Buy These Five Beaten-Down Biotech Stocks, Nomura Says – Stocks …

By Ben Levisohn

Yes, say the folks at Nomura, who recommend buying Celgene (CELG), Receptos
(RCPT), Gilead Sciences (GILD), Neurocrine Biosciences (NBIX), and Alexion Pharmaceuticals (ALXN), in that order. Analyst M. Ian Somaiya and team explain why:

October has historically been a weak month for biotech, with the Nasdaq Biotechnology Index underperforming the S&P 500 in 14 out the last 20 years. We believe the current biotech selloff is driven primarily by macro concerns rather than sector fundamentals. We would take advantage of the weakness by focusing on names with near-term catalysts to drive shares, as our quarterly IMS analysis point to no clear winners in the 3Q14 earnings season….

With the October selloff, we believe these catalyst-driven names have the best chance for upside. 1) Celgene –Crohn’s drug GED-0301 will have Phase II data at the UEGW conference (18-22 Oct), potentially supporting $2.2bn in WW peak sales. 2) Receptos – RPC1063 Phase II data (expected in 4Q14) in ulcerative colitis is a favorable risk/reward event, potentially adding $2.4bn in peak revenues. 3) Gilead Sciences – weak 3Q points to upside in 4Q as warehoused patients initiate treatment. Confirmation of rational pricing by AbbVie (ABBV) should help ease HCV price war concerns. 4) Neurocrine Biosciences – We expect positive elagolix Phase III results in endometriosis (4Q14), and Phase II uterine fibroid data in 1Q15. 5) Alexion Pharmaceuticals – no change in tax guidance and lack of meaningful currency exposure address two concerns heading into 3Q while continued strength of aHUS rollout could provide upside.

 Celgene has fallen 1.4% to $85.33 at $12:15 p.m., while Receptos dropped 2.1% to $60.74, Gilead Sciences has dipped 0.4% to $95.75, Neurocrine Biosciences has declined 1.2% to $16.39, and Alexion Pharmaceuticals is off 0.2% at $160.34.

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Buy These Five Beaten-Down Biotech Stocks, Nomura Says – Stocks …