So the FDA has finally given its stamp of approval to Pfizer’s (PFE) Comirnaty (yes, that’s really what they’re going to call it) coronavirus vaccine — and that’s a huge relief. Only about 57% of Americans had signed up to be vaccinated with Pfizer’s product while it was designated for only “emergency use” during the Covid-19 epidemic. Hopefully, now that the vaccine has the FDA’s full endorsement as safe and effective, more people will consent to taking it.
And yet, there’s still the matter of folks who — vaccinated or otherwise — fall ill to the virus, and this is anything but a small problem. According to the latest data from Johns Hopkins University, nearly 230,000 Americans tested positive for Covid-19 yesterday — nearly 700,000 worldwide. God-willing, most of these patients will suffer no or only minor symptoms of the illness, but many will still fall ill.
And that means we need means of treating them.
Two drugs, produced by Roche (RHHBY) and Humanigen (HGEN), respectively, have proven invaluable for the treatment of hypoxic (having trouble breathing) patients. The Roche drug, tocilizumab (also known as Actemra or RoActemra), has been found to work best on critically ill patients who have been placed on mechanical ventilation, and/or admitted into intensive care units. In contrast, Humanigen’s lenzilumab (mercifully abbreviated “Lenz”) is seen as better suited for use on patients in somewhat less dire straits — and that’s the one we’ll be talking about today.
Now, Roche’s tocilizumab has been approved for emergency use authorization. Humanigen’s Lenz has not — yet. But after meeting with the company, Oppenheimer analyst Kevin DeGeeter thinks that Lenz might be approved for EUA as early as this quarter. And he further believes that once approved, Humanigen might conceivably sell as many as 100,000 doses a year.
Why does he think this? After hosting meetings with Humanigen, DeGeeter summarized his findings from these meetings. To wit, ordinarily the FDA requires that there be no “adequate, approved, and available alternative” to a product in order to grant EUA. That shouldn’t pose too great an obstacle to Lenz getting EUA, however, because the patients it is designed to help are somewhat different from those being treated with tocilizumab.
At the same time, once Lenz does receive EUA, DeGeeter believes that the drug could begin to take market share away from tocilizumab. Here’s why:
On August 16, Roche warned that because of the fast-moving Delta variant of coronavirus, “demand for [tocilizumab] has increased to unprecedented levels globally… spiking to well-beyond 400% of pre-COVID levels over the last two weeks alone” in the U.S. Now, exploding demand might sound like a good problem for the producer of the drug to have. However, Roche says that in fact, it expects to suffer shortages of tocilizumab “over the weeks and months ahead… due to global manufacturing capacity limits, raw material supply constraints, the complex, labour-intensive process of manufacturing biologics and the dynamically evolving nature of the pandemic.”
Result: While physicians might prefer to use tocilizumab to treat critically ill patients, and Lenz to treat less critically ill patients, the lack of supply of tocilizumab could mean that in many cases, they’ll end up using Lenz to treat both.
Ultimately, DeGeeter predicts that Lenz will become a $1.45 billion-a-year drug for Humanigen, and thus a good reason to buy Humanigen stock. He rates the shares “outperform” with a $30 price target. (See DeGeeter’s track record, click here)
Are other analysts in agreement? They are. 5 Buys and no Holds or Sells have been issued in the last three months. So, the message is clear: HGEN is a Strong Buy. Given the $32.40 average price target, shares could soar ~88% from current levels. (See HGEN stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
