Wrapping up the first trading week of the New Year, it’s clear that last year’s headwinds haven’t left us. Inflation remains high, the Fed has signaled that it will keep interest rates higher, longer, in response, and negative economic indicators keep piling up, pointing toward an increased likelihood of recession. The challenge for investors hasn’t really changed: to build a portfolio that will pay, even in this difficult market environment.
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Times like this call for a guiding hand, perhaps some advice from the Wall Street pros could help steer the portfolio on to the right path.
The experts at banking giant J.P. Morgan have the nous to do so, and they have pinpointed two stocks that they believe offer investors an opportunity at current levels – they see the pair delivering returns of over 60% in the months ahead. Do other analysts agree with J.P. Morgan? We’ve opened the TipRanks database to find out. Here’s the lowdown.
Syndax Pharmaceuticals, Inc. (SNDX)
The first on our list of J.P. Morgan picks is Syndax Phamaceuticals, a clinical-stage biotech firm working on cancer treatments. The company’s lead candidate, revumenib (SNDX-5613), is a highly selective oral menin-KMT2A inhibitor, which is being developed to treat different types of leukemia.
Last month, the company reported positive data from the Phase 1 portion of the ongoing Phase 1/2 trial (AUGMENT-101) for revumenib in relapsed/refractory AML or acute lymphoid leukemias (ALL). Top-line data from at least one of the groups from the pivotal Phase 2 section is anticipated to get a readout in 3Q23 with potentially an NDA filing coming by the end of the year.
The company is also working on axatilimab, a monoclonal antibody that obstructs the colony stimulating factor 1 (CSF-1) receptor. The drug is being developed for chronic Graft versus Host Disease (cGVHD). Data from the pivotal phase 2 AGAVE-201 trial is expected to see the light of day around mid-2023.
Assessing these drugs’ prospects, JPMorgan analyst Anupam Rama likes revumenib’s ‘best-in-class potential,’ while believing axatilimab is ‘unappreciated.’
“Our peak sales estimate for revumenib of ~ $1.3BWW (in the refractory setting alone) is at the mid-point/slightly higher end of the Street peak sales range and probability of success (POS) at the higher end of the Street range,” the analyst wrote. “This differs from our more conservative strategy in other SMiD Biotech models; however we feel as justified due to revumenib’s potential as best-in-class (as well as de-risked).”
Based on revumenib’s potential on its own, Rama thinks the shares are undervalued and notes that axatilimab in r/r GVHD has the “potential to emerge both as an underappreciated value driver near- and long-term.”
These comments explain why Rama has initiated coverage of SNDX with an Overweight (i.e., Buy) rating. The cherry on top? His $41 price target implies ~67% upside from current levels. (To watch Rama’s track record, click here)
Rama’s price target is the Street’s highest with the average target standing at $35, suggesting one-year gains of 43%. Overall, all analysts are in this biotech’s corner; a full house of 6 Buys provides the stock with a Strong Buy consensus rating. (See SNDX stock forecast on TipRanks)
Biohaven Ltd. (BHVN)
We’ll stay in the biotech space for the next JPM-endorsed name. Biohaven Ltd. is a clinical-stage biopharma that was spun off from parent company Biohaven Pharmaceutical when pharma giant Pfizer acquired it last year. Pfizer held on to the anti-CGRP franchise, and the new Biohaven kept the rest of the assets.
The remaining pipeline still has plenty of potential with four programs in the clinical stages pursuing therapies for diseases with unmet medical needs such as focal epilepsy, spinocerebellar ataxia (SCA), obsessive compulsive disorder (OCD) and spinal muscular atrophy (SMA), amongst others. Furthermore, the company has other candidates in the pre-clinical stages.
Pipeline activity of interest to investors includes the anticipated completion of enrollment for two Phase 3 studies of troriluzole in OCD in 2023, and updates on the way forward for troriluzole in spinocerebellar ataxia (SCA) after the company interacts with the FDA and/or EMA in the first half of the year.
There is also a Phase 1 study taking place for BHV-7000, the lead candidate from the Kv7 platform. The drug is an activator of Kv7.2/Kv7.3, an important ion channel that controls hyperexcitable states in epilepsy and is active in neural communication. The study should be completed in 1H23, and if it proves to be a success, the company anticipates initiating at least one pivotal trial in patients with epilepsy in 2H23.
It is this drug which has piqued J.P. Morgan’s Tessa Romero’s interest. “We see lead asset, BHV-7000, designed to selectively open voltage-gated potassium ion channels (Kv7.2/Kv7.3) expressed in the central nervous system, as well positioned in a highly valued neurological target that we continue to like,” the analyst explained.
“Our KOL feedback continues to suggest that there is a high unmet need in patients who are afflicted with treatment-refractory focal seizures and need more efficacious options that are well-tolerated. While less is known about BHV-7000 clinically, we expect to learn more in 2023 informing initial features of the therapeutic candidate in healthy volunteers and, if directionally positive, see the potential for appreciation in the stock,” Romero added.
Believing the other assets might also be “long-term drivers of share price performance,” Romero initiated coverage of BHVN with an Overweight (i.e., Buy) rating along with a $23 price target. The figure makes room for 12-month gains of ~67%. (To watch Romero’s track record, click here)
Romero’s analyst colleagues are all on board too; based on 5 unanimous Buys, the stock naturally claims a Strong Buy consensus rating. Going by the $24 price target, the shares will generate returns of ~74% in the year ahead. (See Biohaven stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
