Could These Biotechs Be the Top Performers in 2023?

Each January, the MoneyShow Top Picks report surveys the financial newsletter industry asking advisors to select their favorite stocks for the coming year. Last year's number one performer, from among over 100 stock picks, was The Medical Technology Stock Letter. Here, editors John McCamant and Jay Silverman choose their favorite biotech plays for 2023. Madrigal Madrigal Pharmaceuticals -- which was our top pick for 2022 and again is one of our favorites for 2023 -- pitched a perfect game with their pristine MAESTRO-NASH Phase III trial for resmetirom hitting both primary, FDA agreed upon endpoints. The stock jumped sharply on these recent results, boosting its year-to-date gain to 200%. Despite these gains, I still consider the stock a conservative Top Pick for 2023. The FDA had agreed that even hitting one primary endpoint would lead to approval. They hit both. This is first ever positive Phase III trial for Non-Alcoholic SteatoHepatitis -- a liver disease known as NASH -- and is a watershed event for both NASH patients and MDGL. The company also had great Phase III MAESTRO-NAFLD data for resmetirom in early 2022. With two positive Phase III trials in the bank, MAESTRO-NASH & MAESTRO-NAFLD, resmetirom is poised to become a multi-billion dollar drug as a once-a-day pill to treat both NAFLD and all stages of NASH. In our view, the drug is a true best-in-class compound with both outstanding safety and efficacy all in an easy to take daily pill. The company is expected to file for FDA approval in early H2:23. We expect a premium buyout for the company given that resmetirom is both wholly owned and completely de-risked. There are two additional reasons that MDGL will be acquired: the Baker Bros who are major stock owners and just saw another of their stocks, Horizon acquired in a bidding war by Amgen . With this pristine data from two Phase III trials, MAESTRO-NASH & MAESTRO-NAFLD, we continue to recommend buying MDGL -- with its with best-in-class drug -- even at this new level. MDGL is now a buy under $300 (our previous buy level was $200) with a target price of $400 (our previous target was $275). Alaunos Alaunos Therapeutics -- a top speculative pick for 2023 -- is a true next-generation CAR-T cell therapy company focused on treating solid tumors. The technology incorporates T-cell receptor (TCR) therapies based on its proprietary, non-viral Sleeping Beauty gene transfer technology and its TCR library targeting shared tumor-specific hotspot mutations in key oncogenic genes including KRAS, TP53 and EGFR which are prevalent in solid tumors. Sleeping Beauty is a proprietary non-viral delivery system that allows for repeat dosing and improved manufacturing efficiencies compared to using viruses for cell therapy. The company has a clinical and strategic collaboration with the National Cancer Institute and one of the world's leading immune oncologist, Dr. Steven Rosenberg. To date, TCRT is the only public company to have successfully dosed human solid tumor patients with CAR-T therapy demonstrating sustained POC with Patient #1 who had a partial response and at 24 weeks approximately 30% of all T-cells were TCR-T cells. CAR-T therapies for cancer have the potential to offer a potential cure for patients with success to date only being achieved in much easier to target liquid/blood tumors. CAR-T therapy for solid tumors is a huge unmet medical need, and in our view, TCRT is a leader in the cutting-edge space. The company continues to make progress on both the clinical and manufacturing fronts, which should result in more patients being treated faster in 2023. In our view, proof-of-concept (POC) has been established with Patient #1 who had a partial response and at 24 weeks approximately 30% of all T-cells were TCR-T cells. We expect TCRT to increase patient enrollment in 2023 as they continue to improve the manufacturing process and widen their net to screen more eligible patients. In our view, TCRT is the leader in developing CAR-T treatments for solid tumors and POC has been established with Patient #1 who had a partial response and at 24 weeks approximately 30% of all T-cells were TCR-T cells. The company is poised to become the leader in delivering cutting edge CAR-T therapy for solid tumors in 2023. TCRT is a BUY under 5 with a TARGET PRICE of 12. Esperion Esperion Therapeutics is a de-risked biotech company in the cardiovascular sector with its lead drug, bempedoic acid (BA) -- branded NEXLETOL -- already FDA approved to reduce LDL cholesterol. It is a safe and effective alternative to statins and reduces LDL in patients on its own and in those that are statin-intolerant, an enormous market that comprise about 10% of all statin-eligible patients (roughly 20 million people worldwide). In December, ESPR delivered positive, statistically significant top-line clinical data (at least a 15% improvement in MACE-4) from it's flagship Phase IV study -- Cholesterol Lowering via Bempedoic acid, an