Here are some speculative biotech stocks that investors and traders should consider looking at. All of them are looking to breakout on their charts and offer some compelling upside in the coming months. We have looked for a range of biotech stocks focused on different ailments to give a wider focus for investors and hopefully increase the win rate on FDA success. We looked for stocks in four biotech sectors: heart, cancer, stem cells and sexual dysfunction.
1) Cardiome Pharma (CRME)
Obesity is a leading cause of death in the U.S. and with that there is a strong need for heart drugs. Let's start with Cardiome Pharma, a research-based pharmaceutical company, focused on the discovery, development, and commercialization of drugs to treat or prevent cardiovascular and other diseases. The company offers BRINAVESS, a product approved for marketing in the European Union, Iceland, and Norway for the conversion of recent onset atrial fibrillation to sinus rhythm in adults. This drug was developed in partnership with Merck & Co (MRK). In December Merck returned the rights of the drug to Cardiome in return for $20m cash and forgiveness of a $50m loan due it. That left Cardiome with sole control of BRINAVESS, currently marketed in Europe, as well as $30m in cash and no debt. In December the new CEO of Cardioma purchased 1.75m shares of company stock on the open market for a price of 42c. This would be considered a large purchase for a large cap stock, not just for a small cap trading under $1. When CEO's make large purchases of stock investors need to pay close attention. Cardiome is actively looking for a new partner for BRINAVESS. The confidence shown by the CEO in his stock purchase could be a sign a deal is in the pipeline. A quick look at the Cardiome chart shows a flag formation ready to breakout at 44c. After the spike on the Merck news last month, this consolidation has the stock ready for another advance.
2) Athersys Inc, (ATHX)
Stem cells research is still in its early stages and thus we need to look for a stock to play in their sector. We have gone over the value in shares of Athersys in our previous articles, "Athersys Should Gain At Least 50%" and "Stem Cell Stocks to Consider: Aastrom, Athersys, StemCells and Neuralstem.' Since our articles in November, Athersys has started to see both investor interest and stock price appreciation. The company has an ongoing partnership with Pfizer Inc. (PFE) worth $111m. They also have numerous ongoing trials including a Phase II study of ischemic stroke with results due this year. Athersys is still trading at a low valuation considering its strong pipeline of drugs.
3) Cleveland Biotech (CBLI)
We of course have to look at cancer drugs too for our basket of speculative plays given the prevalence of cancer and need for new drugs to combat. Their profile states the following- engages in the discovery, development, and commercialization of products for cancer treatment, and protection of normal tissues from radiation and other acute stresses. Its lead Protectan, CBLB502, is a radioprotectant molecule with multiple medical and defense applications for reducing injury from acute stresses, such as radiation and chemotherapy by mobilizing various natural cell protecting mechanisms, including inhibition of apoptosis, reduction of oxidative damage, and induction of factors that induce protection and regeneration of stem cells in bone marrow and intestine. Cleveland has two operating subsidiaries, Incuron, LLC, and Panacela Labs, Inc., and strategic relationships with the Cleveland Clinic, Roswell Park Cancer Institute, the Children's Cancer Institute Australia and the Armed Forces Radiobiology Research Institute. In November of last year they signed a $4.6m contract with the Russian Ministry of Industry to research radiation countermeasures. The company is currently in discussions with the FDA regarding the Biologics License Application for Entolimod as a radiation countermeasure. As you can see there is much to like here with Cleveland.
3) BioSante Pharmaceuticals (BPAX)
Lastly we are looking to BioSante with its focus on the development of various products for female sexual health and oncology. It provides LibiGel, a transdermal testosterone gel that is in Phase III clinical development for the treatment of female sexual dysfunction; and male testosterone gel for the treatment of hypogonadism in men, which is licensed to Teva Pharmaceuticals USA, Inc. (TEVA). Last year they announced a merger agreement with ANI Pharmaceuticals, a private company. ANI manufactures oral solid dose products, as well as liquids and topicals, including narcotics and those that must be manufactured in a fully contained environment due to their potency and/or toxicity. ANI also performs contract manufacturing for other pharmaceutical companies. Over the last two years ANI has launched three new products and has 11 products in development targeting markets with current sales of approximately $775 million. The market reacted negatively to the merger. However, given the strong pipeline of both companies, the cash balances each have, and the speculation in small cap biotech stocks right now, there looks to be a lot of value here for patient investors.
Small cap biotech stocks carry risk. Some may argue that the risk is much greater in this sector. However, with that increased risk can come outsized rewards. Biotech drug development has a high failure rate so it is prudent for investors to spread their risk when investing in biotech stocks. I have tried to offer a basket of stocks that could give one or more successes in the coming year with a range of differing drug candidates.