Oppenheimer Analyst Sees Massive Upside Potential for Durect Corporation and Ovid Therapeutics

Penny stocks, which are equities that trade for less than $5 per share, can present opportunities for smart investors. While a low stock price may initially raise concerns, it doesn’t necessarily indicate poor fundamentals. It’s important for investors to conduct thorough research before investing in penny stocks to determine if they are sound investments.

With this in mind, Oppenheimer analyst Francois Brisebois has identified two penny stocks that have received rave reviews. These stocks also have a “Strong Buy” consensus rating from other analysts on Wall Street. Let’s take a closer look at Durect Corporation and Ovid Therapeutics.

Durect Corporation is a biotech firm focused on developing therapeutic agents based on epigenetic regulation. The company’s leading drug candidate, larsucosterol (DUR-928), has shown promising results in improving compromised cellular function and regulating the expression of multiple genes involved in cellular function. Durect is currently conducting a Phase 2b clinical trial for the treatment of alcohol-associated hepatitis (AH). Results from this trial are expected to be released during the fourth quarter of 2023. Durect is also exploring larsucosterol for potential use in other indications.

According to Brisebois, Durect is undervalued due to the significant potential of larsucosterol in treating AH. With an estimated ~158,000 AH hospitalizations in the US and no viable treatments currently available, the market is primed for larsucosterol. The successful Phase 2a trial results further de-risk the Phase 2b trial. Brisebois also highlighted Durect’s plans to enter the oncology space, with the development of novel small-molecule DNMT inhibitors. Brisebois rates Durect as an Outperform with a price target of $32, implying a potential upside of 1,130%.

Ovid Therapeutics is a biopharmaceutical company focused on developing medications for the treatment of rare neurological disorders, particularly severe epileptic seizures. Ovid’s investigational medicines aim to ameliorate hyperexcited states in neuronal activity and return active neurons to a balanced state. The company’s leading drug candidate, Soticlestat, is currently being investigated by Takeda in two Phase 3 trials for the treatment of Lennox-Gastaut syndrome (LGS) and Dravet syndrome (DS). Ovid retains an 87% interest in Soticlestat and has received an up-front payment of $30 million from Ligand, which extends the company’s cash runway into 2026.

Brisebois believes that Ovid’s potential lies in the upcoming pivotal readouts for Soticlestat in DS and LGS, as well as its overlooked CNS pipeline. With positive Phase 2 and open-label extension data, along with slight adjustments to trial designs, Brisebois expects positive Phase 3 pivotal readouts. As a significant percentage of DS and LGS patients remain refractive to standard treatment, Soticlestat’s unique mechanism of action and clean safety profile make it an ideal commercial candidate. Brisebois rates Ovid as an Outperform with a price target of $8, implying a potential upside of 132%.

Overall, both Durect Corporation and Ovid Therapeutics have garnered positive reviews from Oppenheimer analyst Francois Brisebois. Investors considering penny stocks may find these stocks worth investigating further.