ACL-Inhibiting Regimen -- the CLEAR Outcomes trial. The company announced that the trial met its primary endpoint, demonstrating statistically significant risk reduction in MACE-4 (Major Averse Cardiovascular Events) in patients treated with 180 mg/day NEXLETOL compared to placebo. The company will file for an expanded FDA shortly that will lead to a greatly expanded label (plus widespread insurance coverage) to include these great lifesaving results. Importantly, the CLEAR comprehensive trial data will be presented at the American College of Cardiology (ACC) Annual Scientific Sessions March 4, 2023. CLEAR Cardiovascular Outcomes Trial CLEAR Outcomes is a Phase 3, event-driven, randomized, multi-center, double-blind, placebo-controlled trial designed to evaluate whether treatment with bempedoic acid (BA) reduces the risk of cardiovascular events (death, heart attack or stroke) in patients with or who are at high risk for cardiovascular disease with documented statin intolerance and elevated LDL-cholesterol levels. The study included over 14,000 patients at over 1,200 sites in 32 countries. The CLEAT CVOT trial positive results are a watershed de-risking event for Esperion. The American College of Cardiology conference in March will be a very important meeting as the company now has a very attractive de-risked drug/drug combo that provides a significant LDL lowering/death benefit that is a wholly owned asset that is un-partnered in the U.S. Having a CVOT label will lead to significantly higher sales potentials and potential partners can either offer attractive royalties or just buy the company out right in what we believe could end up being a near-term bidding war. ESPR is a buy under $10 with a target price of $25. Precigen Precigen is a novel biotech company with a broad R&D pipeline focused on immuno-oncolgoy, autoimmune and infectious diseases. The company's ULTRA-CAR-T technology has the advantages of non-viral multi-gene delivery, overnight manufacturing process, higher antigen-specific expansion and in vivo persistence, with an integrated kill switch. The lead compounds under development are all in clinical trials with positive data recently and/or about to be presented in 2023 Recent data was presented at ASH (December) for PRGN-3006 UltraCAR-T in acute myeloid leukemia (AML). In late-stage, terminal patients, there was a 27% objective response rate with patients receiving one dose in an ongoing Phase 1b study. Dose expansion is underway at the Mayo Clinic in Rochester, Minnesota, with multi-center expansion and technology transfer and site activation activities underway at multiple new centers. PRGN-2012 -- Enrollment is complete in Phase 1 study of PRGN-2012 AdenoVerse Immunotherapy in recurrent respiratory papillomatosis (RRP); the data will be presented in January 2023 and it is expected to show at least a 40% response rate in these patients. Recurrent respiratory papillomatosis (RRP) is a disease characterized by recurrent wart-like growths on the surface of the vocal cords or tissue around the vocal cords. A Phase 2 study has been initiated and is rapidly progressing. Most important, based on the positing upcoming results and the fact that there is no other treatment for these patients other than repeated surgeries (tens or hundreds per patient), we believe the company will be able to gain an accelerated FDA path for PRGN-2012. PRGN-3005 -- Enrollment is complete in the Phase I trial of PRGN-3005 UltraCAR-T in advanced ovarian cancer; enrollment complete at Dose Level 3 with lymphodepletion in the IV arm; early data from the initial very late-stage patients, objective responses have been observed. PRGN-3005 UltraCAR-T is manufactured using a decentralized, overnight manufacturing process and administered patients the next day. PRGN-2009 -- Enrollment complete in combination arm of Phase 1 study of PRGN-2009 AdenoVerse Immunotherapy in human papillomavirus (HPV)- associated cancers. PRGN-2009 leverages Precigen's UltraVector® and AdenoVerse™ platforms to optimize HPV antigen design and delivery using a gorilla adenovector with a large payload capacity and the ability for repeat administration. We believe encouraging data on any of the four programs above will lead to at least one large corporate partnership this year. Since it owns its technology outright, we also believe Precigen is a very attractive takeover candidate, in particular at the current, depressed market valuation. 2023 will be a transformative year for the company with further clinical and corporate progress in the broad R&D pipeline. Precigen is a buy under $8 with a target price of $18. (Please note that due to factors including low market capitalization and/or insufficient public float, we consider some stocks mentioned in this story to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.)

Could These Biotechs Be the Top Performers in 2023?

Industry experts share their favorite biotech plays for this year.

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