Many biotechs still have a lot to prove with trials and FDA approvals looming at every bend. These particular biotechs are more involved with supporting proven treatments, improving drug deliveries and enhancing therapies in use today. This ultimately positions them closer to reaching their true potential or failing to live up to promise. Taking a look at four companies with products ready to sell, reveals some worthwhile considerations in an industry rife with competition. The financials of each might not yet be healthy, hurdles still remain, leadership and direction might be unclear and marketing still needs to hit home runs however, they are all in similar stages of growth and product development. Another characteristic they all share is either how close they are to generating significant revenue, getting acquired or failure if their products don't sell fast enough.
One of these biotechs making an upward move is Delcath Systems (DCTH). Delcath is not your typical biotech and I guess that suits them well as they have started to get investors to take notice. Delcath has a system for improving cancer treatment that will work today as opposed to the many biotechs with drugs in various FDA approval stages. Delcath's CHEMOSTAT filtering system is taking what we have available now for cancer treatment and making it more effective without the increased risk of poisoning the body further. The CHEMOSTAT system allows much higher doses of chemotherapy agents to be targeted to specific organs and in turn helps to clean these harmful agents following administration. The blood flowing from the targeted organ is collected via catheter and sent through the CHEMOSTAT system where most of the harmful agents can be removed before the blood is returned to the body.
Delcath currently has European approval and is making some noise in Germany with positive inroads developing since early February. Delcath is looking for U.S. FDA approval with the PUDFA date of June 15, of this year. The stock has surged from $1.47 a share on February 26th to a high of $1.96 today (March 8th). It has been slowly climbing since experiencing lows around $1.20 a share in the last half of December 2012. Investors from once popular Celsion (CLSN) have probably helped prop Delcath up just a bit but look for a run as we enter June and those holding now might be rewarded. The Liver Cancer market is quite large and add in the ability to apply the technology to other organs and Delcath appears to be a biotech to keep an eye on.
Unilife Corporation (UNIS) is another biotech that is looking to break out with approved technology. Unilife creates syringes like Unifill, Unitract, EZMix and others to allow drug delivery and in many cases self-administration of drugs. Unilife also has Precision-Therapy bolus based therapy drug delivery injectors for administering a controlled amount of drug over a period of time. As an added bonus, Unilife also provides organ targeted drug delivery systems where targeted drugs can be administered by either intravitreal or intraocular injection. The caveat may be in the Precision-Therapy bolus injectors which have many practical uses today in the pharmaceutical industry alone. Unilife has been quick to market bolus injectors directly to pharmaceutical companies for use in trials benefiting from a controlled delivery of drugs.
Showcasing their products in Europe at Pharmapak was a good step and they have had been building up interest here in the US as well. Their ultimate vision is to have Unilife systems approved as "package deals" in conjunction with any drug approval utilizing Unilife products. This would lead to a huge potential windfall if this pans out and even trickles down to the user level. The problem lies in the financials, which are far from solid; the high cash burn rate ($14.6 million last quarter) and the cash on hand which is dangerously low. Unilife is looking for financing over stock dilution to keep them going, and have recently raised over $13 million in net equity capital to help out in the interim. If things go as planned and revenue really starts to come in, a play now at under $2.30 a share, might be worth the risk
Another interesting biotech that is working on the device side over drug development is Cerus Corporation (CERS). Cerus has its proprietary INTERCEPT blood systems for removing pathogens from the blood supply. It has approval for bath platelets and plasma in Europe and has been approved by the FDA (PMA review) specifically for INTERCEPT usage with plasma here in the US. Cerus looks to become a big part of ensuring the world's blood supply is safe and clean. Patients requiring blood transfusions or products from donated blood will be better protected and worries about the world's blood supply has never been greater. The technology seems timely, and the ability to market and price the product might be the next step for Cerus.
Investors have been jumping on board Cerus stock since the end of February with shares going from $3.29 each on February 28th to a close at $4.23 a share as of March 8th. The most recent earnings report exceeded the Street's expectations, but revenue is still not breaking out and also not expected to do so in the remainder of 2013. Current optimism might be more speculative right now but nevertheless interest in the stock remains high and the potential marketplace for INTERCEPT does appear to be quite large. Approval in the US could easily provide another spike, but the inflated price reacting to positive earnings reports that are still negative in nature seems too good to hold. Watch this one.
BSD Medical (BSDM) corporation is another player in the competitive cancer treatment marketplace. Much like Delcath, BSD has a product for lending a hand today with the supporting arm of Microwave Ablation Systems. BSD systems use either non-invasive (external) hyperthermia or interstitial (internal) hyperthermia delivered through antennas placed either on the outside of tumors or directly inside the growth itself to deliver microwave energy or focused-radio frequency to the tumor. BSD systems are used in conjunction with current radiation therapies to enhance its effectiveness and potential for positive outcomes to such therapies. Even as more cancer therapies evolve, this technology by BSD could continue to be relevant as hyperthermia support gains momentum.
Currently BSD is looking to make a push with MicroThermX, its high-end disposable used in each ablation treatment. This disposable product only means more consistent future revenue growth as the technology becomes more commonplace. The BSD-500 system will need to find its way into more cancer treatment centers before investors can get more excited. Currently BSD stock trades at $1.38 a share (March 8th), but any positive developments will be good for the short term as well as the long term valuation of the stock. BSD is burning through only about $2 million a quarter but currently has only about $9 million left in cash. Still, in a marketplace with over $2 billion dollars of world-wide potential (for soft tissue ablation), the prospects for the future of BSD remain positive. The stock is a value now if you think the technology will still be utilized for many years to come.
As mentioned earlier, these four stocks all have something to offer now and have approvals for their products for use in Europe or in the US (FDA). Each of them might have something that has been proven but the ability to get their products into the marketplace is still a major hurdle. The ball is in each company's court and what each does sooner than later might determine the real value of each stock and which company realizes its true potential.