Some believe the future is starting to look brighter for biotech stocks. With the market now expecting the first rate cut to come in September rather than June or July as previously thought, biotech stocks could start to perform well. Earlier this month, Morgan Stanley analysts noted that biotech stocks outperformed the market in the months leading up to the first rate cut, although they underperformed in the early days after the cut. Biotech covers many different areas, but Citi has identified a market worth $2.9 billion that it says is poised for greater growth. This is hereditary angioedema, a genetic disorder that causes swelling under the skin, in the guts and lungs, and possibly other parts of the body. This can be life-threatening depending on the area involved in the attack. According to Citi, the market will experience mid-single-digit growth over the next five years. “With many therapies in development, the market will become more competitive,” Citi said in an April 26 report. The Wall Street bank named three companies treating the disease. They are US companies Ionis Pharmaceuticals and Intellia Therapeutics, as well as Australia’s CSL. Citi said CSL’s treatment, Garadacimab, has “best-in-class efficacy” and has the potential to become the “standard of care” once launched in 2025. Citi said: “CSL has proven over the past 25 years that it can allocate capital at high returns and integrate the global plasma industry to a well-balanced market structure.” It gave CSL a target price of $305, which is nearly Potential upside of 11%. However, the bank noted that Ionis’ drug Donidalorsen may offer more convenience than Garadacimab because it requires dosing less frequently (once every eight weeks) than Garadacimab (once a month). Citi said of Ionis: “Given current valuation and overall pipeline potential, the stock’s risk/reward profile appears to be positively skewed.” It gave Ionis a Buy rating with a $60 price target, implying about 44% room for growth. As for Intellia, Citi said its gene-editing platform, known as CRISPR/Cas9, is “truly innovative” and could “ultimately be a transformative approach that could benefit multiple diseases and indications.” Intellia has a price target of $31, representing a potential upside of 49%.
