Stock Analysis & Ideas

Biotech Watch: These 3 Names are Gearing Up for Major Potential Catalysts

Though many biotech companies recorded soft sales in the first quarter due to the ongoing pandemic, these companies continue to be in the spotlight. While coronavirus treatments are poised to remain in the headlines, other regulatory and pipeline developments are also back on track after being impacted by the pandemic.

For biotech stocks, factors including clinical trial data, regulatory decisions, and successful commercialization of drugs are sometimes more significant than earnings results in evaluating the prospects of the company. Therefore, any positive update could be the catalyst that results in the ballooning of shares.

Nevertheless, these players do come with some risks. A disappointing outcome of clinical trials or unfavorable regulatory decisions may be a negative catalyst, taking shares in the opposite direction. Therefore, it is difficult to spot the right investment in healthcare stocks, but analysts can help.

Bearing this in mind, we are rounding up three promising biotech stocks that have significant potential catalysts coming up. Here’s the scoop.


Massachusetts-based commercial-stage biopharma Chiasma uses Transient Permeability Enhancer (TPE) technology, which enables therapies to enter the bloodstream while maintaining the natural defense mechanism.

In June 2020, Chiasma’s (CHMA) MYCAPSSA therapy became the first oral somatostatin analog to receive U.S. Food and Drug Administration (FDA) approval. It was designed for treating acromegaly patients who have already responded to and tolerated treatment with octreotide or lanreotide.

During the first quarter, an Investigational New Drug (IND) application was submitted by the company to the FDA for a Phase 1 relative bioavailability study, which is followed by a single Phase 3 randomized, double-blind, placebo-controlled study of MYCAPSSA in patients with carcinoid syndrome related to NET. These studies are likely to support a modified 505(b)(2) regulatory pathway.

The company is expected to virtually present encore data from its MPOWERED Phase 3 clinical trial at the 23rd European Congress of Endocrinology (e-ECE) this week, and new data from the MPOWERED trial at the 30th Annual American Association of Clinical Endocrinology (AACE) meeting from May 26-29, 2021. (See Chiasma stock analysis on TipRanks)

In early May, Chiasma agreed to be acquired by Amryt Pharma (AMYT) in an all-stock deal.

Following the deal, H.C. Wainwright analyst Douglas Tsao reiterated a Buy rating and a price target of $5 (17.1% upside potential).

Tsao said that the merger “offers global commercial and regulatory infrastructure for Mycapssa, as well as resources to quickly begin NET development program.”

“The combination offers financial synergies, with roughly $50 million cost savings identified which should allow Mycapssa to be EBITDA positive within one calendar year, and pushing peak sales for the combined entity to over $1 billion; this can be achieved by leveraging Amryt’s global infrastructure with deep inroads in endocrinology consisting of 50 US-based positions, which should help drive adoption when added to Chiasma’s current US commercial organization. Further, Amryt’s global sales force should allow Mycapssa to reach other global markets that it may not have been able to, had Chiasma gone at it alone,” the analyst added.

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 2 Buys and 2 Holds. The average analyst price target of $4.88 implies 14.3% upside potential to current levels. Shares have increased 45.2% over the past month.

Provention Bio

By developing investigational therapies, Provention Bio (PRVB) is on the path to providing more effective treatment for preventing debilitating and life-threatening immune-mediated disease.

The biopharmaceutical company has filed a Biologics License Application (BLA) for its teplizumab drug for the delay of the progression to Stage 3 clinical Type 1 Diabetes in at-risk individuals, with the FDA. Notably, teplizumab has been granted Breakthrough Therapy Designation by the FDA and PRIME designation by the European Medicines Administration.

Provention Bio CEO Ashleigh Palmer said in the recently reported earnings release, “Our near-term focus is appropriately concentrated on the BLA filing for teplizumab and the upcoming FDA Advisory Committee meeting on May 27. We believe this Advisory Committee meeting’s agenda will include examination of type 1 diabetes unmet need and the safety and efficacy of teplizumab from the TN-10 trial supported by data from other historic studies in newly diagnosed patients. Also, we concurrently continue to make great progress advancing all of our other autoimmunology pipeline candidates, which positions us very well for numerous important data catalysts over the course of the next 12 to 24 months.”

While the shares have tumbled nearly 56.3% year-to-date, some positive news on the drug could be a turning point.

Following the Q1 results, Oppenheimer analyst Justin Kim maintained a Buy rating and a price target of $18 (125.6% upside potential).

Kim commented, “With the upcoming advisory committee meeting for teplizumab later this month, significant attention was paid to what extent PK would be addressable given the FDA’s planned mention of its comparability review in the briefing materials. While no comparability-related questions or topics are planned, we continue to believe the meeting will underscore teplizumab’s clinical potential to address an area of significant unmet need.”

Consensus among analysts is a Strong Buy based on 5 Buys versus 1 Hold. The average analyst price target stands at $18.58 and implies upside potential of 132.8% to current levels.

Eton Pharmaceuticals Inc

Eton Pharmaceuticals (ETON) develops and commercializes treatments for rare diseases. Last November, the company received FDA approval for its first-of-its-kind ALKINDI SPRINKLE (hydrocortisone) oral granules, designed as replacement therapy for the treatment of Adrenocortical Insufficiency (AI) in children below the age of 17 years.

Among others, Eton’s six products in the pipeline are currently under review with the FDA, four of which have been assigned Prescription Drug User Fee Act (PDUFA) dates. These products including Dehydrated Alcohol Injection, Zonisamide Oral Suspension, Ready-to-Use Ephedrine Injection, and Topiramate Oral Solution, which could be approved and launched later this year. Furthermore, backed by its strong financial position, Eton remains active in exploring business development opportunities to add high-value late-stage orphan product candidates to its portfolio.

The stock has picked up a rating from one analyst in the past three months. H.C. Wainwright analyst Ram Selvaraju decreased the stock’s price target to $14 (58.2% upside potential) from $15 and reiterated a Buy rating.

Selvaraju said, “Eton’s DS-100 candidate could receive regulatory approval on or around May 27, 2021. In our view, this agent could be a key value driver for Eton and may achieve peak annual sales approaching $50M in the U.S. alone by 2025E.”

Therefore, the year-to-date gain of around 9% might continue given the value-driving catalyst.

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