Out on Wall Street, stocks were able to pull out a major win. Despite being a more volatile week of trading, the three major U.S. stock indexes were each able to notch a more than 3% weekly-gain, with the Dow Jones exhibiting its best weekly performance since April 9. The surge came as investors applauded progress related to a COVID-19 vaccine and the reopening of the U.S. economy.
Against this backdrop, investor focus has locked in on one area of the market in particular: the healthcare sector. Amid the COVID-19 pandemic, the space has held up strong, broadly outperforming the rest of the market. Not to mention return-minded investors tend to flock to these names thanks to the possibility of sky-high rewards.
What’s the secret to their huge return potential? The nature of the industry itself. Many healthcare companies only rely on a few key indicators such as study results or regulatory approvals to determine if there’s a clear path forward, and thus, a single piece of good news can launch it on an upward trajectory. However, the opposite also holds true, so these tickers are notoriously risky.
Understanding the volatile nature of the industry, we used TipRanks’ database to pinpoint compelling plays within the healthcare space. The platform helped us track down three that have received overwhelmingly bullish support from analysts, enough to earn a “Strong Buy” consensus rating. The cherry on top? Each could double in the twelve months ahead.
NuCana PLC (NCNA)
Using its ProTide technology to turn some of the most widely prescribed chemotherapy agents, nucleoside analogs, into more effective and safer medicines, NuCana hopes to improve treatment outcomes for cancer patients. With the company gearing up for a jam-packed year of potential catalysts, several members of the Street believe that now is the time to snap up shares.
At the beginning of May, NCNA announced that it had restarted enrollment for its Phase 3 NuTide:121 trial, which is examining Acelarin and cisplatin in front-line biliary tract cancer (BTC) patients. Weighing in on the good news for H.C. Wainwright is five-star analyst Robert Burns. He reminds clients that the initial data from the Phase 1 ABC-08 front-line locally advanced or metastatic BTC trial, which was presented at ASCO 2019, demonstrated that within the intent-to-treat (ITT) population, the therapy produced a 50% unconfirmed objective response rate (ORR) and 7% complete response (CR) rate.
“We believe this compares favorably to results that Valle and colleagues presented in their 2010 New England Journal of Medicine paper examining gemcitabine plus cisplatin (n=204) in a front-line BTC Phase 3 trial,” Burns commented. As a result, he thinks data from the trial could fuel significant upside.
If that wasn’t enough, a few weeks later, NCNA revealed that enrollment for the Phase 1 and Phase 1b trials of its NUC-3373 candidate in metastatic colorectal cancer (mCRC) and in advanced solid tumors, respectively, were resumed. Enrollment for the Phase 1 NuTide:701 trial evaluating NUC-7738 in patients with advanced solid tumors also kicked off again. Early data from these trials is slated for release later this year.
Burns points out that there are several other key catalysts on the horizon including the readout of data from the Phase 1b ABC-08 trial of Aclearin and cisplatin in first-line BTC, an update regarding the enrollment status for the Phase 3 trial of Acelarin and gemcitabine in first-line BTC as well as the initiation of a Phase 2/3 trial of NUC-3373 in conjunction with other agents in mCRC.
Based on all of the above, Burns stayed with the bulls. Along with a Buy rating, the $16 price target remains unchanged. Should this target be met, a twelve-month gain of 173% could be in store. (To watch Burns’ track record, click here)
Do other analysts agree with Burns? As it turns out, they do. With 100% Street support, or 3 Buy ratings to be exact, the message is clear: NCNA is a Strong Buy. At $16, the average price target matches Burns’. (See NuCana stock analysis on TipRanks)
Moving right along, we come across Celyad, which is developing innovative CAR-T NK cell-based immunotherapies that could potentially treat cancer. As the second half of 2020 will feature major catalysts, it’s no wonder the analyst community is excited about this name.
In the near-term, Celyad will present updated data from the Phase I alloSHRINK study of CYAD-101, its therapy designed as a treatment for mCRC, at the virtual ASCO conference on May 29 through 31. Using non-gene editing technology, the therapy has already shown anti-tumor activity in two out of twelve patients with a partial response and five patients with stable disease with a minimum of three months of duration.
