Shares of clinical-stage biotech AnaptysBio (ANAB 6.08%) were rising sharply on Tuesday following bullish commentary from a Wall Street analyst. The company's stock was up by 5.6% as of 12:58 p.m. EDT, after rising by as much as 12% earlier in the day.
Truist analyst Joon Lee upgraded AnaptysBio stock to buy from hold. Lee also gave the company's shares a new price target of $34, up from $27. As of this writing, shares are trading for $20.97. Clearly, Lee sees significant upside for the biotech. But what is the analyst's reasoning behind this vote of confidence?
First, it's important to remember that AnaptysBio's stock recently dropped by more than 30% after one of its leading pipeline candidates, imsidolimab, failed to meet its primary endpoint in a clinical trial for the treatment of moderate to severe palmoplantar pustulosis.
After this sell-off, Lee believes that AnaptysBio is a buy at current levels, especially given that, in his view, the company has several catalysts coming in the next 12 to 18 months that could push its stock price higher. The analyst thinks that imsidolimab may deliver positive results in a phase 2 clinical trial for EGFRi-mediated skin toxicity. Topline data from this study is expected by the end of 2021.
Lastly, with AnaptysBio gearing up to start a phase 3 clinical trial for imsidolimab as a treatment for generalized pustular psoriasis, Lee sees the market in this indication as being potentially much larger than even he currently models.
Analyst recommendations are always worth considering, but in my view, AnaptysBio seems like a risky bet at the moment. Sure, the company's upside, if its current programs pan out, seems enticing. But on the flip side, negative results from clinical trials or regulatory roadblocks would send the healthcare stock crashing.
This is especially the case since AnaptysBio doesn't have any products on the market at the moment. In short, I think it is worth keeping an eye on this company, but only investors comfortable with above-average risk and volatility should consider initiating a position.