2023-03-30 23:44:17 ET
Summary
- US-listed biotech stocks are trading even lower than before on fears of a banking system collapse, creating an opportunity to add to positions and take advantage of attractive levels.
- AnaptysBio, Inc. appears to be one of the US-listed biotech stocks worth investing in due to its low stock price combined with some interesting positive catalysts in its treatment pipeline.
- AnaptysBio is a biotechnology developer of innovative immunological therapeutics in the areas of inflammatory diseases, respiratory diseases and ovarian cancer.
- The drugs act as agonists of molecules that suppress immune responses or as antagonists of cellular mediators that favor the representation of inflammatory processes.
- AnaptysBio is also involved in the development of therapies for use in immuno-oncology. Some catalysts could already lead to a significant return in the short term.
US Biotech Stocks Are Trading Attractively After the Recent Bearish Sentiment in the US Stock Market
The wave of bearish sentiment amid fears of a banking crisis appears to be over as the SPDR S&P 500 Trust ETF (SPY), a benchmark for the US stock market, posted 5 days in positive territory, gaining 1.5%.
But the previous two weeks have left their mark on US-listed equities, with sharp falls across all sectors on the back of the collapse of Silicon Valley Bank and Signature Bank ( SBNY ) and financial woes at Credit Suisse Group AG (CS).
The risk of financial troubles spreading like wildfire was a concern that plagued investors across the board.
The recent shock has weighed heavily on the performance of the healthcare sector, which as of this writing represents the following unforgiving situation: it ranks last among US stock market sectors and is down 9.65% over the past month. The biotechnology subsector was the key architect of the defeat, bottoming out with a loss of 12.20%.
The following screenshot of the GuruFocus histograms (graphs) helps to get a clearer picture of the situation regarding the performance of the healthcare and biotechnology sectors over the past month.
Here's what they look like after bearish sentiment amid fears for the stability of Western banking systems.
On the other hand, the financial crisis may have helped purge the biotech sector of all those companies with unlikely growth plans if they had significant exposure to failing banks.
This makes it a bit easier to identify a stock with quality attributes in the broad range of biotech companies, and investors may then want to increase their investments by taking advantage of a cheaper market valuation following the recent turmoil.
AnaptysBio, Inc. Is One of the US-Listed Biotech Stocks Worth Investing In
AnaptysBio, Inc. ( ANAB ) could attract investors looking for opportunities in US-listed biotech stocks as this US-based immunotherapy developer's stock market valuation should benefit from a pipeline making significant progress.
In addition, the allocation of funds to AnaptysBio now means that ownership can be increased by exploiting ANAB stock's current low price relative to its historical performance and relative to the growth potential in the pipeline of therapies in development.
To the benefit of investors, the stock price could have a positive impact if the market welcomes further advances in the development of AnaptysBio's therapies.
The pipeline appears to contain positive catalysts that could potentially lead the stock to trade significantly above current levels.
About AnaptysBio, Inc. and Its Pipeline of Therapies in Development
Headquartered in San Diego, California, AnaptysBio is a clinical-stage biotechnology developer of innovative immunological therapeutics.
The pipeline of therapies in development consists of the following efforts on Rosnilimab, ANB032, ANB033, Imsidolimab, Etokimab, and financial partnership with GSK plc ( GSK ):
About Rosnilimab
Planned phase 2b study evaluating Rosnilimab , a PD-1 agonist, as a potential treatment for patients with moderate to severe rheumatoid arthritis.
PD-1 (programmed cell death-1) is a molecule that has the function of suppressing immune responses and is expressed on lymphocytes that are activated.
Lymphocytes are cells in the blood and in various lymphatic organs (lymph nodes, spleen, thymus gland, etc.) that determine the body's defense and immune responses.
Therefore, as a PD-1 agonist, rosnilimab induces immunosuppression as it stimulates PD-1 function.
Rosnilimab has emerged as a potential treatment for rheumatoid arthritis and other inflammatory diseases because these diseases are caused by overproduced immune responses.
