Was the recent market volatility just a fake out? After notching an all-time high on September 2, fears related to overheated valuations spurred a rapid correction, marking the first material correction of the current bull market. However, this doesn’t mean the bears have been vindicated, so says Wells Fargo’s Sameer Samana.
Samana highlights the fact that both the S&P 500 and the NASDAQ “were able to hold above the levels we saw in June,” arguing “from a higher highs, higher lows standpoint, the fact you were able to hold at higher levels than June or July is encouraging.” He added, “Right away, it tells a lot to investors, nothing is wrong with the trend, we just got a blowoff and kind of a pullback.”
On top of this, the absorption of 10-year and 30-year Treasury issuances, recent M&A activity and easing of financial conditions like the volatility indexes and the dollar are all “helping sentiment on the day and leading to a rebound from the volatility over the past week or two,” in Samana’s opinion.
With Samana’s outlook in mind, we took a closer look at two stocks Wells Fargo is backing. The firm’s analysts see over 100% upside potential in store for each. We used TipRanks’ database to find out what the rest of the Street has to say.
Bellicum Pharmaceuticals (BLCM)
Developing high-performance cellular immunotherapies, Bellicum Pharmaceuticals wants to unleash their power against a wide range of cancers. Given the progress of its controllable CAR-T therapeutic pipeline, Wells Fargo is pounding the table on this healthcare name.
Representing Wells Fargo, 5-star analyst Jim Birchenough points out that, “With approaching data for repeat-dose rimiducid to reactivate BPX-601 PSCA-targeted GoCAR-T cells and recent IND clearance for dual-switch HER2-targeted GoCAR-T we see several opportunities for value creation over the next 6-12 months.”
BPX-601 is an autologous GoCAR-T product containing BLCM’s proprietary iMC co-activation technology. It was designed to treat solid tumors expressing prostate stem cell antigen (PSCA). BLCM is hoping to amend the Phase 1 trial to increase eligibility from second line pancreatic to second and third line, increase the CAR-T dose from 5×106/Kg to 1×107/Kg and open a cohort of relapsed/refractory prostate cancer patients that have failed all approved treatments.
The protocol amendment has been submitted to the FDA for Phase 1, and the company remains on track to present the first repeat BPX-601 and rimiducid data in approximately five second line pancreatic cancer patients enrolled in cohort 5B by YE20.
As for BPX-603, its dual-switch GoCAR-T product designed to target solid tumors that express the human epidermal growth factor receptor 2 antigen (HER2), Birchenough has high hopes. Following the recent IND clearance, BLCM revealed the details for the planned Phase 1/2 dose escalation HER2 solid tumor basket trial. The trial will utilize a standard 3+3 design, with a starting BPX-603 dose of 100,000 Cells/kg administered after cyclophosphamide/fludarabine conditioning.
Adding to the good news, Birchenough cites the publication of data showing improved proliferation, persistence and innate cell cytotoxicity with the inclusion of iMC and secreted IL-15 and augmentation of target cell killing with the addition of a CAR as a positive. He added, “BLCM expects additional preclinical data updates by late 2020, to select a final candidate over the next 12 months and file an IND 1H22.”
To this end, Birchenough rates BLCM an Overweight (i.e. Buy) along with an $18 price target. This figure puts the upside potential at a whopping 158%. (To watch Birchenough’s track record, click here)
Looking at the consensus breakdown, 2 Buys and no Holds or Sells have been published in the last three months. Therefore, BLCM gets a Moderate Buy consensus rating. Based on the $21.50 average price target, which is more aggressive than Birchenough’s, shares could climb 209% higher in the next year. (See BLCM stock analysis on TipRanks)
Global Blood Therapeutics (GBT)
With the goal of transforming the treatment of sickle cell disease (SCD) and other blood-based disorders, Global Blood Therapeutics works to bring cutting-edge solutions to market. Based on the solid performance of one of its products amid the ongoing pandemic, Wells Fargo has high hopes.
Wells Fargo’s Jim Birchenough, who also covers BLCM, points to the recent launch of OXBRYTA, its drug designed to treat patients with Sickle Cell Disease (SCD) by addressing hemolytic anemia, as a key component of his bullish thesis. Along with better-than-expected sales, he cites the “clear progress towards a blockbuster opportunity beyond 2020.”
During Q2 2020, U.S. sales of the therapy hit $31.5 million, surpassing the $16.1 million consensus estimate and reflecting a 123% quarter-over-quarter gain. Additionally, the COVID-19-related impact to prescriptions stabilized following the initial impact, thanks to increased use of telemedicine by HCPs and increased comfort with virtual engagements with GBT field teams. These trends are set to continue through Q3 2020 and into YE20, with the ultimate recovery surpassing pre-COVID-19 levels, so says management.
“While COVID-19 headwinds have impacted exponential growth seen in Q1 2020, continued steady growth through the pandemic, with at least 1,000 new patients per quarter, puts GBT in a position to exit its first year of launch with at least 5,000 patients prescribed and representing $500 million opportunity,” Birchenough commented.
On top of this, GBT is communicating with healthcare providers on a virtual basis, achieving 500-600 customer field interactions per week, with the recent launch of its branded patient ad campaign and branded healthcare professional ad campaign. According to Birchenough, aided awareness of OXBRYTA among SCD specialists is above 90%, and 60% of physicians surveyed plan to start patients on OXBRYTA within the next three months.
All of this prompted Birchenough to state, “… with broadening prescriber base, higher target hemoglobins for treatment and strong progress towards full reimbursement, GBT is already establishing an opportunity well beyond the ~$2 billion represented by patients with most severe anemia.”
It should come as no surprise, then, that Birchenough stayed with the bulls. To this end, he kept an Overweight rating and $133 price target on the stock, implying 140% upside potential.
Are other analysts in agreement? Most are. 13 Buy ratings and 1 Hold have been issued in the last three months. So, the word on the Street is that GBT is a Strong Buy. Given the $113.08 average price target, shares could gain 104% in the next year. (See GBT 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.