Representing H.C. Wainwright, five-star analyst Edward White is optimistic that the outcome will be favorable. He explained, “To date, CYAD-101 alloSHRINK has not demonstrated clinical evidence of GvHD or dose limiting toxicities.”
Looking forward, CYAD will read out preliminary data from the Phase 1 THINK trial involving its candidate, CYAD-01, a CAR-T that uses natural killer cell specificity to target T-cells against a broad range of tumors, without preconditioning in patients with r/r AML and MDS, and the DEPLETHINK trial utilizing preconditioning with Cy/Flu. Both of these trials use the OptimAb manufacturing process, but White points out that the company will decide which protocol to proceed with based on the data.
Some investors expressed concern after COVID-19 forced the company to push back the previously expected timing for the THINK and DEPLETHINK trial readouts, but White was unphased by the delay. “THINK data presented at the American Society of Hematology (ASH) Annual Meeting 2019 showed that 53% (8/15) of evaluable patients demonstrated anti-leukemic activity with bone marrow blasts decrease, including five patients with objective responses and one patient with stable disease (SD) for at least three months,” he stated. The analyst added, “No objective responses had been shown at the time of presentation, but safety data demonstrated that CYAD-01 manufactured with OptimAb was well tolerated following preconditioning chemotherapy.”
With a decision on which protocol CYAD will pursue expected by year end 2020, the deal is sealed for White. In addition to reiterating his Buy recommendation, he kept the $37 price target as is. This target conveys his confidence in CYAD’s ability to soar 339% in the next year. (To watch White’s track record, click here)
All in all, other analysts echo White’s sentiment. 4 Buys and no Holds or Sells add up to a Strong Buy consensus rating. Based on the $27.33 average price target, the upside potential comes in at 224%. (See Celyad stock analysis on TipRanks)
IDEAYA Biosciences Inc. (IDYA)
Last but not least we have IDEAYA, which is developing targeted oncology drugs including the PKC inhibitor, IDE196, for the treatment of metastatic uveal melanoma (MUM) as well as a portfolio of synthetic lethality drug candidates. On the heels of the acceptance of four abstracts for presentation at the American Association for Cancer Research (AACR) Virtual Annual Meeting II, which will be held on June 22-24, many Wall Street analysts have been impressed.
Among the bulls is Oppenheimer’s Kevin DeGeeter. He tells investors that he sees two abstracts as being especially promising as both have the potential “to inform clinical studies to start within the next twelve months.” Specifically looking at abstract 1956, “In vitro and in vivo characterization of novel MAT2A allosteric inhibitors”, the five-star analyst believes it is a “placeholder and most likely potential source of upside for IDYA shares.”
DeGeeter added, “Specifically, we are cautiously optimistic abstract 1956 may more fully describe the cellular anti-proliferation activity and PK profile from a scaffold of IDYA's lead synthetic lethality program, a small molecule allosteric inhibitor of MAT2A... If management opts to disclose cellular anti-proliferation activity or cellular SAM modulation data. In the absence of efficacy data, we would view clean liver tox profile as a material finding.”
In addition, DeGeeter pointed out, “Our investment thesis for shares of IDYA is based in large measure on the potential of the company’s broad pipeline of synthetic lethality programs.” As a result, he argues that the selection of a development candidate for lead synthetic lethality program, MAT2A, which is slated for Q2 2020, and the IND filing expected in Q4 2020, represent key catalysts. He also thinks AACR is a “logical” timeframe to confirm selection. It should be noted previous studies have demonstrated that MAT2A regulates PMRT5 expression.
To top it all off, DeGeeter believes abstract 5337 will provide more clarity regarding the magnitude of a potential synergy of IDE196 with a MEK inhibitor. The results could help IDYA select patients for a basket study of IDE196.
To this end, DeGeeter left an Outperform rating and $17 price target on the stock. Given this target, shares could skyrocket 143% in the next twelve months. (To watch DeGeeter’s track record, click here)
Turning now to the rest of the Street, other analysts also like what they’re seeing. 3 Buys and no Holds or Sells have been assigned in the last three months, making the consensus rating a Strong Buy. While less aggressive than DeGeeter’s, the $15 average price target still leaves room for 115% upside potential. (See IDEAYA stock analysis on TipRanks)