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Is the fund for these 2 shares? Analysts say ‘buy’
Today, we are looking at two small-cap biotechnology companies, whose shares have collapsed. Each company underwent a recent clinical setback that caused the stock price to fall, erasing previous gains and returning it to low levels. Such setbacks are not uncommon in the biotechnology industry and, in fact, highlight the risk and speculative nature of the industry. So, what should investors do when a stock collapses? Is this a question of poor fundamentals? And has the share price already reached its lowest point? That’s where Wall Street professionals come in. Noting that each is set to retreat on an upward trajectory, some 5-star analysts see an attractive entry point for both. Using the TipRanks database, we found that these two tickers obtained moderate or strong consensus buying ratings from the analyst community and have strong potential for growth. Cortexyme, Inc. (CRTX) The defeated first name we are looking for is Cortexyme, a clinical biopharmaceutical company focused on degenerative diseases, especially Alzheimer’s. The company’s main candidate is COR388, also called atuzaginstat. Atuzaginstat is currently under investigation in the GAIN trial, a study of its effectiveness against Alzheimer’s disease. The study is fully enrolled, with 643 patients, and the company is moving towards an open enrollment (OLE) section of the phase 2/3 study. During a routine regulatory update, Cortexyme announced that the OLE phase would be halted, although the main GAIN study will continue, with results expected to be released in the fourth quarter of 2021. The announcement of the partial halt triggered a 35% drop in the price of shares. The partial suspension was caused by adverse liver events during the atuzaginstat trial. Liver symptoms were reversible and showed no long-term effects. The FDA reviewed these records and, in collaboration with Cortexyme, a decision was made to maintain OLE while continuing with GAIN. This decision allows the main thrust of the program to continue, while working on a new protocol for OLE. The purpose of OLE is to test the drug’s long-term effectiveness and tolerability. In a review of Cortexyme after the announcement, HC Wainwright 5-star analyst Andrew Fein noted: “Cortexyme’s announcement of a partial clinical control of the OLE study of atuzaginstat is disappointing, but the reversible nature of liver toxicity may provide some ray of hope for Cortexyme. We believe that the continuation of the fundamental study suggests that drug-induced liver damage may not be severe enough to interrupt the program. ”Moving on to the short term, Fein adds:“ The continuation of the GAIN study is encouraging, despite the partial suspension of OLE. This suggests that the FDA plans to wait for additional data from the main trial before reaching any conclusions. Management shared that nearly a third of GAIN patients completed the study and have now passed the 12-week time point, suggesting that they are at risk. ”To this end, Fein values CRTX a Buy, and its target price of $ 76 indicates confidence in a growth potential of 147%. (To view Fein’s track record, click here) Overall, Cortexyme has a moderate buy rating from the analyst consensus, with 6 recent reviews dividing from 4 to 1 to 1, buy-hold-sale. The average price target of $ 83.60 for the stock suggests that Wall Street sees high potential here, on the order of ~ 170% high compared to the $ 30.74 trading price. (See the CRTX stock analysis at TipRanks) Immunovant (IMVT) Next comes Immunovant, a biopharmaceutical research company in the clinical stage, focused on developing treatments for patients with autoimmune diseases, a class of diseases in which the immune system attacks the patient’s own body. The company’s main candidate drug, IMVT-1401, is undergoing tests as a treatment for eye diseases of the thyroid, myasthenia gravis and hot autoimmune hemolytic anemia. The drug described as “a new monoclonal anti-human FcRn antibody”, administered by subcutaneous injection. On February 2, Immunovant’s shares plunged 42% and have been falling ever since. The precipitating factor was the company’s announcement that IMVT-1401 had its Phase 2b clinical trial for thyroid eye disease temporarily stopped due to patients who experienced dangerous increases in their LDL levels. LDLs are the potentially harmful form of cholesterol, which has been linked to cardiovascular disease. Despite the clinical setback, Stiffel’s 5-star analyst, Derek Archila, reiterated a buy rating for IMVT shares, along with a target price of $ 28. This figure suggests a potential increase of 52% compared to current levels. (To view Archila’s history, click here) “Interestingly, increases have only been seen in patients with TED, and our review of the literature suggests a few things: (1) it is likely to be TED specific due to biology – see below for details , but we do not think that similar increases in LDL will be seen in other indications outside of TED; and (2) other antithyroid therapies used in Graves / TED also show similar increases in LDL, which end up being transient. We think IMVT-1401, by far, is replicating this mechanism, “noted the analyst. Archila summarized:” Although we need to see additional data from the company to confirm … we don’t think this program is dead. Overall, Strong Buy’s analyst’s consensus view of IMVT suggests that Wall Street generally agrees with Archila’s assessment. This rating is derived from 8 recent reviews, which include 7 purchases and only a single wait. The average target price here is $ 40.38, which implies an increase of ~ 121% for the next 12 months. (See TipRanks IMVT stock analysis) To find good ideas for stock trading with attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that brings together all TipRanks stock insights. Disclaimer: The opinions expressed in this article are exclusively those of the analysts presented. The content should be used for informational purposes only. It is very important to do your own analysis before making any investments.