The biotech stocks to own in 2024, according to Piper Sandler

Looking ahead to 2024, Piper Sandler segmented its top biotech picks based on three categories. Madrigal Pharmaceuticals (MDGL), Cytokinetics (CYTK), CymaBay Therapeutics (CBAY), Verona Pharma (VRNA), and Arcturus Therapeutics (ARCT) are the firm’s picks for stocks with low clinical risk and high probability of success for approval and launch. Meanwhile, Immunovant (IMVT) and Altimmune (ALT) are its top names for stocks with assets that are primed for partnership. Lastly, Piper names Crinetics Pharmaceuticals (CRNX), Prothena (PRTA), Pliant Therapeutics (PLRX), Acelyrin (SLRN), Savara (SVRA), Allakos (ALLK), Praxis Precision Medicines (PRAX), Tenaya Therapeutics (TNYA), Immunic (IMUX), and Aligos Therapeutics (ALGS) as the clinical data driven stocks with high probability of success of positive readout in 2024.

LOWEST CLINICAL RISK: Madrigal’s shares have been up more than 60% since the AASLD liver meeting in November. With the PDUFA on March 14, 2024, and the firm’s estimate of 95% PoS of approval, Piper believes this is a major stock to own heading into 2024. Regarding Cytokinetics, Piper notes that aficamten has established itself as a differentiated product in the space with best-in-class efficacy and safety, thus warranting potential for a refined label with less stringent REMS. The firm believes this data will set up discussions for REMS in the process of NDA filing by the second half of 2024. Therefore, the time to own would be now rather than waiting for approval in the de-risked and blockbuster HCM market.

Now, CymaBay has seladelpar NDA submitted on December 15, 2023, and positive/strong Phase 3 data from RESPONSE out there establishing seladelpar as best-in-class differentiated 2L PBC asset in a 21K U.S. addressable market with high unmet need. Thus, Piper’s expectation for 2024 is for priority review, IDEAL enrollment completion, differentiated label with itch, and defined market entry before addition of IDEAL population to double market size. Together, the firm thinks all these milestones will drive shares up and even if they take 10K patients, this would be a $1B market opportunity and drive share gains.

Discussing Verona, Piper noted that heading into PDUFA/approval June 26, it believes ensifentrine is the asset with the best risk/reward profile with little debate around it entering the major blockbuster COPD market as the first novel MoA in decades. Meanwhile, the firm says that now that Arcturus has secured their first LUNAR platform approval in Japan for its COVID vaccine ARCT-154, 2024 should be a big year to roll out orders in Japan.

HIGHEST POS FOR ASSET PARTNERING: Immunovant’s best-in-class FcRn inhibitor carries low clinical and regulatory risk and is ready for pipeline expansion across 20-plus potential blockbuster indications. Partnership potential around this asset remains very high and management noted they want in a partner someone that is able to go broad, the firm adds.
Altimmune’s pemvidutide, on the other hand, is the most late-stage, de-risked asset in obesity marked by competitive weight loss, robust reduction in circulating lipids, clean safety and direct liver de-fatting effects with glucagon agonism thus potential NASH read through. With the massively growing interest in the obesity market, partnership interest remains high with expectations to line one up next year ahead of Phase 3, Piper says.

PHASE 2/3 BINARY CATALYSTS: Piper notes Crinetics is a high value name heading into 2024 where investors are paying for the first in class oral SST2 agonist in two well-defined markets with high unmet need, and getting the rest of the pipeline for free in our view. NDA submission for acromegaly is anticipated for 2024, and the firm expects will move the stock.
Piper also argues that Pliant is an ideal buying opportunity heading into 2024/2025 with Phase 2 PSC readout and Phase 2b IPF enrollment completion highlights bexotegrast’s anti-fibrotic play to work well both in liver and lung indications. Additionally, the firm highlights Savara as its most de-risked Phase 3 readout of 2024 with IMPALA-2 and the first approval of molgramostim in the infantile aPAP market.

2024 is a major year to own Praxis Precision ahead of with Phase 3 Essential3 topline in the second half of 2024 and EMBOLD Ph2 topline in the first half of 2024 to solidify its pipeline of neuro assets, Piper notes. That said, as ET and epilepsy are key value driving programs for PRAX with high PoS, this poses a significant market opportunity. Aligos has also two major shots on goal in 2024, with FDA meeting in the first half of 2024 to discuss HBV monotherapy path, and topline Phase 2a MRI-PDFF data in NASH in Q4 2024 with their differentiated THR-β asset. With MDGL resmetirom approval next year, this should de-risk the regulatory pathway for Aligos, the firm adds.

Other picks include Prothena, Acelyrin, Tenaya, and Immunic.