Acumen, BridgeBio, Arcus among BTIG’s top healthcare picks for 2H 2023 (BBIO)

Acumen Pharmaceuticals (NASDAQ:ABOS), Establishment Labs (NASDAQ:ESTA), Arcus Biosciences (NYSE:RCUS) and BridgeBio Pharma (NASDAQ:BBIO) are four of BTIG’s top picks for small and mid-cap healthcare stocks going into the latter half of 2023, replacing names such as Aldeyra Therapeutics (ALDX), Esperion Therapeutics (ESPR) and VaxCyte (PCVX).

Also making BTIG’s pick list were Evolent Health (EVH), Sharecare (SHCR), Keros Therapeutics (KROS), Outlook Therapeutics (OTLK), Immunocore (IMCR), Replimune (REPL), Natera (NTRA), MaxCyte (MXCT) and Treace Medical Concepts (TMCI).

BTIG also removed several biotechs and medtechs from its list for 2H 2023. In addition to Aldeyra, Esperion and VaxCyte, which all retain their buy ratings, BTIG also dropped AtriCure (ATRC), Axsome Therapeutics (AXSM), Intuitive Surgical (ISRG), Penumbra (PEN), Sarepta Therapeutics (SRPT), Selecta Biosciences (SELB) and Syndax Pharmaceuticals (SNDX).

BTIG is particularly bullish on Acumen, largely because of its promising Alzheimer’s drug candidate ACU193, and BridgeBio, which has been working on therapies for the heart condition ATTR-CM and achondroplasia, a type of dwarfism.

Establishment Labs, which makes products for breast reconstruction, and Arcus are also new to the list. BTIG described oncology drug developer Arcus as having “many shots on goal,” augmented by a partnership with Gilead (GILD) and a $1B cash runway. As for Establishment Labs, the investment bank said it viewed the shares as undervalued and not reflecting the company’s “market expanding opportunities” in 2H 2023 and beyond.

BTIG also had positive things to say about Evolent Health, calling the it “one of the highest quality healthcare services companies in our sector” and highlighting its strong position in managing complex specialty care.

The investment bank was likewise bullish on Replimune, which has been working on treatments for skin cancer, noting that data from two key pivotal trials is expected in Q3 and Q4. The bank added that Natera was also attracting investor interest as it expands from prenatal and carrier testing in cancer monitoring through minimal residual disease tests.

Meanwhile, BTIG said it believes Outlook shares were trading at a “compelling discount relative to the blockbuster market opportunity in the wet AMD market.” The FDA is expected to decide on whether to approve the company’s wet age-related macular degeneration drug ONS-5010 by Aug. 29. If approved, BTIG said it sees the product gaining “relatively high peak market penetration.”

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