2 Potentially Hot Biotech Stocks Currently Under $5 Per Share

May 31, 2016
By Mark Terry, BioSpace.com Breaking News Staff

Everyone wants a bargain, especially investors. And even though a like Dublin-based Allergan is likely to pay dividends in the long run, at a current price of $238.31, the initial investment is fairly high. But how about two biotech companies whose stock is selling under $5 per share that might take off this year?

George Budwell, writing for The Motley Fool, takes a look at Agenus and Amarin Corp . He notes, “And while share price alone is never a good way to determine if a stock is cheap or expensive, it looks like these two may be great bargains at current levels.”

Agenus

Headquartered in Lexington, Massachusetts, Agenus focuses on immuno-oncology. It has a number of compounds in various stages of development ranging from several checkpoint antibodies in preclinical and Phase I development, to heat shock protein-based vaccines for glioblastoma multiforme (GBM) in Phase II, to QS-21 Stimulon Adjuvant for shingles in Phase III and for malaria, which has been submitted for regulatory review.

On the positive side, Budwell notes that the company has a lot of compounds in development, generally under partnership with Incyte. “As such, there’s a relatively good chance that the company will have multiple early stage trials under way for its broad checkpoint inhibitor platform by either late 2016 or early 2017.”

On the negative side, there’s a lot of competition in immuno-oncology these days and Agenus doesn’t have a great cash position, which was last reported at about $148.2 million.

Agenus is currently trading for $4.10 per share.

Amarin

Amarin Corp. , headquartered in Dublin, Ireland, with U.S. offices in Bedminster, New Jersey, focuses on cardiovascular health. The company has an FDA-approved product, an ultra-pure, EPA-only omega-3 fatty acid drug, Vascepa.

On May 20, the company announced it had presented data at the annual meeting of the National Lipid Association (NLA) that showed Vascepa’s effectiveness in treating women with very high triglyceride levels.

Budwell notes that analysts are taking a closer look at Amarin because of a recent court ruling that “allows the company to talk to doctors about the possible benefits of its fish-oil pill, Vascepa, for patients with only moderately high triglyceride levels (as opposed to only severely high levels). In effect, this much larger target market is expected to cause Vascepa’s sales to surge over the next 18 months. As a result, the Street thinks that Amarin’s stock could appreciate by a whopping 357 percent by 2017.”

Amarin is currently trading for $1.91.

But investors and analysts are also holding their breath for a September or October interim data readout of the company’s REDUCE-IT trial, which is evaluating Vascepa’s effect on decrease heart attack and stroke rates in patients with high triglyceride levels. If the trials show it decreases triglycerides, but doesn’t reduce heart attack and stroke risks, sales probably won’t take off. If that connection is made, expect sales to meet analysts’ forecasts.

Amarin is in the same boat as Agenus in terms of cash. At the end of this year’s first quarter, it reported only $81.4 million in cash. Budwell points out that both are risky. Agenus is trying to carve out a position against some big companies. Amarin, he writes, “is arguably an all-or-nothing type stock, given that the company’s entire valuation is tied to the success—or failure—of a single product. All told, I like Agenus at these levels as a speculative immuno-oncology play because of its diversified checkpoint inhibitor program that gives the company multiple shots on goal. However, Amarin’s risk profile is simply a little too spicy for my taste at this point, despite the Street’s overtly bullish 12-month price target.”