Biotech is a fast-changing world, so it’s very ambitious to start looking out to 2025. Luckily RBC Capital has peered into its crystal ball to reveal the biotech stocks it believes investors should keep an eye on over the coming years.
These are “disruptive” biotech stocks that could pose a risk to key players and franchises.
That’s why I find the report so interesting. Namely:
1) it reveals fresh investing ideas (especially for longer-term investors), and
2) it highlights risks to well-known biotechs you may now own. Understanding these threats is crucial in determining whether a franchise is likely to be sustainable for many years to come.
As the firm writes: “Many of the programs detailed in our report remain early and/or high risk, but we believe they are all worth watching — especially given our view that many are overlooked by the Street, which tends to more closely follow high-profile competitors at later stages or with validated mechanisms.”
So with that in mind, let’s take a closer look at these seven disruptive biotech stocks now:
CymaBay Therapeutics (NASDAQ:CBAY) is a cutting-edge biotech company working in liver disease. Right now, all eyes are on lead product candidate Seladelpar. This is for the treatment of primary biliary cholangitis (PBC). PBC is a chronic disease that slowly destroys bile ducts in the liver.
The drug is a potential disruptor to Intercept Pharma’s (NASDAQ:ICPT) PBC franchise Oclavia. As a result, investors should watch out. RBC Capital writes, “Ocaliva provides a sustainable revenue stream for the company and helps establish a stable valuation floor — and any potential emerging competition in decreased uptake could affect the base value of the stock outside of NASH.”
Furthermore, CBAY has already reported Phase II data that shows improvements upon OCA’s efficacy (especially on response rates) and potential for improvement to pruritic symptoms (i.e., itching). The company is now enrolling patients for the final Phase III trial.
According to CBAY; 1 in 1,000 women over the age of 40 lives with PBC. Interested in CymaBay stock? Get a free CBAY Stock Research Report.
Atara Bio (ATRA)
Atara Biotherapeutics (NASDAQ:ATRA) is developing novel treatments for patients with cancer, autoimmune and viral diseases. Specifically, the company is developing off-the-shelf, allogeneic T cells, which it bioengineers from donors with healthy immune function. This allows for rapid delivery to patients.
According to RBC Capital, this is a potential disruptor to pharma giant Gilead Science’s (NASDAQ:GILD) own CAR-T franchise.
“An off-the-shelf allogenic CAR-T modality, if achievable with comparable efficacy and without any safety tradeoffs, could make current CAR-T products largely obsolete, given the significant advantages in time to manufacture and potentially reduced costs of a more one-size-fits-all format vs. an individualized cellular product for each different patient” states the firm.
However, these studies are still very much in the early stage, with Atara only just reporting “clean” Phase I safety data for ATA188. Get the ATRA Stock Research Report.
Translate Bio (TBIO)
Translate Bio (NASDAQ:TBIO) is a leading mRNA therapeutics company. It is currently developing a new class of potentially transformative medicines to treat diseases caused by protein or gene dysfunction.
MRT5005 is the first clinical-stage mRNA product candidate addressing the underlying cause of cystic fibrosis (CF). This is a genetic disorder that affects mostly the lungs, but also the pancreas, liver, kidneys and intestine. Translate aims to give fully functional CFTR genes to lung cells for all CF mutations. “Such a technique could theoretically make small-molecule correctors obsolete”, writes RBC Capital.
That could spell trouble for the current cystic fibrosis powerhouse. AKA Vertex Pharmaceuticals (NASDAQ:VRTX). Vertex’s CF franchise accounts for more than $7 billion in estimated out-year revenues … nearly 100% of total revenues. What’s more, Vertex’s drugs are extremely, shockingly, expensive. As a result, the space is ripe for a new entrant. Get the TBIO Stock Research Report.
Biohaven Pharma (BHVN)
Biohaven Pharmaceuticals (NYSE:BHVN) is hitting the headlines with its potential migraine treatment, Rimegepant. Excitingly, the drug could be approved by the Food and Drug Administration as soon as year-end 2019, or early next year.
As a result we are looking at a potential rival to Alder BioPharma’s (NASDAQ:ALDR) own migraine franchise. ALDR’s Eptinezumab is aiming for approval by early 2020, and RBC Capital models ALDR’s yearly revenues from the drug to top $1 billion by 2027. However, ALDR’s Eptinezumab is an intravenous infusion. And other rival drugs are injections.
That’s why Biohaven’s oral Rimegepant stands out from the crowd.
“An orally administered drug could be impactful to future uptake in the large migraine market, offering both potential convenience advantages and the potential to rapidly clear from the system in anticipation of a planned pregnancy” cheers RBC Capital. Get the BHVN Stock Research Report.
Marinus Pharma (MRNS)
Marinus Pharmaceuticals (NASDAQ:MRNS) is developing Ganaxolone, a Gabaa modulator as a new type of treatment for epilepsy, and more recently, postpartum depression.
According to RBC Capital, ganaxolone could damage Sage Therapeutics’ (NASDAQ:SAGE) depression franchise. “MRNS’s ganaxolone could emerge as a direct competitor to SAGE’s depression franchise if it ultimately demonstrates a similar efficacy and safety profile” the firm tells investors.
This quarter, MRNS plans to report additional data from the phase II studies. But — and it’s a big but here — SAGE remains much further ahead of MRNS. Consequently, near-perfect execution is required by MRNS to succeed in taking substantial share from Sage, without simply competing on price. Get the MRNS Stock Research Report.
Solid Biosciences (SLDB)
That sets it up against the current market leader, Sarepta Therapeutics (NASDAQ:SRPT). Sarepta has already launched Exondys 51, the first-ever FDA-approved treatment for DMD. Plus Sarepta is also developing its own Microdystrophin gene therapy. And it’s primed for success … in the near-term at least.
For instance, RBC Capital estimates SRPT’s Microdystrophin therapy could generate more than $3 billion in yearly worldwide revenues by 2029.
But despite Sarepta’s first-mover advantage, the market is still up for grabs. Given this is a likely one-time treatment, physicians can switch providers at any time.
As RBC Capital explains: “Any follow-on treatment with a best-in-class efficacy/safety profile could potentially get used in nearly 100% of subsequently treated patients, making the space particularly important to monitor for potential disruption.” Get the SLDB Stock Research Report.
PTC Therapeutics (PTCT)
PTC Therapeutics (NASDAQ:PTCT) teamed up with Swiss multinational Roche (OTCMKTS:RHHBY) all the way back in 2011. The duo are developing a potentially groundbreaking drug for SMA, spinal muscular atrophy. This is a genetic disease caused by mutation or deletion of the SMN1 (survival of motor neuron) gene.
Right now, Biogen (NASDAQ:BIIB) is the go-to company for SMA treatment. Its Spinraza franchise had sales of $ 1.7 billion last year, but RBC Capital expects it to top $2 billion this year (~18% of total 2019 product revenues, and a key potential future growth driver).
Although Spinraza has revolutionized SMA treatment, there are a number of limitations. For instance, patients need physician-administered injections into the spinal canal and costly upfront loading doses. What’s more, there are also three maintenance injections every year.
“Roche/PTCT’s oral splice modulator risdiplam could potentially take share from Spinraza given the more convenient route of administration without need for intrathecal injection infrastructure” says RBC Capital. Roche/PTCT plan to file a new drug application for risdiplam by the end of the year. Get the PTCT Stock Research Report.
TipRanks offers investors the latest insight into eight different sectors by tracking the activity of over 5,000 Wall Street analysts. As of this writing, Harriet Lefton did not hold a position in any of the aforementioned securities.