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On Thursday, Stifel provided an outlook for the biotech industry shares in 2025, focusing on the importance of scientific advancements and data.
The firm highlighted three companies, Rhythm Pharmaceuticals (NASDAQ:RYTM), Soleno Therapeutics (NASDAQ:SLNO), and Verve Therapeutics (NASDAQ:VERV), as its top picks for the year, citing significant upcoming catalysts that could drive their stock values higher. According to InvestingPro data, SLNO has shown strong momentum with a 17.7% return over the past year.
According to the firm, the biotech sector is facing questions regarding the potential impact of the upcoming change in administration. However, it is emphasized that it is too early to draw conclusions about the effects on the industry.
Stifel is looking for a "business as usual" mindset in the new year, pending a clearer direction from the FDA over the next four years. The firm's Outlook 2025 report discusses company-specific catalysts and ongoing debates for the 17 companies under its coverage.
Stifel notes that the top picks for 2025 have important events in the first half of the year that could significantly boost their shares if outcomes are favorable. For Rhythm Pharmaceuticals and Verve Therapeutics, clinical data releases are expected, while Soleno Therapeutics is awaiting a regulatory decision. These events could de-risk and potentially open up new opportunities in rare disease markets that currently lack effective standard care.
The report specifically mentions RYTM's focus on hypothalamic obesity and SLNO's engagement with Prader-Willi syndrome, noting that positive developments could attract merger and acquisition interest or strategic partnerships.
Furthermore, Verve Therapeutics' upcoming Phase 1b Heart-2 data could set its PCSK9 editor apart, especially in terms of safety. InvestingPro analysis reveals SLNO maintains a strong financial position with more cash than debt and liquid assets exceeding short-term obligations. Analysts maintain a strong buy consensus with price targets ranging from $67 to $93.
An approval for Soleno's product, with a PDUFA date set for March 27, 2025, could mark the beginning of a period of revenue growth and profitability, making it an attractive target for strategic investors.
InvestingPro data supports this outlook, with analysts forecasting positive earnings for the upcoming year. The company's current market capitalization stands at $1.9 billion, with a solid financial health score indicating fair overall condition.
As for Verve, the firm anticipates that positive early-stage data in the first half of 2025 will influence Eli Lilly (NYSE:LLY)'s decision to opt-in during the second half of the year, potentially alleviating investor skepticism regarding the commercial opportunity of PCSK9 editors.
In other recent news, Soleno Therapeutics has been the subject of several significant developments. The U.S. Food and Drug Administration (FDA) extended its review period for Soleno's New Drug Application (NDA) for DCCR, a treatment for Prader-Willi syndrome, with a new target action date set for March 27, 2025.
Despite this delay, analysts from Baird, H.C. Wainwright, Oppenheimer, and Laidlaw remain optimistic about DCCR's eventual approval and project Soleno to begin generating revenue by mid-2025.
The company also entered into an agreement with Jefferies LLC to potentially sell up to $150 million of its common stock and awarded performance-based restricted stock units to its employees. Moreover, Soleno's Board of Directors saw changes with the appointment of Matthew Pauls as the new Lead Independent (LON:IOG) Director and the addition of Dawn Carter Bir.
Baird and H.C. Wainwright maintained their positive outlooks on Soleno, with price targets of $72 and $70 respectively, while Oppenheimer raised its price target based on updated sales projections, and Laidlaw set targets at $75. These developments mark a significant period for Soleno Therapeutics.
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