by Anyone involved in investing knows that it’s all about “picking stocks.” Choosing the right stocks to leave your money with is vital to ensuring a strong return on an investment. Therefore, when the Wall Street pros consider a name to be a “Top Pick,” investors should take note.
Using the TipRanks platform, we dug up details on two stocks that recently received the “Top Pick” designation from some of Street’s analysts.
So let’s dive into the details and find out what makes them so. By using a combination of market data, company reports, and analyst commentary, we can get a sense of what makes these stocks compelling choices for the remainder of 2023, and why both are rated Strong Buys by analyst consensus.
EyePoint Medicines (EYPT)
We’re starting in the biotech sector with EyePoint Pharmaceuticals, a small-cap biopharmaceutical company that operates in both the clinical and commercial stages. The company is actively developing a new drug for the treatment of various eye conditions, has another product on the market and recently sold a successful commercial product.
EyePoint has two drug delivery platforms, Durasert and Verisome, that enable injectable, sustained drug delivery. The first, Durasert, is being used with the drug candidate EYP-1901, a potential treatment for wet age-related macular degeneration (wAMD) and non-proliferative diabetic retinopathy (NPDR). The second platform, Verisome, is used with the commercial product DEXYCU, a drug for the treatment of postoperative inflammation after eye surgery. The platforms offer the advantage of being dosed on a schedule of months rather than days or hours.
A closer look at EyePoint’s pipeline reveals that the EYP-1901 candidate dominates the company’s research program. This drug is the subject of two leading clinical trials: the DAVIO trial, which focuses on the treatment of wAMD, and the PAVIA trial, which focuses on NPDR. In late March, EyePoint completed enrollment in the Phase 2 DAVIO trial, which was described as “oversubscribed.” Publication of topline data is expected by the end of 4Q23. In a recent June 5 press release, EyePoint announced the completion of enrollment in the Phase 2 PAVIA trial of EYP-1901 for NPDR treatment. The trial aimed to enroll 60 patients, but ended up enrolling 77. Topline data is expected to be released in 2Q24.
On the commercial side, the company’s current commercial drug is DEXYCU, a one-time injectable treatment for inflammation that can occur after eye surgery. DEXYCU experienced a significant decline in product sales during the first quarter, which was attributed to the end of the pass-through fee period on January 1 of this year. Nevertheless, the company is actively involved in commercialization activities for the drug.
EyePoint also reported results for a second commercial product in 1Q23. This product, YUTIQ, accounted for the majority of the company’s sales, contributing approximately $7.4 million out of a total of $7.7 million. YUTIQ sales increased 60% year-on-year. Following the quarter, EyePoint announced in May that it had sold YUTIQ to Alimera Sciences for a total of $82.5 million in cash, along with royalties. The sale enabled EyePoint to pay off its outstanding bank debt and extend its cash runway through 2025.
However, the main story here is about the research pipeline, according to Cantor analyst Jennifer Kim. She writes about EyePoint: “We are drawing attention to EYPT as one of our top picks [for] 2H23. We believe that continued management execution and recent clinical and competitive developments deserve more attention ahead of key upcoming readouts: 1) Phase 2 DAVIO 2 data in wet age-related macular degeneration (wAMD) in December ’23, and 2) Phase 2 PAVIA data in non-proliferative diabetic retinopathy (NPDR) in 2Q24. We continue to believe the peak sales opportunity for EYP-1901 is undervalued, and believe the risk/reward is favorable on the way to the DAVIO 2 data.”
Kim puts her stance in quantifiable mode, rates EYPT stock as Overweight (ie Buy) and sets her price target at $31, implying a strong 240% upside over the next 12 months. (Click here to view Kim’s track record)
Overall, this stock’s strong upside has impressed the street; all 5 of the recent analyst reviews are positive, for a Strong Buy consensus rating. The trading price of $9.11 and the average price target of $27.80 together suggest a 205% one-year upside potential. (To see EYPT stock forecast)
Cogent Biosciences (COGT)
Next, we look at Cogent Biosciences, a precision medicine company focused on treating genetically determined diseases. These can include autoimmune and other rare diseases, and even some dangerous cancers. Typically, these conditions have large unmet medical needs. Cogent is working on solutions to improve patients’ quality of life by targeting the genetic mutations behind the disease states.
The company’s focus on the genetic causes of disease is key to its approach – Cogent strives to go beyond treating symptoms and bring about cures. To that end, the company’s drug pipeline includes bezuclastinib, a precision drug designed to specifically target exon 17 mutations when found in the KIT receptor tyrosine kinase. The KIT receptor KIT D816V can be locked in an ‘on’ state, causing systemic mastocytosis or AdvSM. This is a disease condition in which mast cells accumulate in the internal organs. Mutations in exon 17 are also involved in GIST, gastrointestinal stromal tumors. Bezuclastinib is a potent inhibitor of KIT activity and is highly selective in its activity. The drug candidate has shown great potential for the treatment of exon 17-related disorders in early stage studies.
Cogent is currently conducting several clinical trials with bezuclastinib, with a particular focus on the two most advanced trials. The first trial is the Phase 2 APEX trial for the treatment of AdvSM. Part 1 of the ongoing Phase 2 trial completed enrollment and Part 2 started enrollment in April with a goal of 65 patients. The company expects to release data from 30 patients in Part 1 of the APEX trial in the second half of 2023.
The second advanced clinical trial is the Phase 3 PEAK trial in the treatment of GIST. Data released in June showed a 55% disease control rate in heavily pretreated GIST patients, and showed that bezuclastinib in combination with sunitinib was well tolerated with an acceptable safety profile. The company is now actively enrolling patients in Part 2 of the PEAK trial, with further data expected to be released in 2H23.
Piper Sandler analyst Christopher Raymond is impressed with bezuclastinib, especially the APEX and PEAK studies. In support of designating this stock as a ‘Top Pick’, Raymond confidently states: “Our contention on this name is that bezuclastinib’s unique mutation selectivity and safety profile position it well in the spectrum of SM disease. With early AdvSM data favoring avapritinib, we are confident that updates later this year in both AdvSM and ISM will continue to support bezuclastinib’s best-in-class potential. In GIST, although the ASCO update was early, we believe the thesis is tu
rning out exactly as hoped, with indications of meaningful clinical progress as combination therapy with sunitinib in 2L GIST. We remain buyers of this name for some high-risk data events this later year.
Unsurprisingly, Raymond rates Cogent as overweight (ie buy), while his $22 price target for the stock implies 77% upside potential on the one-year horizon. (Click here to view Raymond’s track record)
Overall, there are 8 recent analyst reviews on this stock and all are positive, for a unanimous Strong Buy consensus. The shares are selling for $12.42 and the $23.14 average price target implies an 86% gain over the next 12 months. (To see COGT stock forecast)
To find great ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that brings together all of TipRanks’ stock insights.
disclaimer: The opinions expressed in this article are solely those of the named analysts. The content is for informational purposes only. It is very important to do your own analysis before making an investment.
