'Overall, I think sector drivers are really flashing green lights': Chico on the biotech sector

Added: 2026-05-31

[00:00:00]Well, it's time for hot picks, and today we're looking at three picks in the biotech sector. Let's get more from Laura Chico, managing director and senior biotechnology analyst at Wedbush.

[00:00:10]Laura, thanks for being here.

[00:00:12]>> Thank you very much for having me.

[00:00:13]>> You know, before we get into the picks themselves, Laura, let's get into you know, just the sector itself. You know, you know, I was reading about keeping track and and and keeping at least pace with the S&P 500, but give me your sense of of where biotech stocks in particular to where where investors are going in in the sense of things as they stand right now.

[00:00:29]>> Yeah, and I think one thing that might surprise viewers, you mentioned the XBI biotech ETF is is slightly ahead of the S&P 500.

[00:00:37]I think it's particularly notable because the biotech has been out of favor with generalist investors for a number of years, but you know, overall, I think sector drivers are really flashing green lights. We're seeing a convergence of attractive valuations, M&A is back for biotech, and a lot of these companies are now embedding de-risking strategies in their development campaigns, and that helps give investors more confidence in catalysts that are coming up. So, I think all in, a really positive setup for biotech.

[00:01:06]>> Yeah, certainly interesting too as as you get back into favor, I think at least in the last little bit. Let's get into some picks, shall we?

[00:01:11]First one First one for you, BioCryst Pharmaceuticals. Take us through this one.

[00:01:16]>> Yeah, so BioCryst Pharmaceuticals, ticker BCRX, we've got a $21 target on this one, and I think this is an orphan disease company focused on hereditary angioedema, HAE for short. So, about 10,000 people in the US, but they have a product, Orladeyo, already on the market, and this is on about a $600 million plus run rate right now. Stock is trading at about three times consensus revenue, but the mid-cap peer group is trading closer to six times.

[00:01:43]So, what Why is there a disconnect? Why a discount here? Investors are concerned about the longevity of Orladeyo's revenue tail, and how long is that going to persist with other competitors coming into the HAE space. I think this is misplaced and it's totally overlooking a recent acquisition that BioCryst did of Astria Therapeutics. That brings in a late-stage program called Navena Bart, another HAE preventive agent, but this one is administered only two to four times per year. So, we're going to get phase three data on that early '27. If that looks positive, that's going to dramatically change how we treat HAE, and that's also going to solidify BioCryst positioning in the HAE space already. So, I think you've also got another pipeline readout coming up year-end '26 for a different program. I love the mix of commercial and clinical catalysts here, and again, our target is $21.

[00:02:35]>> Yeah, I was going to ask about the clinical part of that, too.

[00:02:37]In talking about it in particular, so next year, but it's 2027 in in particular that you're looking at the part of this, and and really where you're going to see some of those results?

[00:02:45]>> Yeah, for Navena Bart, we will see that in the early part of '27. That's going to be that first efficacy data for Navena Bart. And then that late '26 readout is for another orphan disease called Netherton syndrome, and I would argue at this point there's zero in the valuation for that program right now.

[00:03:02]>> Okay, interesting, too. Um how about Viridian Therapeutics? Another one, your second hot pick for for the day today.

[00:03:07]Take us through that.

[00:03:09]>> Yeah, so ticker VRDN, and this one here, we've we've got a $32 target. This is a pre-commercial name, but that could change pretty soon. They have a PDUFA date for Velaglucerase their program in thyroid eye disease, and that's on June 30th. So, um they've got breakthrough therapy designation, priority review, commercial team is hired. So, this is essentially a launch-ready story. And I think what's really exciting about this one is um the the disconnect here between consensus revenue expectations and historical precedent. So, Tepezza is already on the market for thyroid eye disease, same mechanism as Viridian, and Tepezza generated over $800 million in its first four quarters of launch.

[00:03:51]Consensus right now is factoring in about $300 million for Viridian over the first eight quarters of launch. So, love the setup here. Vella grodig same target, same disease, both are IV administered, but the Viridian program has fewer infusions and shorter infusions. So, a better mouse trap kind of entering the market here for Viridian. And then, you know, the stock has come under pressure more recently after sub sub cutaneous data came out for a leg of art their second program, but I think the second reveal to data read out really more supportive and it doesn't change anything about the Vella grodig story, which is the more immediate catalyst. So, again, our our target here is $32.

[00:04:30]>> Okay. Uh maybe a longer horizon one two and we talk about gene therapy uh in in lots of different parts of the medical field in particular, but Solid Biosciences uh ticker SLDB. Take us through that one.

[00:04:43]>> Yeah, and so this is definitely a clinical stage story, but I think, you know, what's really exciting here is they are working on a next gen technology for Duchenne muscular dystrophy. And this is really a devastating condition that affects young boys. Currently, I I would argue somewhat limited treatment options available. So, what Solid is doing differently versus the first generation it it it's their capsid technology. So, that's the the vehicle that's delivering the gene therapy. And I I think Solid's approach is a really more muscle targeted system. So, that's de-emphasizing the liver, emphasizing more muscle tissue delivery, which is exactly where you want the drug to go.

[00:05:23]Um they've also shown some preliminary data that looks really encouraging in terms of biomarkers and safety has been uneventful, which is exactly what you'd want to see in this type type of story.

[00:05:33]Now, they do have a phase three study already up and running and the key question here is would they be able to file for accelerated approval? And now, bears are going to tell you that gene therapy can't really win with FDA right now, but I think Solid is taking you know, kind of a belt and suspenders approach and they've already started to solicit positive feedback from FDA on different aspects of their program, which is a great strategy, very methodical. They are going to go back soon have another FDA meeting to really refine what FDA needs to see in terms of endpoints. And then beyond this, we have another program with Solid already advancing in the clinic. So, I think over the next 12 months, you're going to get a very more clear picture on the regulatory requirements for O3 in Duchenne, but you're also going to get validation of some clinical data for their second program. So, our target here is $16 and I think for investors with a longer time horizon, this is a great idea.

[00:06:30]>> Yeah, it's already up 75% since you called it out back in November. So, it could be a good way certainly to get in.

[00:06:36]Laura Chico, managing director, senior biotechnology analyst at Wedbush. Laura, thanks for your time today. Appreciate this.

[00:06:42]>> Thanks, Matt.