Healthcare stocks keep rockin as February begins with searing action. Will it last, or flame out?

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Winners far outpaced losers last week as the broader market continued to worry about trade talks with China and the prospect of another government shutdown over the Trump wall. Check out these soaring champs and whether profit -taking knocks them back to earth this week.

1) MacroGenics Inc. (Nasdaq:MGNX) led advancing issues, soaring 96% over a wild week to $22.44. Investors can be excused for feeling a bit of whiplash. Before the market opened last Wednesday, the little Rockville, MD-based biotech announced positive results for a Phase 3 trial of margetuximab, a breast-cancer treatment. The stock then roared higher, closing at $25.60, up 130%. Last March, MacroGenics hit $32.74, before crumbling by almost 70% until last Wednesday. That wild round trip illustrates the reality that biotechs largely trade as options on the outcome of drug trials or applications for Food and Drug Administration approval.

In 2018’s first three quarters, MacroGenics lost $126.8 million, on just $44.3 million in revenue. Part of the reason for MacroGenics’ surge was that expectations were so low. Last Monday, a Citigroup analyst, Dr. Yigal Nochomovitz, issued a Sell rating on the stock, and gave the trial a 75% chance of failure. Now, Evercore ISI analyst Umer Raffat sees margetuximab generating more than $650 million a year in sales. A Nomura analyst, Dr. Christopher Marai has a $41 target on the stock. FDA approval is the next hurdle for margetuximab.

Steve’s Take:

I always like to start with market cap, and MGNX rests at $877 million. Not a warm and fuzzy Biogen-like feeling, but…well, wait for the next 3 candidates and you’ll notice a drop off in that comfy feeling.

From MarketScreener.com:

Mean consensus OUTPERFORM
Number of Analysts 11
Average target price $35.10
Last Close Price $21.00
Spread / Highest target 138%
Spread / Average Target 67%
Spread / Lowest Target 24%

Zacks’ proprietary data indicate that MacroGenics is currently rated as a Zacks Rank 2, or BUY, and they are expecting an above average return from the MGNX shares relative to the market in the next few months. In addition, MacroGenics has a Value, Growth, Momentum (VGM) Score of F (this is a weighted average of the individual Style Scores which allow you to focus on the stocks that best fit your personal trading style).

Zacks says valuation metrics show that MacroGenics may be overvalued. Its Value Score of F indicates it would be a bad pick for Value investors. The financial health and growth prospects of MGNX, demonstrate its potential to Underperform the market. It currently has a Growth Score of F. Recent price changes and earnings estimate revisions indicate this would not be a good stock for momentum investors with a Momentum Score of F.

My suggestion is to Hold this name until there’s more time to evaluate the Phase 3 results of their breast-cancer drug. Even then, getting through the FDA to market is a crap shoot as we all know. The spread to analysts’ average target price is hard to ignore, but not quite time to pull the trigger, especially with the huge run-up last week. Shares are off 4% at $21.45 today (February 13, 2019).

2) Elsewhere, Eyenovia Inc. (Nasdaq:EYEN) rocketed 91% to $6.30 after announcing that the FDA has accepted its Investigational New Drug (IND) application to initiate the CHAPERONE study–the company’s Phase 3 registration trial of MicroPine to reduce the progression of myopia in children. Currently, there are no FDA-approved therapies to slow the progression of myopia, a condition that, if uncontrolled, can in some cases be associated with major pathologic changes such as retinal atrophy, macular staphylomas, retinal detachment and visual impairment.

It is estimated that approximately 9% of children in the US have myopia resulting in a potential US market for MicroPine of approximately $5 billion. Outside of the US, the Reno, NV-based company estimates the market potential for MicroPine is even larger–with up to approximately 80% of children starting out myopic in Asian markets. Eyenovia says there is a growing body of evidence that supports the therapeutic effect of low dose atropine, potentially slowing myopia progression by 60%-70%.

Steve’s Take:

 From MarketScreener.com:

Mean consensus OUTPERFORM
Number of Analysts 3
Average target price $21.30
Last Close Price $5.11
Spread / Highest target 585%
Spread / Average Target 317%
Spread / Lowest Target 174%

Zacks’ proprietary data indicate that Eyenovia is currently rated as a Zacks Rank 3, or HOLD, and they are expecting an in-line return from the EYEN shares relative to the market in the next few months. In addition, Eyenovia has a VGM Score of F. Zacks valuation metrics show that Eyenovia may be overvalued. Its Value Score of D indicates it could be a flawed pick for Value investors. The financial health and growth prospects of EYEN, demonstrate its potential to Underperform the market, says Zacks. It currently has a Growth Score of F. Recent price changes and earnings estimate revisions indicate this would not be a good stock for momentum investors with a Momentum Score of F.

