After Moderna’s Big News, Here Are Three Biotechs to Watch
Biotech had a huge day Wednesday with the State Street SPDR S&P Biotech ETF ($XBI) rising nearly 6% by market close to hit a post-pandemic high. The trigger for the rally was positive Phase 3 trial data for a skin cancer therapy from Moderna ($MRNA) and Merck ($MRK). MRNA rose just over 175% on the disclosure Wednesday while Merck rose over 12%.
It has been a good year for biotech with the sector up nearly 40% year to date. One of the primary drivers of the rally this year has been provided by a notable uptick in M&A volume. And nothing powers biotech names more than increasing acquisitions with significant buyout premiums.
In my column today, I am going to circle back on some biotech names that have been highlighted on these pages before that have seen recent positive news flow. Let’s start with Aurinia Pharmaceuticals ($AUPH). The company reached a litigation settlement with giant generic drug maker Teva Pharmaceutical Industries ($TEVA). The deal reached will ensure that TEVA will not make a generic version of the company’s Lupkynis (voclosporin) until late 2036 at the earliest. This removed some uncertainty around the investment thesis. Small analyst firm Bloom Burton upgraded Aurinia on the news and boosted its price target on the shares from $15 to $21. Other analyst firms are likely to follow suit in the weeks ahead.
Speaking of favorable analyst firm commentary, three analyst firms, including Needham and William Blair, have reiterated their buy ratings on Ocular Therapeutix, Inc. ($OCUL) this week. This follows late-stage trial data from potential competitor Eyepoint ($EYPT) in the wet age-related macular degeneration or AMD space missed its primary endpoint. Ocular released Phase 3 data around its wet AMD candidate Axpaxli in February. This positions it as the first therapy to demonstrate superiority to an approved anti-VEGF agent in a Phase III wet AMD trial. This condition is the leading cause of irreversible blindness.
Next up is Precigen, Inc. ($PGEN) which got a shout out from James “RevShark” DePorre on Monday. The praise was well-deserved in my opinion. The company’s primary asset is a drug called Papzimeos. This became the first Food and Drug Administration-approved therapy to treat recurrent respiratory papillomatosis, or RRP, last summer. RRP is a rare and sometimes fatal neoplastic disease of the vocal cords, trachea, and lungs.
Papzimeos was developed using Precigen’s proprietary platform AdenoVers, which houses a library of adenovectors for efficient transfer of its gene therapies. Papzimeos acts as a “vaccine” that elicit immune responses directed against cells infected with human papillomavirus 6 (HPV6) and HPV11. Papzimeos was granted seven-year market exclusivity when it was approved. The product has got considerable traction in its first few quarters on the market. Revenue in the second-quarter came in at just over $53 million. This was more than double Q1’s sales and blew through analyst projections. Management has stated the company will achieve cash flow breakeven by year end. The analyst consensus sees almost 70 cents a share of profit in fiscal year 2027 as sales almost double to just north of $450 million. The stock currently trades for just over seven bucks a share.
At the time of publication, Jensen was long AUPH, OCUL, PGEN, and XBI.
