Chicago, IL – December 27, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Amphastar Pharmaceuticals AMPH, Journey Medical DERM, Centessa Pharmaceuticals CNTA and Aquestive Therapeutics AQST.
Here are highlights from Tuesday’s Analyst Blog:
The drug and biotech sector went through a rather tough phase in 2023. Companies in the medical sector were troubled by frequent pipeline setbacks, both developmental and regulatory, along with newer drugs taking time to gain traction in the market as well as geopolitical tensions, such as the Israel-Hamas conflict, all of which severely disrupted the supply chains. In 2023, the Federal Trade Commission started scrutinizing merger and acquisition (M&A) deals, an added concern for biotech companies.
Despite these factors pulling down the drug/biotech sector this year, investors continued to cheer new drug approvals, the success of investigational drugs in clinical studies and regular M&A deals. With the end of the pandemic, popular therapeutic areas like weight loss/obesity and Alzheimer's disease gained the spotlight. Additionally, the Federal Reserve's indications of potential rate cuts in 2024 have ignited hopes of a biotech market rebound.
As we approach the New Year, let us take a good look at some branded and generic companies like Amphastar Pharmaceuticals, Journey Medical, Centessa Pharmaceuticals and Aquestive Therapeutics, which provided more than double returns in 2023. These stocks also have room for further growth.
While AMPH and DERM currently sport a Zacks Rank #1 (Strong Buy) each, CNTA and AQST carry a Zacks Rank #2 (Buy) each at present. The stocks have been mostly witnessing favorable earnings estimate revisions as well. You can see the complete list of today's Zacks #1 Rank stocks here.
Amphastar Pharmaceuticals
In the year-to-date period, shares of Amphastar, a generic drugs company, have shot up 117.4% compared with the industry's 38.5% climb.
The encouraging run of the stock can be associated mainly with two events in 2023. The first event was the FDA approval of Amphastar's naloxone hydrochloride nasal spray 4mgas an emergency treatment for known or suspected opioid overdose and the second was the acquisition of Baqsimi from Lilly. Baqsimi is a dry nasal spray to treat low blood sugar in people with diabetes aged four years and above. The acquisition deal provided Amphastar with a commercial-stage product with growing sales and a strong gross margin. The company was able to expand its market share in 26 countries upon gaining commercial rights to Baqsimi.
Amphastar started recognizing Baqsimi revenues from third-quarter 2023 on a net basis within net revenues as part of its transition of services agreement with Lilly. The transition of Baqsimi operations, when completed in 2024, is expected to significantly drive up revenues from the newly acquired drug. Sales of Amphastar's naloxone hydrochloride nasal spray 4mg is also expected to gain traction in the market in 2024, which should also boost revenues.
Per its third-quarter earnings release, AMPH is stepping into 2024 with a new generics and biosimilars portfolio, either under development or under FDA filing, targeting products with a cumulative market size of over $21 billion. This represents the potential for continued stock price momentum in 2024.
In the past 60 days, estimates for AMPH's 2024 earnings per share have increased from $3.47 to $3.77.
Journey Medical
In the year-to-date period, shares of Journey Medical, a dermatology company, have skyrocketed 314.6% against the industry's 2.5% decline.
Journey Medical markets eight branded and two generic products to treat some common skin conditions. The uptick in the stock price of the company is fueled by the successful development of its key pipeline candidate, DFD-29.
DFD-29 is being developed as an oral treatment for inflammatory lesions (papules and pustules) and erythema (redness) associated with rosacea. Journey Medical announced positive top-line data from two phase III studies on DFD-29 in July. The studies achieved the co-primary and all secondary endpoints, demonstrating statistically superior efficacy of DFD-29 over Oracea (standard of care) and placebo. Oracea is used to treat inflammation associated with rosacea in adults.
The studies also demonstrated the beneficial effect of DFD-29 on erythema assessment, a key secondary endpoint of both studies. Erythema is an important sign of rosacea severity. Improving erythema is relevant to rosacea treatment. DFD-29's significant impact on erythema reduction could prove to be the differentiating factor over the current standard of care for rosacea. The company plans to file a new drug application for DFD-29 soon. Journey Medical believes DFD-29 has the potential to change the treatment paradigm for rosacea.
Subject to approval and commercialization of DFD-29, Journey Medical has the potential for a significant revenue boost, which should fuel the continued growth of the stock price.
Centessa Pharmaceuticals
In the year-to-date period, shares of Centessa, a clinical-stage company, have surged 158.1% against the industry's 2.5% decline.
The phenomenal performance of the stock can be attributed to the developmental progress of its lead product candidate, SerpinPC, which is being evaluated in two registrational phase III studies, PRESent-3 andPRESent-2, for the treatment of hemophilia B with and without inhibitors, respectively. Centessa is currently dosing patients in both studies.
Management believes that SerpinPC has the potential to become a new standard of care in the treatment of hemophilia B. SerpinPC currently enjoys the FDA's Fast Track Designation in the United States for the treatment of hemophilia B, with or without inhibitors.Centessa's second clinical-stage candidate, LB101, a PD-L1xCD47 LockBody, is being developed in a phase I/IIa study for solid tumor indications.
In the past 60 days, estimates for CNTA's 2024 loss per share have narrowed from $1.76 to $1.70.
Aquestive Therapeutics
In the year-to-date period, shares of Aquestive, a clinical-stage company, have rallied 121.7% against the industry's 2.5% decline.
The significant surge in the stock price has been due to two reasons. The FDA accepted the company's new drug application (NDA) for Libervant (diazepam) Buccal Film in pediatric patients between two and five years of age for the acute treatment of intermittent, stereotypic episodes of frequent seizure activity. A decision from the regulatory body is expected on Apr 28, 2024.
Moreover, Aquestive has been progressing well with its developmental plan of Anaphylm (epinephrine) Sublingual Film for the emergency treatment of severe allergic reactions, including anaphylaxis, after aligning with the FDA regarding the timeline and pathway for itsoral epinephrine product candidate. Anaphylm is the first and only orally delivered epinephrine product candidate that has shown clinical results non-inferior to autoinjectors (such as EpiPen and Auvi-Q). The non-invasive oral delivery mechanism is an easier-to-use formulation than the currently available intramuscular injections.So far this year, the company has reported positive study results from the Anaphylm development program.
Aquestive recently dosed the first patient in its first pivotal phase III pharmacokinetic (PK) study of Anaphylm Sublingual Film. The second part of the pivotal phase III program includes a phase III pharmacodynamics (PD) study. The two-pronged late-staged development of the candidate will compare the PK and PD of single and repeat doses of Anaphylm against that of currently available epinephrine autoinjectors. The regulatory filing for Anaphylm is expected to be completed in 2024.
The potential FDA approval of Libervant along with the successful late-stage development of Anaphylm should continue to boost the stock in 2024. In the past 60 days, estimates for AQST's 2024 loss per share have narrowed from 56 cents to 34 cents.
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