The study involves hundreds of patients worldwide and consists of evaluating 6 months of rosnilimab treatment compared to the placebo group. Preliminary topline data based on endpoints measured with ACR20/50/70 and DAS28 will be available around mid-2025.
The American College of Rheumatology [ACR] is a response criterion adopted as a measure of the effectiveness of a treatment for rheumatoid arthritis. The DAS28 measures rheumatoid arthritis activity by examining 28 joints during patient assessment.
About ANB032
Planned phase 2b trial to evaluate ANB032 , a BTLA agonist, as a potential treatment for patients with moderate to severe atopic dermatitis which is an inflammatory disease of the skin.
BTLA (B and T lymphocyte attenuator) is broadly like PD-1 in both function and architecture. BTLA is present in most lymphocytes and its function is to induce immunosuppression as it inhibits B and T cell activation and proliferation.
Therefore, as a BTLA agonist, ANB032 induces immunosuppression as it stimulates BTLA function.
ANB032 has emerged as a potential treatment for atopic dermatitis because, as this article of 'frontiers in Immunology' says , “recently, a large number of studies have found that BTLA participates in numerous physiopathological processes”, including inflammatory diseases.
The study will begin sometime in Q2 2023 and will evaluate ANB032 in patients with moderate to severe atopic dermatitis. It will enroll 160 patients worldwide and will include 12 weeks of treatment with ANB032. The results are being evaluated in comparison to the placebo group and the main interim data will be based on some endpoints measured with EASI75 and IGA 0/1. The results will be available before the end of 2024.
EASI (The Eczema Area and Severity Index) and vIGA (The validated Investigator Global Assessment) are established indices in studies evaluating the treatment of patients with atopic dermatitis.
About ANB033
Investigational New Drug [IND] filing for ANB033 expected in H1 2024. ANB033 is an anti-CD122 antagonist antibody being studied as a potential treatment for patients with autoimmune and inflammatory diseases.
CD122 is a protein involved in immune responses mediated by T cells in humans. More specifically, CD122 is involved in T cell activation through 2 pathways of the interleukins IL-2 and IL-15, which are cellular mediators that, while having different functions in how they activate and induce certain immune responses, like all interleukins, IL-2 and IL-15 promote differentiation and proliferation of certain lymphocyte populations.
It appears that these interleukins IL-2 and IL-15 aid in the formation of autoimmune memory at the sites where the disease exhibits its signs and symptoms, as these manifestations return upon discontinuation of conventional treatments.
Instead, the aim of an innovative therapy based on the anti-CD122 antagonist antibody, which blocks the signaling of these interleukins, is to delay the recurrence of the disease signs and symptoms as much as possible and to offer the patient more lasting relief.
About Imsidolimab and Etokimab
AnaptysBio has also developed two other cytokine antagonists, but these are available for out-licensing:
Imsidolimab , an anti-IL-36R antagonist being investigated in a Phase 3 study as a potential treatment for patients with generalized pustular psoriasis.
Topline data from the study should be available sometime in the last quarter of 2023, but the company wants to out-license Imsidolimab ahead of potential Food and Drug Administration approval.
Etokimab , an anti-IL-33 antagonist being studied as a potential treatment for patients with respiratory disease and is ready for Phase 2/3, trying to provide further evidence of treatment efficacy and safety.
About the Financial Partnership With GSK plc
AnaptysBio has a financial partnership with GSK plc and has licensed several therapeutic antibodies to GSK for use in immuno-oncology. These are JEMPERLI and cobolimab.
- JEMPERLI has the potential to receive regulatory approval as a first-in-class treatment for cervical cancer. JEMPERLI plus chemotherapy appears to be effective in improving progression-free survival [PFS] in patients.
The application for approval from the supervisory authority is expected in the current semester. The upcoming publication of the overall results in a medical journal and their presentation at a scientific congress should give the stock a boost.
- JEMPERLI is also being investigated in the pivotal Phase 3 study in patients with first-line ovarian cancer, and an interim analysis of the study results is expected to be available next semester.
- JEMPERLI plus cobolimab plus chemotherapy is being evaluated in a pivotal phase 3 study. The combination therapy will be given to patients with advanced non-small cell lung cancer and the results will be compared to JEMPERLI plus chemotherapy.
