While the broad-based SPDR S&P Biotech ETF has galloped higher by 20% year-to-date, a number of biotech stocks are wallowing near their 52-week lows. Could there be bargains to be had among this sea of red? With that in mind we three biotech stocks which have a good chance to turn things around; and here’s a quick look at each of them.
Looking at their current valuations, Orexigen looks like the best investment with a market cap that’s now under $500 million. VIVUS is cheaper, but without a large marketing partner, it’s hard to see its obesity drug Qsymia taking off.
Like Orexigen, Arena Pharmaceuticals has a marketing partner, Eisai, but the Japanese pharma hasn’t been able to get much traction since launching Belviq over a year ago. Arena’s market cap is also considerably larger than Orexigen’s although admittedly it has a better pipeline, so a higher price tag is justifiable.
There’s a lot of overlap between diabetes and obesity, so Takeda’s experience with its blockbuster diabetes drugs Actos and more recently with its Nesina franchise should help Orexigen’s marketing partner have a more successful launch than Qsymia and Belviq. Their obesity drug Contrave also sits in a sweat spot, producing more weight loss than Belviq with less severe side effects than Qsymia.
Biotech Stock News
Shares of NPS crashed and are now down by 31% over the past year. What spooked investors was the panel’s tepid recommendation for Natpara, with some members even stating that the only reason they voted “yes” was because of compelling patient testimony. Put simply, they weren’t overwhelmingly convinced the drug works, and some questions regarding Natpara’s safety weren’t resolved by the clinical data, according to the panel.
With NPS shares now inching toward their 52-week lows, I think this stock is a strong buy ahead of its Oct. 24 target action date for Natpara. The briefing documents from the FDA were positive in their tone, leading to believe the drug stands a good shot at being approved. From a fundamental perspective, Natpara’s approval should double the company’s revenues within two years of its launch.
Biotech Financial News
Additionally, Exelixis and collaborative partner Roche (NASDAQ RHHBY) announced positive data from its coBRIM study for the combination of cobimetinib and FDA-approved Zelboraf last month as a treatment for advanced melanoma with the BRAF V600 mutation. The combo including cobimetinib delivered a progression-free survival improvement of 3.7 months to 9.9 months and reduced the risk of disease worsening by 49%.
These cheap biotech stocks may offer plenty of upside, but growth-wise this revolutionary product could leave these biotech stocks in the dust!
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