA is then reviewed through 2019 and approved around January 2020, in line with a 12-month review window typical of PDUFA-exempt filings. At this time, we consider this the base scenario, and assign it a 50% probability. We would expect AIMT shares to trade flat in the short term under this scenario.”
Finally, UniQure (QURE) is maintained as a Buy with $73 price target at H.C. Wainwright who provide how they arrive at their valuation.
Our $73 price target is based on a 13-year DCF analysis that incorporates rNPV of two clinical-stage pipeline products AMT-061 and AMT-130. For AMT-061, we assume a 70% POS driven by the compelling clinical updates and single- arm Phase 3 involving about 50 patients, along with RMAT and PRIME designations. We anticipate commercial launch during 2H22, with a NAB-based exclusion of 5%, and model risk-adjusted peak sales of roughly $765M, during 2028. We assume a launch price of $850K, which could be an underestimate based on the 7 plus years of anticipated durability.”
And those are four small cap concerns that might get a boost from analyst commentary today.
Bravery is a willing decision to do what must be done. Fear is a cancer that is cured only by doing what must be done, backed by an intelligent, open mind.” ― Corey Aaron Burkes
Thank You & Happy Hunting,
Bret Jensen
Founder, The Biotech Forum, The Busted IPO Forum & The Insiders Forum
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