When a stock’s price falls into the doldrums, it’s tempting to just avoid those shares. After all, rock bottom prices usually happen for a reason, and those reasons are usually not good for the stock’s prospects. But there are times – more frequent than most would guess – that this common wisdom runs counter to the facts.
Because the fact is, many fundamentally sound stocks can and do see periods of falling share price. Maybe there was change in company leadership, or a hyped product failed to meet expectations, or sales were low one month. Any of these – and plenty more short-lasting factors – can push down share prices.
For investors, those lower share prices in otherwise solid equities mark a key entry point, a chance to buy low before selling high. The trick is separating the opportunities from the truly unsound stocks.
Recently, the Street’s analysts have tapped three stocks they see as long-term winners – but with low share value right now. According to TipRanks’ database, these are Strong Buy stocks, featuring solid upside potential. Let’s take a closer look.
Bioxcel Therapeutics (BTAI)
We’ll start with a small-cap biopharma company, Bioxcel. This firm works in the fields of neuroscience and immune-oncology, researching and developing new medicines for the treatment of severe conditions. Bioxcel uses an AI approach to screen a pool of drug candidates, finding the right ones to move along to clinical stages.
For now, Bioxcel has two drug candidates in its pipeline. The first, BXCL501, is an orally dissolving thin film – a relatively new mode of drug delivery – of dexmedetomidine. The drug was originally developed as a treatment for agitation due to opioid withdrawal symptoms and other conditions. The FDA has accepted Bioxcel’s NDA filing for BXCL501 for the treatment of agitation due to schizophrenia and bipolar disorders. The PDUFA date is set for January 5 of next year. The acceptance was supported by the SERENITY I and II Phase 3 pivotal trials – data from those trials showed that BCXL501 brought significant clinical relief within 20 minutes of dosing.
The drug has other clinical trials ongoing, including the TRANQUILITY Phase 1b/2 trial. This trial is evaluating the drug as a acute treatment for dementia-related agitation. The company plans to move forward to late-state clinical trials in dementia patients during the second half of this year. Data from the RELEASE study, published in March, showed efficacy in treating opioid withdrawal patients, and supported investigating this drug candidate for additional application.
The second drug candidate, BCXL701, is an orally administered innate immunity activator used in treatment of aggressive prostate cancer and other advanced solid tumors. By the end of May, this drug candidate had shown single-agent anti-tumor activity against melanoma, and had been evaluated for safety in over 700 patients.
But even with two drug candidates showing promise and entering late-state clinical research, BTAI shares are down. The answer could lie in the company’s June offering of stock, in which it put 3.155 million shares on the market at $31.70 each. That pricing was well below the $36.85 per share where the stock had been trading in the previous day.
Canaccord analyst Sumant Kulkarni reviewed this stock, and wrote: “Stock action in BTAI has been frustrating. This has been compounded by some investor angst around the timing/price of recent capital raises. In terms of catalysts, a potential approval for BXCL501 is coming in early , and a pivotal program for agitation in dementia is set to start in 2H21. The latter remains a key investor focus…. In summary, as long as BTAI can deliver on its plans, we continue to believe patient investors could be rewarded…”
To this end, the analyst rates BTAI a Buy along with a $95 price target. Investors stand to take home about 287% gain, should the target be met over the next 12 months. (To watch Kulkarni’s track record, click here)
The Strong Buy consensus rating on this stock is unanimous, based on 4 recent reviews – showing that the Canaccord view is no outlier. BTAI shares are trading for $24.86 and have an average target price of $112, which suggests a very bullish 354% upside potential. (See BTAI stock analysis on TipRanks)
Hookipa Pharma (HOOK)
Next up, Hookipa Pharma, is another clinical-stage immune-oncology research firm. Hookipa uses a proprietary platform to modify arenaviruses to carry virus-specific and tumor-specific genes directly to the patient’s T-cells, thus ‘educating’ the immune system to create the correct response. The company is using this approach to develop treatments for several serious viral diseases, including CMV, HBV, and HIV, as well as HPV-related cancer and prostate cancer.
The company has two leading research tracks. On the infectious disease front, HB-101 is a potentially prophylactic treatment against CMV – a vaccine candidate. HB-101 is currently in Phase 2 clinical trial and enrolling patients. Safety and efficacy data is expected to start coming in during 2H21.
