3 High-Risk, High-Reward Biotech Stocks for Q4

As we move toward the last quarter of 2018, plenty of companies are looking at potential catalysts. George Budwell, writing for The Motley Fool, takes a look at three potentially high-reward biotech companies, but along with their big catalyst potential comes high risk.

Amarin. Headquartered in Bedminster, New Jersey, Amarin Corporation focuses on developing and commercializing drugs for cardiovascular indications. Its first commercial product was Vascepa (icosapent ethyl), used to treat high triglycerides. The big catalyst for Amarin also revolves around Vascepa, specifically expecting top-line results any day now for its REDUCE-IT clinical trial of Vascepa, administered at four grams per days, as an add-on to statin therapy.

Vascepa is a “highly-pure, omega-3 fatty acid product available by prescription.” Often, patients with difficult-to-control triglycerides take fish-oil pills. Vascepa isn’t fish oil, but is derived from fish and is classified as a new chemical entity by the U.S. Food and Drug Administration (FDA).

Budwell notes, “Apart from being the next major trial to evaluate the cardiovascular benefits of omega3 supplementation in general, these data have the potential to grow Vascepa’s target market in exponential fashion. If REDUCE-IT hits its primary endpoint, after all, Vascepa’s peak sales are projected to eventually reach close to $2 billion within a decade. As a result, Wall Street expects Amarin’s shares to more than double in value from current levels if this trial is a smashing success.”

The risk, of course, is that it won’t show those results. Omega3 supplements have had pretty fuzzy results overall in numerous studies, and it’s possible that Vascepa’s results will be less-than-definitive.

CRISPR Therapeutics and Vertex Pharmaceuticals. On August 31, an announcement was posted on ClinicalTrials.gov that the two companies were launching a single-arm, open-label, multi-site, single-dose Phase I/II trial in up to 12 patients 18 to 35 years of age with transfusion-dependent beta-thalassemia. The Scientist notes, “Although the study itself is to be carried out in a hospital in Germany, it marks the first clinical trial of CRISPR genome-editing technology to be sponsored by U.S. companies, Boston-based Vertex Pharmaceuticals and CRISPR Therapeutics, a Swiss biopharmaceutical with labs in Cambridge, Massachusetts.”

Vertex spokesperson Heather Nichols, according to STAT News, stated, “This is one important step of many toward bringing the promise of this new technology to patients with serious diseases like sickle cell [disease] and beta thalassemia, and we are thrilled to be at the forefront of what we believe may be a fundamental change in the treatment of disease.”

Budwell writes, “CRISPR’s valuation has taken a beating in the last few months, thanks to CTX001’s clinical hold in the U.S., as well as a flurry of negative journal articles questioning the safety of this gene-editing technology. This long-awaited clinical update for CTX001 might prove to be a turning point, however. After all, this early-stage trial should only take a few short months to produce a top-line readout, and it will also provide critical data needed to assess the viability of the company’s novel approach to drug development in general.”

Geron. Based in Menlo Park, California, Geron is waiting for Johnson & Johnson’s Janssen to decide about the imetelstat clinical program before the end of September. The two companies are developing the drug as a monotherapy for myelofibrosis and low-risk myelodysplastic syndromes. At the company’s second-quarter financial results on July 31, John A. Scarlett, Geron’s president and chief executive officer, stated, “We still expect Janssen’s decision whether to continue imetelstat development by the end of the third quarter. During the second quarter, we strengthened our balance sheet and made progress on our plans to address either scenario resulting from Janssen’s decision. Therefore, we are confident in our ability to manage our business effectively going forward.”

J&J has scheduled a conference call on September 13 for investors, so Budwell, at least, expects the decision will be announced on that date, if not before. He also says, “The good news is that imetelstat doesn’t appear to be in serious danger of being punted at this point. J&J has continually listed the drug as a top blockbuster candidate on its pharma pipeline presentations throughout the year, and the company is reportedly looking to hire a pricing manager to handle imetelstat’s commercialization abroad.”