Credit Suisse Upgrades Gilead On Remdesivir Commercial Opportunity

The biotech sector is a surefire winner due to a two-pronged benefit from the coronavirus pandemic, according to an analyst at Credit Suisse. 

Biotechs To Outperform In Q2? The biotech sector is not only the likely source of the solution to the pandemicm but is also fairly immune to the associated headwinds, analyst Evan Seigerman said in a note.

The SPDR S&P Biotech XBI has soared 42.1% in the second quarter compared to the 26% advance for the S&P 500 Index, the analyst said. 

"We continue to like the broader set-up for our coverage heading into 2Q earnings, with strength expected across our franchise." 

Gilead's Remdesivir Opportunity: Gilead Sciences, Inc.'s GILD COVID-19 treatment candidate, which has received FDA Emergency Use Authorization, is commercially relevant and helps to change the near-term P&L trajectory, he said. 

Seigerman said he would like to see further pipeline development, especially with respect to Gilead building out its late-stage pipeline.

Regeneron, Vertex To See More Strength: Seigerman expects Regeneron Pharmaceuticals Inc REGN and Vertex Pharmaceuticals Incorporated VRTX to see strength.

Regeneron's Eylea likely recovered after the softness experienced in April, as physicians have reopened, the analyst said.

Credit Suisse's model  doesn't account for Regeneron's antibody cocktail, as the sell-side firm is awaiting clinical data and clarity on commercialization plans.

Vertex's commercial business is heavily insulated from any COVID-19-related headwinds, Seigerman said. He termed the company as one of his favorite names.

The analyst also expects updates on Vertex's non-cystic fibrosis pipeline later this year.

Caution On Biogen, Neurocrine: The analyst expects Biogen Inc BIIB to update guidance to reflect the Tecfidera generic launch. The company's Spinraza sales may have been hit by the pandemic, he said. 

Seigerman is bracing for below-consensus sales for Neurocrine Biosciences, Inc.'s NBIX Ingrezza. The Ingrezza set-up, according to the analyst, could be more affected than other commercial assets due to the pandemic.

See also: The Week Ahead In Biotech: Jazz Awaits FDA Nod For Sleep Disorder Drug, Earnings Trickle In, ACell IPO

Bullish On Amgen: Credit Suisse said it is bullish on Amgen, Inc. AMGN following the Enbrel IP win. The firm expects 10% year-over-year growth for the psoriasis drug Otezla.

Waiting On The Sidelines For Incyte: Seigerman is awaiting more clarity on the commercial plans for Incyte Corporation's INCY Tafa. This is despite the Jakafi business remaining insulated from the pandemic, the analyst said. 

The Biotech Ratings:

Seigerman upgraded shares of Gilead from Underperform to Neutral and increased the price target from $64 to $75.

The analyst maintained a Neutral rating on Regeneron and increased the price target from $700 to $716.

The analyst maintained an Outperform rating on Vertex and hiked the price target to $328.

The analyst maintained a Neutral rating and $270 price target for Biogen shares.

Seigerman maintained a Neutral rating on Neurocrine shares and increased the price target to $135.

The analyst maintained an Outperform rating on Amgen and moved the price target up from $252 to $290.

The analyst maintained a Neutral rating on Incyte shares and increased the price target to $100.

Related Link: BofA On 3 Coronavirus Vaccine Frontrunners, The Remdesivir Opportunity And Antibodies