Biohaven is coming "out of stealth mode," an analyst said Thursday as BHVN stock climbed for a fourth consecutive day.
The company held a meeting outlining its research and development strategy on Wednesday, its first since selling its migraine assets — including blockbuster Nurtec — to Pfizer last year. Previously, investors focused solely on Biohaven's experimental epilepsy treatment. Now, there's a lot more to like, Piper Sandler analyst Christopher Raymond said in a note to clients.
He says Biohaven is coming "out of stealth mode" after selling its leading migraine drug and spinning off into a new company. The company was previously quiet about its programs, but now is discussing them more openly.
"This name — overnight — has transformed its catalyst flow, with now a handful of bona fide new drivers" aside from the epilepsy treatment, he said.
Among the biggest surprises, Biohaven is planning to ask the Food and Drug Administration to approve its drug, troriluzole, in patients with a movement disorder called spinocerebellar ataxia type 3. The drug didn't have statistically significant results in a final-phase study, but the Food and Drug Administration is seemingly more flexible these days, SVB Securities analyst Marc Goodman said in his note to clients.
On the stock market today, BHVN stock vaulted 18.4% higher and closed at 20.73. On Wednesday, the top-notch biotech stock gained 7.6%.
BHVN Stock: A Surprising Twist
The troriluzole news was the most surprising, said Goodman, the SVB analyst.
Spinocerebellar ataxia type 3, or SCA3, is a movement disorder in which patients experience problems with coordination and balance. In the Phase 3 study, placebo recipients didn't worsen as expected. So, the treatment didn't statistically outperform the placebo, Goodman said.
However, Biohaven ran a post-hoc analysis and found a statistically significant impact. Further, patients who received troriluzole were 53% less likely to have falls. That has helped buoy BHVN stock.
Goodman notes the FDA has been more open-minded about approving drugs with less-than-perfect test results in areas of high unmet need. He points to the approval process for neurodegenerative drugs from Biogen, Amylyx Pharmaceuticals, Reata Pharmaceuticals and Sarepta Therapeutics as evidence.
He has an outperform rating on BVHN stock, and raised his price target to 28 from 24.
Other Pipeline Updates Key
Piper Sandler's Raymond also highlighted a wide array of pipeline updates.
Biohaven is working on protein degraders for autoimmune conditions and a kidney disease. Biohaven plans to ask the FDA for permission to begin testing these drugs in people in late 2023 and early 2024, respectively, Raymond said.
The leading epilepsy drug is also showing promise in bipolar disorder and pain. Further, Biohaven says one of its drugs could be used in obesity treatment. It plans to begin a proof-of-concept study before the end of the year.
Finally, Biohaven gave an update on its newly acquired experimental treatment for Alzheimer's disease and Parkinson's disease. The company plans to move the drug into Phase 2 testing next year and could see how it works in multiple sclerosis "down the line," Raymond said.
He has an overweight rating on BHVN stock and a price target of 21.
Highly Rated BHVN Stock Runs
Biohaven is a leader among biotech stocks with a nearly perfect Relative Strength Rating of 98. This means BHVN stock ranks in the top 2% of all stocks — regardless of industry group — in terms of 12-month performance, according to IBD Digital.
Shares have surged for four consecutive days and are well above their 50-day and 200-day moving averages, MarketSmith.com shows. On the weekly chart, shares are forming a cup base with a buy point at 20.67.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
