What happened

Shares of Sesen Bio (SESN -4.68%) were soaring 10.9% higher as of 11:26 a.m. after rising as much as 19.4% earlier in the day. The big jump came after Canaccord analyst John Newman called Sesen "a must-own small-cap stock for 2021."

So what

Should investors buy this biotech stock because one analyst is bullish about it? Nope. However, it's always a good idea to understand why analysts like (or dislike) a given stock.

Man wearing coat and tie giving a thumbs up in front of a laptop

Image source: Getty Images.

In this case, Canaccord's Newman foresees two positive catalysts on the way for Sesen. He thinks that the U.S. Food and Drug Administration (FDA) will grant priority review for the company's Vicineum in treating nonmuscle invasive bladder cancer (NMIBC). Winning priority review would mean that the candidate could obtain approval within six months instead of the normal 10 months after the FDA accepts Sesen's application.

If Sesen does receive priority review for Vicineum, Newman anticipates that the biotech will win FDA approval for the drug in the third quarter of this year. He thinks the stock could rise to $5 per share, more than triple Sesen's closing price on Friday.

Is Newman's optimism warranted? Maybe. Sesen reported positive late-stage data for Vicineum in the NMIBC indication. There's a significant unmet need for high-risk NMIBC patients. Vicineum will be an important new treatment alternative if it wins FDA approval.

Now what

Sesen submitted its biologics license application (BLA) for Viceneum on Dec. 21, 2020. It shouldn't be long before the FDA makes its determination on priority review for the drug.