October 24, 2016
By Mark Terry, BioSpace.com Breaking News Staff
With biotech stocks in the doldrums, investors are anxious that the results of the presidential election in two weeks will make matters worse. Bret Jensen, writing for Seeking Alpha, looks at two small cap biotech companies that appear to be rallying and may make headway no matter who wins the election.
Seattle, Washington-based Omeros focuses on developing protein therapeutics for both the broader market and orphan indications, with a particular interest in inflammation, coagulopathies, and central nervous system (CNS) disorders. The company has been on a roll this month.
On October 17, Omeros announced positive data from its Phase II trial of OMS721 to treat kidney disorders. The drug is also being investigated in a Phase III trial for atypical hemolytic uremic syndrome (aHUS) and in a Phase II trial for thrombotic microangiopathies (TMAs).
On October 19, the company announced positive results from a Phase II trial of OMS405 in patients with cocaine use disorder (CUD). And on October 20, Omeros announced positive results in its Phase II trial of OMS721 in TMAs, with clinically meaningful improvement in red blood cell destruction measurements.
With that string of good news, it’s no surprise that the company’s jumped from $7.34 to a current trading value of $9.49.
Jensen wrote, “In addition, five different analyst firms reiterated Buy ratings on this small biotech this week with price targets ranging from $19 to $75 a share.”
Xenon Pharmaceuticals , located in Burnaby, British Columbia, also focuses on orphan indications, as well as for larger market indications. Its core tech platform is called Extreme Genetics, and allows for the discovery of validated drug targets by evaluating diseases that have extreme symptoms caused by mutations in ion channels.
Xenon made a $30 million public offering (IPO) on September 8. traded on September 8 for $7.84 and are currently trading for $8.65.
Jensen indicates that three analyst firms, starting in early August, have made “buy” ratings for the company, with price targets ranging from $13 to $20.
One of those firms, Guggenheim, wrote in a note, “XEN801 addresses an unmet need within the large, ~$3.7 billion acne market and could present a novel mechanism of action to treat acne. The three mechanisms of action most commonly used to treat acne have been available for over 30 years. That said, innovative therapies launched over the past few decades have resulted in significant sales. This gives us confidence that XEN801 sales could exceed consensus expectations if it is approved.”
The company also has Nav1.7 blockers. With the U.S. government and the U.S. Food and Drug Administration (FDA)’s focus on an opioid epidemic, Guggenheim says that, “We believe Xenon and its partners for these drugs are well positioned to benefit from initiatives to move the market away from opioids.”
The Phase II readout for XEN801 is expected in the first quarter of 2017. A Phase II readout for TV-45070 against Postherpetic neuralgia is expected sometime in the first half of next year. Jensen writes, “The company has just a $125 million market capitalization, positive analyst support and a couple of definable upcoming catalysts. One has to like Xenon’s risk/reward profile over the next few quarters.”
