Momenta Pharmaceuticals, Inc. (MNTA)

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Barrons - Stocks to Watch - September 1

2 Biotech Biosimilar Winners

By Ben Levisohn

Guild Investment Management’s Monty Guild and team don’t think it’s time to start buying biotech stocks just yet but urge investors to “get their buy lists ready.” That starts with companies like Coherus Biosciences (CHRS), and Momenta Therapeutics (Pharmaceuticals ) (MNTA),which are poised to benefit from biosimilars, Guild says. He explains why:

It is safe to say that the verdict is in: the political pressure is not coming off healthcare. In recent weeks, we’ve had a new dose of public outrage about drug pricing, this time focusing on the EpiPen injector manufactured by Mylan (MYL). General uncertainty has risen as Aetna (AET) has announced its withdrawal from 11 of the 15 Affordable Care Act (ACA) markets where it had operated — with some analysts calling this withdrawal a “death knell” for the ACA in its current form. As we know, markets do not like uncertainty. With events underway that could require a significant reshaping of the U.S. healthcare system yet again, no matter which candidate wins, this is probably a cautionary signal for investors no matter how attractive valuations may begin to look.

Still, we advise readers to work on their shortlist of attractive companies — based on events and fundamentals. We believe that although the long-term landscape will include greater pressure on pricing, the regulatory environment will not quickly become one in which the U.S. stops being the engine of global pharma and biotech discovery. Fear of price controls is here; actual price controls are far off. As the market begins to discount this reality, perhaps after the dust has settled from the election, many pharma and biotech stocks with good pipelines and strong management teams may present excellent buying opportunities.

We would like to draw readers’ attention to one area specifically: biosimilars. We’ve covered these drugs in the past — generic versions of the complex new biologic drugs that have provided so many of the last decade’s transformative new therapies…The regulatory landscape for these drugs is still being determined. Currently, biologics enjoy a 12- year period of exclusivity for their inventors; one key plank of Hillary Clinton’s healthcare platform is the reduction of this period to seven years, which would open opportunities for companies that have the technical knowhow to produce biosimilars. A Clinton victory is therefore likely to be seen as a bane for many big biotechs, whose future revenues largely depend on the success of the new biologics in their pipelines. On the other hand, it could be a boon for such companies as Coherus Biosciences, Momenta Therapeutics…

http://blogs.barrons.com/stockstowatchtoday/2016/09/01/3-biotech-biosimilar-winners/?mod=yahoobarrons&ru=yahoo