(Bloomberg) -- For investors looking for deals in biotech, Wall Street firms like Baird advise “cash is king.”

Losses in the U.S. stock market have decimated many portfolios. And while biotechnology companies haven’t been immune, they have withstood the losses better than the broader market. That may be because health-care stocks are defensive in nature, as the need for medicines isn’t usually buffeted by the winds of economic change. Early commercial and development-stage biotechs are a wholly different beast, however.

Developing new drugs isn’t easy, and making bets in biotech comes with the risk of failure. Yet, the potential payoff for investors can also be enormous when a new medicine succeeds.

Wall Street analysts have been quick to point out their favorites. Baird analysts led by Brian Skorney said they preferred “well-capitalized names” that had enough cash to get them beyond 2021 or those with “major data events this year that could support value creation.”

Baird’s list of companies includes Neurocrine Biosciences Inc., Dicerna Pharmaceuticals Inc., Coherus Biosciences Inc., Arrowhead Pharmaceuticals Inc., Sarepta Therapeutics Inc. and Intercept Pharmaceuticals Inc.

“Investors seemed largely positive on the outlook, particularly longer term, though still view several risks as underappreciated, particularly clinical trial conduct and regulatory timelines,” RBC analysts led by Brian Abrahams said Wednesday after an investor survey.

More than half of the 88 investors RBC spoke to saw investment opportunities in the sector, though the bank cautioned that the generalists who are key to bolstering the sector might not return, “at least not until the dust settles.” Roughly $1.5 billion has left the iShares Nasdaq Biotechnology fund in the past year.

“Our sense is that investors are sharpening their focus on the ability of promising pre-cash flow companies to weather the immediate crisis and potential prolonged economic downturn,” Abrahams wrote last week, saying that after a strong multi-year run in the secondary market most of the unprofitable companies the bank covered appeared to have enough cash to last the next 18 months and could cut operating expenses or form partnerships to keep afloat.

Among companies RBC covers, only a handful were likely to need cash before the next 12 months were up. Those companies included Ovid Therapeutics Inc., Corbus Pharmaceuticals Holdings Inc. and BioCryst Pharmaceuticals Inc. Some of those companies will have to rely on upcoming clinical data catalysts. That could be problematic as drug trials are becoming more and more likely to get delayed.

Takeovers, of course, are always at the top of investors’ minds, with an estimated $1 trillion in dry powder spread across the health-care sector. Still, deals will depend on how the pandemic and the ensuing financial mayhem resolves, RBC analysts said.

Some stocks like Ideaya Biosciences Inc., Surface Oncology Inc., Jounce Therapeutics Inc. and Idera Pharmaceuticals Inc. have started trading below their cash position, Baird said. “While tough to know when sentiment might shift, we think the argument could be made that these companies are at least worth cash on hand,” the analysts said.

Bloomberg screened for other biotech companies that are trading close to or below cash levels, based on recent trading and the last quarterly reported cash position. Many of the companies listed have had recent disappointing regulatory updates such as Lexicon Pharmaceuticals Inc. or failed trials like Cymabay Therapeutics Inc. weighing on their valuations.

Those names include: Akorn Inc., Amag Pharmaceuticals Inc., AnaptysBio Inc, Cymabay Therapeutics Inc., Cellectis SA, CytomX Therapeutics Inc., Endo International Plc, Evolus Inc., GlycoMimetics Inc., Lexicon Pharmaceuticals Inc., Prothena Corp, Supernus Pharmaceuticals Inc., ResTORbio Inc., Voyager Therapeutics Inc., XBiotech Inc., Xeris Pharmaceuticals Inc.

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