Four Small-Cap Biotechs Investors Should Take a Look at
NEW YORK, NY / ACCESSWIRE / March 14, 2016 / 2015 was a wild year in biotech, with six months of sector-wide gains during January to July reversed throughout the latter half of the year on a combination of political reform expectations and US rate-hike-induced risk-off sentiment. We're nearly a full quarter into 2016, and it looks like we may have finally seen an intermediate bottom in stocks with yesterday's big up move holding today, March 2.
Biotech should follow broader markets higher, and small cap biotech, which has been severely pummeled in recent months may recover particularly strongly if indeed a trend change back up is what we are now seeing. This makes it a good time to start thinking about reestablishing positions. Here are four small cap biotechs with near term catalysts that make them an intriguing consideration for a 2016 exposure and a ride back up.
Protalex
Protalex Inc. (OTCQB: PRTX) is a New Jersey based development stage biotech with a focus on autoimmune conditions. Its primary development candidate, PRTX-100, is currently under trial for two separate indications - immune thrombocytopenia (IT), which is a reduced blood platelet count that results in excessive bleeding and easy bruising, and rheumatoid arthritis.
Both indications are currently in phase I/II trials in the US, and the IT indication is also in trials in Europe. Safety studies suggest the drug is well tolerated, and also hinted at some early signs of efficacy. So what's so exciting about Protalex for 2016? The answer is the number of potential data releases. While we haven't had notice of completion, the phase I/II for the RA indication was slated for primary closing at the end of last month, so we should be seeing topline results from the trial before this first quarter is out.
The ongoing IT trial is comparatively young, having initiated enrollment in November 2015, but it's only an 18 month carry through, so expect an interim release sometime during the second half of this year, and topline during the comparable period next year.
Sequenom
San Diego based Sequenom, Inc. (NASDAQ: SQNM) just announced the results of a clinical validation study for its lead therapeutic test MaterniT. The test is a genomic imaging technology designed to detect prenatal abnormalities. There are already tests available, with the primary and currently preferred being karyotype analysis. It's highly accurate and relatively cheap, but it requires amniocentesis. Amniocentesis involves extraction of amniotic fluid from the pregnant mother, which while relatively safe, carries a small risk of miscarriage and is also uncomfortable.
Sequenom's alternative is non-invasive. It just requires a blood sample from the mother, which eliminates the miscarriage risk and is procedurally much simpler. It's not quite as wide range from a testing perspective as there are some conditions that a karyotype analysis will pick up on that a MaterniT test will not, but from a risk profile perspective, it looks superior.
This is an interesting time to pick up an exposure to Sequenom. THe MaterniT test is already approved fro use as of August last year, and the company is undertaking an aggressive expansion strategy. It's got enough cash on hand at around $50 million to carry it through to positive cash flow, slated for mid 2017, and is currently available at a 67% discount to its 2015 highs.
Cidara Therapeutics
Cidara Therapeutics Inc. (NASDAQ: CDTX) rode the early 2015 IPO wave to a NASDAQ listing in April last year, and had a pretty solid year, but has had a rough start to 2016. Fundamentally, however, we've had a number of positive announcements, and the company looks oversold at its current $10 price. Cidara is a San Diego-based company with a focus on novel anti-infectives, and a current primary target indication of systemic Candida infection. Its lead candidate CD101 completed a phase I back in October and a second phase I dose escalation in January just gone. Both trials resulted in some encouraging top-line data demonstrating both safety and efficacy, and Cidara is set to kick off a phase II before the first half of this year is out.
Further, the company just announced an orphan designation for CD101, which alongside its fast track status, should contribute to both a streamlined clinical development process and an extended period of exclusivity at twelve years should the treatment get the green light.
Athersys, Inc.
To close out the list, Athersys, Inc. (NASDAQ: ATHX) has drawn a lot of attention over the last couple of weeks, with the mid February release of one-year results from its ongoing follow up to a phase II trial in its lead indication of strokes. The drug in question is a stem cell therapy called MultiStem. It's an IV administration treatment that uses stem cells from a donor to regenerate damaged cellular structures in a patient - in this instance, neurons and blood vessels.
Its target indication is a real unmet need at the moment in the US, and that's what makes the company so appealing. More than 800,000 individuals suffer strokes each year in the US, 85% of which are ischemic, meaning caused by a blockage in blood flow to the brain. The current and only standard of care is an anti-clotting treatment called tPA, but this must be administered within a matter of hours or it can cause bleeding in the brain or death. According to Athersys, less than 5% of victims receive the treatment, and its MultiStem product is designed to meet this treatment gap.
A pivotal trial is slated to kick off before the year is out, and potential near term catalysts are in abundance, with ongoing trials in a host of alternative indications - heart attack, liver conditions, leukemia and more - are set to produce interim and top-line results across the next twelve months.
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