The conversation might have turned from dealing with a pandemic to living in a post-covid climate – or even living alongside the virus – but there are still opportunities opening up in the world of coronavirus stocks.
One such promising name is Humanigen (HGEN). The company has a prospective treatment for hospitalized COVID-19 patients called lenzilumab for which it has applied to the FDA for emergency use authorization (EUA). A decision by the regulatory body is expected in July or August.
Jefferies’ Kelly Shi thinks there are 3 reasons why the therapy is “well-positioned” to win an EUA: “1) efficacy is supported by Ph3 LIVE-AIR trial; 2) continuously emerging Covid variants and case spikes drive the needs for vaccine-complementary drugs; 3) EUA approval of toci (IL6i) validates lenz-targeted pathway for Covid treatment.”
Considering Shi’s first point, during emergency situations when the public’s health is at stake, the FDA’s normally stringent criteria for EUA submission becomes more relaxed, making room for drugs that show they “may be effective”. As lenzilumab Lenz met the primary endpoint in the Phase 3 LIVE-AIR trial, it shows the treatment qualifies as one that “may be effective.”
As for 2, although the US’ vaccination program has made “solid progress,” there are several reasons why vaccine-complimentary drugs could still have a role to play. For one, vaccination rates are slowing down, and coverage could hit a ceiling leaving millions unprotected. Additionally, new variants keep emerging, against which the available vaccines appear to be less effective. Lastly, even in countries with high vaccination rates there have been signs a 3rd Covid wave is on the horizon, which could make the US vulnerable too.
As for the 3rd point, the FDA’s approval of Roche’s toci – a covid drug providing SWOV (survival without ventilation) – implies the regulatory body “recognizes preventing disease progression to ventilation and/or death as an unmet need for hospitalized Covid patients.”
The analyst believes that if the treatment is approved, the stock could climb by 60 to 80%, while should a larger safety dataset or additional trial be requested, the downside is “limited” to 20-30%.
Shi is backing HGEN’s success with a Buy rating and a $40 price target. The implication for investors? Upside of a strong 130%. (To watch Shi’s track record, click here)
4 other analysts have reviewed Humanigen’s prospects recently and all have reached the same conclusion – Buy. Therefore, the stock has a Strong Buy consensus rating, backed by a $34.20 average price target, indicating shares could nearly double from current levels over the next 12 months. (See HGEN stock analysis 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.