As Health-Care IPO Boom Continues, Wall Street Tells Investors to Buy

(Bloomberg) -- Health-care companies are going public at a startling rate and analysts are as bullish as ever as they kick off initiations of five companies today.

The companies range from one developing so-called “off the shelf” immunotherapies to a commercial-stage medical device maker with a non-invasive treatment for depression. Even as two of the five companies have slid from their initial valuations, only one company has so far earned anything less than a buy from the analysts who underwrote the deals.

Calif.-based Tricida has added more than $10 per share since a June IPO at $19, leading two analysts to give the biopharmaceutical company a more cautious neutral rating as speculation of a deal caused shares to overheat.

Analysts began research coverage on these five companies today:

Forty Seven (FTSV) -1.2% through Friday since IPO

  • Underwriters included Morgan Stanley, Credit Suisse, Canaccord, BTIG, Oppenheimer
  • Four of the five underwriters have initiated coverage with the equivalent of a buy; avg PT $24
  • “With a clear lead vs competitors, we see FTSV as the best positioned anti-CD47 company,” Morgan Stanley analyst Matthew Harrison wrote in his initiation note
    • Harrison sees Forty Seven’s therapy, which lowers CD47 expression enabling macrophages to locate and attack tumors, as safer and potentially less toxic than other cancer treatments like CAR-T therapies, which may lead to an accelerated approval for lead asset 5F9

Neon Therapeutics (NTGN) -32% from IPO

  • Underwriters include Morgan Stanley, BofAML, Mizuho, Oppenheimer
  • Three of the four underwriters have initiated coverage with the equivalent of a buy; avg of two PTs $21
  • BofAML analyst Ying Huang writes that all eyes are on early-stage results for Neon’s lead asset, NEO-PV-01, a personalized neoantigen-targeting vaccine in several different kinds of cancer; data are expected in 1H of next year
  • While Neon’s therapy is a “front-runner” in the vast market for personalized cancer treatments, “proof-of-concept data is early and manufacturing time and affordability remain obstacles”

Neuronetics (STIM) +58% from IPO

  • Underwriters include Piper Jaffray, William Blair, Canaccord, JMP, BTIG
  • Four of the five underwriters initiated coverage at a buy, PT $34
  • Neuronetics is the only commercial stage company in today’s round-up. Neuronetics’ FDA-approved trans-cranial magnetic stimulation device, the NeuroStar Advanced Therapy System, is used to treat depression.
  • “It has a technology and organizational advantage that will allow it to dominate the category. The favorable reimbursement environment and strong service component of the story should allow STIM to generate strong domestic sales growth,” Piper Jaffray analyst Matt O’Brien writes.
  • Sales may grow more than 20% over the next several years in the U.S. and with a potential approval in the Japanese market in 2019, Piper said

Tricida, (TCDA) +52% from IPO

  • Underwriters include Goldman Sachs, JPMorgan, Cowen
  • Goldman and JPMorgan both rate TCDA neutral while Cowen gives it a buy; avg PT $41
  • Tricida has as much as a 50 percent shot at getting bought, Goldman analyst Dana Flanders writes; Tricida’s treatment for metabolic acidosis, TRC101, may get accelerated approval as soon as 2020 with additional data needed for full approval expected by 2023

Translate Bio (TBIO) +8.5% from IPO

  • Underwriters include Citi, Leerink, Evercore
  • All three underwriters initiated Translate at the equivalent of a buy; avg PT $23
  • Translate’s messenger RNA therapeutic platform is a “lower risk way to play [the] gene correction theme,” Citi analyst Yigal Nochomovitz wrote, highlighting the transient nature of mRNA treatments with less off-target effects than other gene therapies.

©2018 Bloomberg L.P.