3 Bargain Basement Biotech Stocks That Have the Potential to Skyrocket

June 29, 2016
By Mark Terry, BioSpace.com Breaking News Staff

Biotech stocks have been more volatile than usual this year, and it’s unlikely that the recent Brexit, which shook up world markets, is going to help that any. Three well known biotech stocks, bluebird bio (BLUE), Celldex Therapeutics (ZX) and Ionis Pharmaceuticals (IONS) have all dropped fairly dramatically. But Cory Renauer, writing for The Motley Fool, takes a closer look, arguing that now might be the time to buy these promising companies at a deep discount.

Bluebird Bio

Bluebird Bio , located in Cambridge, Massachusetts, focuses on gene therapy, cancer immunotherapy and gene editing. In May, Renauer discussed the company, calling it “a high-risk moonshot.” The company has lost about 36 percent of its value so far this year.

Bluebird is working on a gene therapy product for childhood cerebral adrenoleukodystrophy (CCALD), which affects about 40 boys in the U.S. annually. It is using a lentiviral vector-based product, Lenti-D, to insert functional copies of the bad gene into patients’ cells. One reason it’s promising is it utilizes the patient’s own cells, which avoids the often deadly graft-versus-host disease that is a problem with stem-cell transplants.

Renauer notes, “With such a small population of CCALD patients, an approval in this indication won’t make Bluebird profitable. It would, however, provide regulators plenty of real-world safety data with its lentiviral-based cell therapies, which could help its Lentiglobin candidate earn approval for two much larger indications.”

Those are beta-thalassemia and sickle-cell disease. There are a lot of “ifs” involved, but if Bluebird could eventually have products to treat those two worldwide diseases, the current of $39.74 might seem like pocket change.

Celldex Therapeutics

Headquartered in Hampton, New Jersey, Celldex Therapeutics has six ongoing clinical trials for its drug Glembutumumab, including the METRIC study in triple negative breast cancer, two Phase II studies across a broad range of indications, and multiple Phase I/II studies.

Renauer wrote earlier this month that, despite a recent setback in the company’s RINTEGA program for brain cancer, it showed improvement in progression-free survival and overall survival in triple-negative breast cancer patients. If the drug was approved for that indication alone, it could hit $1 billion in annual sales. Other rare cancers, as well as ongoing trials in melanoma, would drive that even higher.

The company also has several other clinical-stage candidates that show promise. The RINTEGA trial hammered the company’s value, and so far this year it has lost 72 percent of its value, but Renauer believes the company shows a lot of promise. “Celldex is also light on debt and heavy on cash,” he writes, “with an enterprise value of about $186 million. If glemba even comes close to repeating its previous success in the ongoing pivotal trial, which will probably have results next year, it could send this stock through the roof.”

Celldex is currently trading for $4.32.

Ionis Pharmaceuticals

Carlsbad, California-based Ionis Pharmaceuticals has lost about 64 percent of its value so far this year. Much of that is related to GlaxoSmithKline delaying the start of a Phase III trial of IONIS-TTRrx in patients with TTR amyloid cardiomyopathy because of safety concerns. There’s hope that GSK will decide to go ahead with the trial based on new data, and Ionis has other products. It also has more than $723 million in cash and less than $479 million in debt.

Earlier this month, writing for The Motley Fool, Keith Speights said, “Ionis regained rights for homozygous familial hypercholesterolemia drug Kynamro earlier this year. The biotech soon licensed those rights out to privately held Kastle Therapeutics. Ionis expects results from late-stage studies for nusinersen and volanersorsen in the first half of 2017.”

It also has two drugs, plazomicin, an antibiotic, and custirsen, a cancer drug, in late-stage trials with other partners. And it has 12 other drugs in its pipeline in Phase II trials and six drugs in Phase I trials.

Renauer wrote, “Behind its enormous clinical program is a drug-discovery machine that churns out potential clinical candidates faster than any biotech I can think of. With a recent market cap of about $2.7 billion, this stock is a real bargain.”

Ionis is currently trading for $22.83.