Analysts Kaveri Pohlman, PhD and Bill Maughan, PhD from Clear Street, a cloud-native financial technology firm on a mission to modernize the brokerage ecosystem, have launched coverage of several healthcare names.
“The launch of our equity research product complements our Equity Capital Markets, Debt Capital Markets, M&A Advisory and Corporate Access offerings and further builds out Clear Street’s value proposition, particularly for our expanding base of opportunistic hedge fund clients,” Ed Tilly, president and CEO-elect of Clear Street said in a statement last month when the firm revealed its new equity research group.
In a research note issued today, Dr. Pohlman writes, “We initiate coverage on SMID cap biotechnology. Overall, we remain selectively optimistic about the sector outlook. Since 2021, biotech has performed poorly with a decrease in average valuations, lower stock performances, and an increase in regulatory restrictions (e.g., accelerated approval pathway, IRA) — the XBI has lagged the S&P 500 by 80% in the past three years. While the short-term data from the past year (XBI lagging the S&P 500 by 7%) shows signs of recovery (likely contributed by a decline in interest rates), we expect investment outcomes to be company-specific and more dependent on selective commercial opportunities, instead of a general sector-wide surge (in average valuations). This is because there is overcrowding in the industry with a plethora of companies (and their novel technology) competing for the same market share.
Dr. Pohlman continues, “Our optimism is based on (1) rapid technological advancements in the field, leading to an improved understanding of target biology and more effective drug development, (2) integration of machine learning and AI to identify areas of success, and (3) imminent patent cliffs for multi-billion-dollar drugs, which need to be compensated to maintain biopharma’s steady revenue stream. Given that biopharma companies rely more heavily on acquisitions of assets than their own R&D, we see it as a positive for SMID cap companies. Specifically, oncology and I&I companies that are in the late stages of development have the potential to provide huge value to shareholders. This is because the late stages of development provide more de-risked data, which is becoming increasingly important after seeing plenty of unfavorable outcomes in the past few years. Furthermore, both oncology and I&I serve chronic and aggressive diseases and are the focus areas of some of the biggest revenue-generating drugs in biotechnology (e.g., Humira, Keytruda).”
“Along these lines, we are initiating coverage on nine companies we believe are worth a closer look in the oncology and I&I subsectors of biotechnology. We believe that these companies have the potential to provide best-in-class drugs in their respective fields and are in the late stages of development with multiple key catalysts expected in the next 12-18 months. As a result, these companies can drive significant value for shareholders.”
Dr. Pohlman’s nine initiations are:
- Enliven Therapeutics (ELVN, Buy, $36 PT)
- Protagonist Therapeutics (PTGX, Buy, $63 PT)
- Erasca (ERAS, Buy, $5 PT)
- Janux Therapeutics (JANX, Buy, $80 PT)
- Cullinan Therapeutics (CGEM, Buy, $30 PT)
- Immatics (IMTX, Buy, $18 PT)
- MoonLake Immunotherapeutics (MLTX, Buy, $108 PT)
- Nuvation Bio (NUVB, Buy, $5 PT)
- Cargo Therapeutics (CRGX, Buy, $28 PT)
Meanwhile, Dr. Maughan launched coverage on three other companies:
- Delcath Systems (DCTH, Buy, $22 PT)
- Century Therapeutics (IPSC, Buy, $9 PT)
- Y-mAbs Therapeutics (YMAB, Buy $21 PT)
