Reviewing its coverage on biotechs with negative enterprise values, Morgan Stanley says that the number of companies on the list with potential catalysts in 2022 has increased to 27 in May from 20 previously.
Adding market capitalization to total debt and deducting cash and cash equivalents, the enterprise value indicates the actual value of the company’s business operations.
Belgian biotech Galapagos NV (NASDAQ:GLPG) (OTC:GLPGF) tops the list with the largest negative enterprise value, followed by its U.S. rivals, Kodiak Sciences (KOD), Adagio Therapeutics (ADGI), and Graphite Bio (GRPH).
Bolt Biotherapeutics (BOLT), AVROBIO (AVRO), Alector (ALEC), and Cyteir Therapeutics (CYT) are also among the notable components.
The list based on the most up-to-date cash and debt balances also includes companies with low negative enterprise values despite their potential catalysts this year, namely 2Seventy Bio (TSVT), Bluebird Bio (BLUE), and Foghorn Therapeutics (FHTX).
Other constituents in the list: Atea Pharmaceuticals (AVIR), Xilio Therapeutics (XLO), Allakos Therapeutics (ALLK), Vigil Neuroscience (VIGL), Sigilon Therapeutics (SGTX), Tscan Therapeutics (TCRX), Cabaletta Bio (CABA), Rhythm Pharmaceuticals (RYTM), Freeline Therapeutics (FRLN), Prelude Therapeutics (PRLD), Hookipa Pharma (HOOK), Centessa Pharmaceuticals (CNTA), IO Biotech (IOBT), Adagene (ADAG), Immuneering (IMRX) and Rubius Therapeutics (RUBY).
Alector (ALEC), Adagene (ADAG), Graphite Bio (GRPH) and Immuneering (IMRX) are among new entrants to the list.
“Multiple names offer catalysts with potential to have a significant stock impact over the next twelve months,” the analysts wrote. Morgan Stanley has Overweight ratings on 12 of the companies, including Galapagos (GLPG), Alector (ALEC), 2Seventy Bio (TSVT), Foghorn Therapeutics (FHTX), and Centessa Pharmaceuticals (CNTA).
The remarks from analysts led by Matthew Harrison come at a time when the SPDR S&P Biotech ETF (XBI) has dropped over 59% from its peak in February 2021 to trade at levels seen during the start of the pandemic in March 2020, as shown in this graph.
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