3 Life Science Stocks Short-Sellers are Wrong About
May 19, 2016
By Alex Keown, BioSpace.com Breaking News Staff
So far 2016 has been a rough year for biotech and pharma investors with stock prices struggling to gain traction and S&P Biotech Index down nearly 30 percent this year.
That news may make some short sellers happy, but there are a few stocks that could prove to be disappointing to those investors looking to make a profit if the share prices of a company falls. Analysts at The Motley Fool picked three biotech stocks that they think will prove those short sellers wrong.
Opko Health
There have been more than 64 million shares of Opko Health sold short, the Fool’s Brian Feroldi said. Those shares represent approximately 20 percent of its public stock. The move to sell short the stock comes largely from the U.S. Food and Drug Administration’s Complete Response Letter for Rayaldee, a treatment for secondary hyperparathyroidism in patients with stage 3 or 4 chronic kidney disease and vitamin D insufficiency. However, in April the FDA accepted Opko’s resubmitted New Drug Application for Rayaldee, and regulators set to make a decision on the drug in October. The FDA did not force the company to redo any clinical trials, which Feroldi is a sign the drug stands a good chance of winning approval and sending the stock, which is currently trading at $9.88 per share, through the roof. That sentiment seems to be shared by Opko, which forged a $282 million deal with Swiss-based Vifor Fresenius Medical Care Renal Pharma to commercialize Rayaldee in Europe, Canada, Mexico, Australia, South Korea and certain other international markets.
Celldex Therapeutics
Motley Fool’s Cory Renauer likes Celldex , despite the company having lost 80 percent of its value over the past year. In March, shares of Celldex plummeted after its Rintega cancer vaccine had failed to meet its primary endpoint in a Phase III trial. The company ultimately terminated its research on Rintega, which had at one time earned Breakthrough Therapy Designation by the FDA for treatment of glioblastoma. Despite that loss, Celldex has another promising treatment in its pipeline, this time for triple negative breast cancer. Celldex's candidate, glembatumumab vedotin, is a protein that binds to gpNMB, a protein found on the surface of tumors. Renauer believes the promise for glembatumumab vedotin in triple negative breast cancer, as well as other cancers, could turn the company around and send its shares back up. Shares of Celldex are currently trading at $3.86.
Lannett Company
Generic drugmaker Lannett has seen its stock, currently trading at $20 per share, lose more than 75 percent of its value over the past year. The company is working through a restructuring and downsizing following its acquisition of Kremers Urban Pharmaceuticals, as well as the loss of some executives. Keith Speights of the Motley Fool, said he thinks the restructuring will only help Lannett regain its footing and “achieving the full synergies expected” from its acquisition of Kremers. The company is also talking with an unidentified customer that accounted for $87 million in revenue about reestablishing its relationship. If that happens, and the restructuring is successful, Speights said the stock will be worth having over the long run.