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Piper Sandler highlights CNS biotech stocks for 2025

EditorRachael Rajan
Published 02/01/2025, 19:40
© Reuters

© Reuters

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On Thursday, Piper Sandler, a well-known investment firm, released a report detailing their top biotechnology picks for 2025 within the Central Nervous System (CNS) vertical.

The report comes after a year where obesity management dominated the biopharma space in 2024, with transformative impacts on the industry. Despite macroeconomic concerns and regulatory headwinds, Piper Sandler's analysts believe that the CNS space remains ripe for investment, particularly given the brisk pace of innovation and the potential for transformative clinical and commercial success.

"The landscape is brimming with late-stage assets focused on novel mechanisms/targets that are not far from bearing fruit from a clinical/regulatory and commercialization perspective," the firm said.

The report acknowledges the inherent risks within CNS development, such as placebo responses and the complexity of brain-related treatments, but maintains optimism for the sector. As evidence of the vertical's potential, the report cites the FDA approval of Bristol's novel antipsychotic, Cobenfy, in September 2024, marking a significant advancement in the field.

However, not all CNS endeavors have been successful. The report references the high-profile clinical failure of AbbVie (NYSE:ABBV)'s emraclidine, which did not show statistical superiority over placebo in Phase III schizophrenia studies. This setback, following AbbVie's $8.7 billion acquisition of Cerevel, is noted as embarrassing but not detrimental to mergers and acquisitions within the CNS space. Piper Sandler points to Lundbeck's recent $2.6 billion purchase of Longboard as an indication of continued strategic interest in novel CNS therapies.

The report names Neurocrine (NASDAQ:NBIX) and Intra-Cellular (NASDAQ:ITCI) as the two highest-conviction CNS ideas for 2025, with both companies poised for commercial execution at attractive risk/reward profiles. Other companies receiving honorable mentions for their CNS-focused efforts include Teva (NYSE:TEVA), Alkermes (NASDAQ:ALKS), and Axsome (NASDAQ:AXSM), all rated as overweight by Piper Sandler analysts, indicating a positive outlook for their stock performance.

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