The company also has several drug candidates in Phase 1 trials against HPV-related cancers. This is a dangerous class of cancers affecting women, and connected to the human papillomavirus. The company initiated trials for HB-201 and HB-202 late last year. Data release this past May showed acceptable safety and tolerability factors. In June, Hookipa released data on HB-200, another of its anti-cancer drug candidates. The candidate showed only 18% overall response rate – but showed antigen-specific CD8+ T cell responses described as ‘outstanding.’
Despite these ongoing trials and early data, the company’s stock plunged in June. H.C. Wainwright analyst Swayampakula Ramakanth believes the selloff was unwarranted.
“In our view, the sell-off is likely due to the lower than expected efficacy data from the cohort receiving HB-202/HB-201 alternating treatment…. However, we believe it is premature to make the call. First, all eight patients enrolled in HB-202/HB-201 cohort to date remain on the treatment, and only four of them are evaluable for efficacy, of whom, one patient achieved target tumor shrinkage of nearly 20%. Additionally, preliminary data on antigen-specific CD8+ T cells are consistent with the preclinical data. Finally, the company is still escalating the dose level for HB-202/ HB-201, and there were no dose-limiting toxicities and no Grade ≥3 treatment-related adverse events observed,” Ramakanth noted.
The analyst summed up, “Taken together, we believe HB-202/HB-201 alternating treatment still holds the potential to deliver stronger efficacy compared to HB-201 monotherapy, and the recent sell-off creates an attractive entry point for long-term investors.”
In line with these comments, the analyst rates HOOK a Buy, and his $21 price target implies a one-year upside potential of ~181%. (To watch Ramakanth’s track record, click here)
That Wall Street likes this stock is clear from the unanimous Strong Buy consensus rating. That consensus is built on 4 recent Buy reviews, which is good news for HOOK. The share are priced at $7.48 and their $23.33 average price target implies ~212%. (See HOOK stock analysis on TipRanks)
Ascendis Pharma (ASND)
We’ll wrap up this list with Ascendis Pharma, another biotech company. Ascendis is an emerging company, focused on endocrinological ailments, serious diseases that can affect the patient’s whole body. The company’s pipeline includes three drug candidates in the clinical trial stage, for diseases including pediatric and adult growth hormone deficiency, adult hypoparathyroidism, and achondroplasia. Ascendis also has an oncology program, with two drug candidates in early stages of development.
Ascendis is developing these drug candidates using a proprietary platform, one that allows a ‘carrier’ drug – one with known biochemical actions – to deliver the therapeutic agents directly to targeted areas of the body. The therapeutic agents are proteins, peptides, and other small molecules.
The company’s two leading candidates, TransCon hGH and TransCon PTH, have both been in the news recently. The first, also called lonapegsomatropin, has its Biologics License Application under review by the FDA, and the regulatory agency wants additional time for further review. In mid-June, it was announced that the PDUFA date has been pushed back to September 25. This drug is a treatment for pediatric growth hormone deficiency.
Also in the news, the company announced it had achieved enrollment targets for the Phase 3 PaTHway trial for TransCon PTH, palopegteriparatide, a treatment for hypoparathyroidism in adults. The trial is already underway, and top-line results are expected in 1Q22. If the trial warrants, the company anticipates a New Drug Application submission in mid-2022.
And yet, with approval applications rolling along and clinical trials proceeding, ASND shares are down 32% year-to-date.
Joseph Schwartz, covering the stock from Leerink, however, thinks that the current low price is a chance for investors to get in.
“Despite [the] announcement that ASND’s PDUFA for TransCon hGH is being pushed out by three months to September 25, our positive outlook on a successful regulatory outcome remains unchanged… The company believes the FDA simply needs more time to review the application and finalize their internal procedures, and the FDA may not need the entire three months. To this point, the agency is not requesting additional data or site visits; ASND believes that all requests have been addressed and labeling discussions have been finalized in a very favorable manner… Now that the PDUFA has been pushed back and the overhang of the potential worst case scenario… has apparently been removed, we believe that this strengthens the likelihood of a positive regulatory outcome,” Schwartz opined.
Schwartz rates ASND stock an Outperform (i.e. Buy) along with a $178 price target. Investors stand to pocket ~54% gain should the analyst’s thesis play out. (To watch Schwartz’s track record, click here)
Overall, Wall Street seems ready to give this stock a chance. Of the 10 recent reviews, the Buys outweigh the Holds 9 to 1, for a Strong Buy consensus rating. Shares are selling for $115.30 and their average target of $190.13 implies ~65% upside in the next 12 months. (See ASND stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.