Financial Situation of AnaptysBio
Collaboration revenue came in at $10.3 million in 2022, down 84% year-on-year which was due to “four development milestones achieved for JEMPERLI for the twelve months ended December 31, 2021, and one development milestone achieved during the twelve months ended December 31, 2022”, says the company in its “Fourth Quarter and Full Year 2022 Financial Results” report.
Research and development expenses decreased 10% year over year to $88.8 million in 2022 primarily due to a decline in both clinical and manufacturing costs.
General and administrative expenses increased 70.2% year over year to $36.6 million, primarily due to higher stock compensation costs.
Non-cash interest expense in 2022 was $21.1 million which accrued on a specific liability incurred in connection with the sale of future royalties.
The 14.1x year-over-year increase was due to “a full year of expense during 2022 as compared to one month of expense during 2021”, the company explains .
Thus, AnaptysBio suffered a net loss of $128.7 million (or a net loss of $4.57 per share) for the twelve months of calendar year 2022, which got worse compared to the net loss of $57.8 million for the twelve months of calendar year 2021 (or a net loss of $2.11 per share).
The balance sheet as of December 31, 2022, reported cash and short-term investments of $584.2 million while total debt was $19.45 million.
The balance sheet appears to be sufficiently liquid to continue the projects for the next few years before a capital increase might become necessary.
The Stock Valuation
Based on potential upside catalysts in the pipeline as well as some technical comparisons, ANAB stock doesn't look expensive at all.
As of this writing, shares are trading at $21.10 per unit, giving a market cap of $620.35 million and a 52-week range of $18.20 to $32.44.
Shares are trading significantly below the 200-day simple moving average of $25.12, the 100-day simple moving average of $26.05 and the 50-day simple moving average of $24.16. The current share price level is also below the mean of the 52-week range.
Over the next two years, the pipeline is expected to deliver several advances that could potentially stimulate the stock price to reach higher levels.
Rosnilimab in moderate-to-severe rheumatoid arthritis by mid-2025 and ANB032 in moderate-to-severe atopic dermatitis by late 2024, so shareholders will have to wait a bit longer for the results of the trials.
They also need to watch out for the Investigational New Drug [IND] filing for ANB033, which is expected in the first half of 2024.
Further results from JEMPERLI surveys in patients with first-line ovarian cancer should be disclosed in the second half of 2023, while topline data from Imsidolimab, which will be evaluated in pustular psoriasis, should be published before the end of 2023.
In the near term, the start of phase 2/3 trials for Etokimab in respiratory disease could potentially boost the stock price, while approval of JEMPERLI as a first-in-class treatment for cervical cancer could come sooner than widely expected.
Turning to macroeconomic events, a likely end to the Federal Reserve's monetary tightening this half year, coupled with an end to fears of a broader financial crisis following the collapse of the two US regional banks, should boost stock market sentiment and also help AnaptysBio's stock trade higher.
Of course, when it comes to the stock markets, which are notoriously volatile in nature, it cannot be ruled out that AnaptysBio stock will not perform as this analysis expects and as most Wall Street analysts also do expect.
Wall Street analysts believe AnaptysBio shares will be trading higher from current levels as they recommend a Hold rating with the stock price up more than 45% in a year.
Analyst recommendations aside, given the 14-day Relative Strength Indicator [14-day RSI] of 35.78, the comparison between the share price and some previously observed technical indicators, and the presence of potential catalysts, the risk of a significant downtrend should not be high.
The 14-day RSI of 35.78 in the chart above suggests that there is not much room for additional downside from current levels as shares are not far from oversold levels after the recent bearish sentiment.
Conclusion
The US-listed biotech stock of AnaptysBio, Inc. is trading attractively following the recent bearish sentiment in the US stock market.
But it is not just the lower price that catches the eye.
The presence of positive catalysts in the pipeline of treatments in development could potentially renew optimistic expectations for the stock. This is a factor that, along with the low price, makes this stock very interesting and perhaps worth considering buying.
For further details see:
AnaptysBio: Upside Could Be Lying Ahead Very Nicely