My suggestion is that for the risk-tolerant portion of a portfolio, this name is a solid Buy. It’s definitely risky, especially with a market cap of just $57.7 million. But the product market is starved for MicroPine, and analysts foresee a goldmine in the future share price. Shares are off 15% from their recent high, so buying is even more of a rational bet than a pure gamble. Time to jump in.

3) BioXcel Therapeutics Inc. (Nasdaq:BTAI) surged 78% to $9.60 after announcing proof-of-concept data from its Phase 1b study of intravenously-administered dexmedetomidine (IV Dex) in patients suffering from opioid withdrawal symptoms. The positive data from this Phase 1b trial provide evidence to expand the potential market for BXCL501, a first-in-class proprietary sublingual film of Dex, beyond its current focus for acute treatment of agitation in neuropsychiatric indications.

New Haven, CT-based BioXcel says the study further confirms that BXCL501’s selective alpha-2a adrenergic receptor mechanism has potential application in opioid withdrawal symptoms, in addition to the acute treatment of agitation in schizophrenia, bipolar disorder and dementia. Additionally, previously published studies support the potential of Dex as an adjunctive treatment for symptoms of alcohol withdrawal.

BioXcel is a clinical-stage biopharmaceutical development company utilizing novel artificial intelligence approaches to identify the next wave of medicines across neuroscience and immuno-oncology.

Steve’s Take:

From MarketScreener:

Consensus

Mean consensus OUTPERFORM
Number of Analysts 5
Average target price $18.20
Last Close Price $10.50
Spread / Highest target 139%
Spread / Average Target 74%
Spread / Lowest Target 24%

Zacks’ proprietary data indicate that BioXcel Therapeutics is currently rated as a Zacks Rank 3, or Hold, and they are expecting an “in-line” return from the BTAI shares relative to the market in the next few months. In addition, BioXcel has a VGM Score of F. Zacks says its valuation metrics show that BioXcel may be fairly valued. Its Value Score of C indicates it would be a neutral pick for value investors. The financial health and growth prospects of BTAI, demonstrate its potential to Underperform the market. It currently has a Growth Score of F. Recent price changes and earnings estimate revisions indicate this stock lacks momentum and would be a lackluster choice for momentum investors.

My suggestion is that there is a prevailing, favorable investment searchlight on anything/everything relating to mitigating the opioid crisis, and BXCL501, even in the Phase 1 stage, has big ROI promise, although “risky” doesn’t do justice to a Buy right now. Strictly for the highly risk-tolerant portion of a portfolio where losing the entire bet–which this can morph into–won’t hurt too much. Shares were up 6% today at $10.20.

4) And Mustang Bio Inc. (Nasdaq:MBIO) leaped 50% to $5.61. The company, focused on the development of novel immunotherapies based on proprietary chimeric antigen receptor engineered T-cell (CAR-T) technology and gene therapies for rare diseases, announced that the FDA has granted Orphan Drug Designation to MB-102 (CD123 CAR T) for the treatment of blastic plasmacytoid dendritic cell neoplasm (BPDCN), a rare and incurable blood cancer with a median survival of less than 18 months and no standard of care.

MB-102 is currently being studied in a single center, first-in-human Phase 1 dose-escalation clinical trial evaluating the safety and anti-tumor activity of escalating doses of MB-102 in patients with relapsed or refractory AML (cohort 1) and BPDCN (cohort 2). Patients receive a single dose of MB-102 with an option for a second infusion if they continue to meet safety and eligibility criteria and still have CD123+ disease. MB-102 has demonstrated complete responses at low doses in AML and BPDCN without dose-limiting toxicities.

Steve’s Take:

From Market Screener:

Mean consensus BUY
Number of Analysts 1
Average target price
Last Close Price 4,66 $
Spread / Highest target -100%
Spread / Average Target -100%
Spread / Lowest Target -100%

Zacks’ proprietary data indicate that Mustang Bio is currently rated as a Zacks Rank 3, or Hold, and they are expecting an inline return from the MBIO shares relative to the market in the next few months. In addition, Mustang Bio, Inc. has a VGM Score of F (this is a weighted average of the individual Style Scores which allow you to focus on the stocks that best fit your personal trading style). Valuation metrics show that Mustang Bio, Inc. may be overvalued. Its Value Score of D indicates it would be a bad pick for value investors. The financial health and growth prospects of MBIO, demonstrate its potential to underperform the market. It currently has a Growth Score of F. Recent price changes and earnings estimate revisions indicate this would not be a good stock for momentum investors with a Momentum Score of F.

Even for those investors literally with money to burn, this is way too early to start building a pile of dough and looking for a match. There’s simply not enough information about this name and its product to warrant an investment at this juncture. Certainly, there’s early positive progress, but not yet the time to make a bet, unless one actually needs to ignite a money pit to keep from freezing to death. Already, shares are down 20% today to $4.46.

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