One standout in a gloomy stock market this week was Ventyx Biosciences (VTYX -1.79%). According to data compiled by S&P Global Market Intelligence, the clinical-stage biotech’s shares soared more than 58% higher during the period, thanks to the approval of a drug that hasn’t actually been developed by the company.
The treatment in question is Bristol Myers Squibb‘s deucravacitinib (brand name: Sotyktu), which was approved by the U.S. Food and Drug Administration (FDA) last Friday. The drug was green-lighted for the treatment of moderate-to-severe plaque psoriasis, an autoimmune disease that affects the skin, in adults who qualify for systemic therapy or phototherapy.
That’s exciting for Ventyx, because the biotech is developing a drug that utilizes a similar mechanism, and thus could potentially target the same disorder, in addition to other maladies.
In the days following Bristol Myers Squibb’s happy news, several analysts upped their price targets on Ventyx, largely on this basis.
One was Jefferies‘ Michael Yee, who doubled his price target on Ventyx stock (to $60 per share from $30) while maintaining his buy recommendation. Referring to said mechanism, Yee wrote in a new analyst note that “VTYX has the potentially cleanest oral TYK2 inhibitor.”
“The first one from BMY has just been approved, importantly with a very clean label w/no Black Box or major restrictions,” he added.
Credit Suisse analyst Tiago Fauth concurs, backing this by reiterating his outperform (read: Buy) recommendation at a $63 per share price target. Fauth reasoned that “overall, deucravacitinib’s clean label sets a highly favorable precedent for the TYK2i class, and this profile is supportive of broad uptake potential.”
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bristol Myers Squibb and Jefferies Financial Group Inc. The Motley Fool has a disclosure policy.