Biogen, Galapagos and Ultragenyx among key biotech calls at Morgan Stanley for 2022
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Biopharma weakened sharply in 2021, driven by the underperformance in SMIDs, a group of analysts from Morgan Stanley laments, noting a "show me" attitude among investors for next year. Issuing its outlook for 2022, the investment bank expects positive data to change the sentiment. Yet, the team of analysts led by Matthew Harrison argues that the M&A activity and waning pressure on drug pricing could still act as key catalysts for SMID-cap and large-cap stocks during the year, respectively.

The firm has picked several key calls on stocks with Overweight ratings in its coverage, adding Biogen (NASDAQ:BIIB) to a group of companies in the SMID cap space namely, Galapagos (NASDAQ:GLPG), Fulcrum (NASDAQ:FULC), 2seventy bio (NASDAQ:TSVT), Cerevel (NASDAQ:CERE), Ultragenyx (NASDAQ:RARE) and Talaris (NASDAQ:TALS).
In large caps, where its 2022 theme is dominated by growth over value, Morgan Stanley analysts have picked Biogen (BIIB), identifying it as the âmost compelling risk/reward in our large-cap coverage.â The team cites the Medicare National Coverage Determination scheduled this month for Alzheimerâs therapy Aduhelm as the near-term driver for an attractive risk-reward setup for the stock. Morgan Stanley has a price target of $363 per share for Biogen (BIIB).
The selections in SMIDs are led by Galapagos (GLPG), with a price target of $77 per share. With a new CEO who has the potential to âdrive a transformational business plan,â the company could return to positive enterprise value, the analysts argue, anticipating royalty from an upcoming data readout in H1 2022 from AbbVie (NYSE:ABBV) for a cystic fibrosis therapy.
With a $34 per share target on Fulcrum (FULC), the analysts project a âpivotal yearâ for the clinical-stage biopharma company and cite an inaugural data readout scheduled for Q2 2022 from an experimental therapy for sickle cell disease. 
Despite the threat of market entry of a rival therapy from Legend Biotech (NASDAQ:LEGN) in Q1 2022, 2seventy bio (TSVT) can grow its sales for Abecma âeven with competition,â the analysts wrote on the latter, noting that its potential remains âunderappreciated by consensus.â An FDA-approved CAR T cell therapy for multiple myeloma, Abecma generated $67M revenue in the U.S. for Q3 2021. However, the team has drooped the price target for 2seventy bio (TSVT) to $59 from $72.
Cerevel (CERE) has a âkey year for data,â Harrison and the team argue, assigning a $39 target for the stock on the assumption that positive results could propel its shares.
The analysts also think that Ultragenyx (RARE) âshares remain undervaluedâ and predict GTX-102 for Angelman syndrome could become the main driver for its top line. Citing positive views on an early update from a Phase 1/2 trial for the candidate, the team writes that an upcoming 128-day data expected in mid-2022 for the study âcould have a greater positive impact on (company) shares.â Ultragenyx (RARE) has a price target of $156 at Morgan Stanley.
Meanwhile, for Talaris Therapeutics (TALS), the firm has issued a ~$17 per share target as the analysts expect a significant upside for the stock from the next interim data from the FREEDOM-1 study for FCR001 in living donor kidney transplant recipients. With data from additional patients expected potentially from more than one trial site, the readout from the late-stage trial anticipated in June âcould provide investors greater comfort regarding the viability of FCR001,â the team of analysts wrote. Read about the first clinical update from the FREEDOM-1 study.