3 Stocks That May Appeal to New Biotech Investors
11/21/2016 6:11:18 AM
November 21, 2016
By Mark Terry, BioSpace.com Breaking News Staff
If someone wanted to start investing, biotech stocks would probably not be the place to start. The sector is notoriously volatile and most early companies don’t have a product to sell or a revenue stream. The distance between an initial public offering (IPO) and drug approval can be anywhere from 10 years to never.
Still, for those interested, Brian Feroldi, writing for The Motley Fool, takes a look at three biotech companies that might be appropriate for the new investor.
1. Acadia Pharmaceuticals
Unlike many biotechs, ACADIA (ACAD) has a drug on the market. Its first drug, Nuplazid, is on sale for the treatment of Parkinson’s disease psychosis (PDP). It’s essentially the only drug on the market for PDP, which affects about 40 percent of the million U.S. Parkinson’s patients.
Nuplazid brought in $5.2 million in its first quarter of sales, doubling Wall Street projections. Feroldi writes, “While growth in PDP will likely remain strong for years to come, ACADIA believes that Nuplazid’s label could eventually be expanded to include other disease states, too. The drug is already in trials as a potential treatment for Alzheimer’s disease psychosis and schizophrenia.”
ACADIA’s shares are currently trading for $28.97.
2. Celldex Therapeutics
The Motley Fool’s Cory Renauer chose Celldex (CLDX), largely based on its cash holdings and pipeline. It’s not a company without risk. In March 2016, it announced that its Rintega cancer vaccine had failed in clinical trials and was terminated. The company’s shares plunged by more than half on the news.
However, the company recently acquired Kolltan Pharmaceuticals. In the deal, it picked up KTN-158, a humanized monoclonal antibody that inhibits KIT activation and receptor dimerization in tumor cells and mast cells. It also got KTN3379, which is being evaluated in combination with Erbitux for refractory patients in head and neck squamous cell carcinoma and in BRAF-mutant non-small cell lung cancer (NSCLC).
At the end of its third-quarter, Celldex had $203.2 million in cash, cash equivalents and marketable securities.
And its pipeline is deep. Renauer writes, “Despite its modest price tag, the company has a development pipeline stuffed with targeted cancer therapies. Industry peers 10 times its size would be thrilled to have five separate candidates in nine self-sponsored clinical trials, plus two more sponsored by the National Cancer Institute.”
Celldex’s shares are currently trading for $4.52.
3. Neurocrine Biosciences
Neurocrine Biosciences (NBIX) has two lead late-stage clinical programs. The company’s valbenazine received Breakthrough Designation from the U.S. Food and Drug Administration (FDA) and is looking at a possible approval on April 11, 2017 for tardive dyskinesia. It will have to fend off Teva Pharmaceutical (TEVA)’s SD-809. Many investors think Teva will do better because of the size of its sales force, but valbenazine is likely to hit the market first.
Cheryl Swanson, writing for The Motley Fool, says, “With no approved products and decades of pent-up demand, that indication alone gives it blockbuster potential. But valbenazine is also being tested in Tourette’s syndrome, a condition that involves involuntary movements or sounds. With data due to be released by the end of 2016, Tourette’s could give the drug another $2 billion market in the developed world.”
Neurocrine also has a deal with AbbVie (ABBV) for elagolix in endometriosis and uterine fibroids. The new drug application (NDA) is expected next year. Swanson writes, “Be forewarned this is a high-risk stock, but if Neurocrine can get these drugs across the finish line, then in my view, it’s a steal.”
Neurocrine’s shares are currently trading for $50.62.
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