As biotech investors, we are always looking for something new to capture our interest. In this arena, it is about potential and the ability to get through the FDA's roadblocks to realize that potential. It takes money, patience, and plenty of persistence for biotechs to produce a profit in this sector and the same characteristics apply to investors of these stocks. The following three companies are closer to 52-week lows than highs and have less room to fall. With the right moves these stocks make compelling opportunities for investors who take a chance on them. The books might not be the greatest, there are no dividends to speak of, but what they all offer is the potential that biotech investors look for to add some pop to their investment portfolios.
Cel-Sci's stock seems like it has been bottoming out since it shaved off 17% of its value last December. This low cost stock ($.2651 a share, April 12) has some pretty heavy volume, having over 1,100,000 shares exchange hands on April 12th, and yet has shown very little upward movement. Cel-Sci has ample cash on hand to deal with its current cash burn rate of just over $2 million, a modest amount of debt and even has its lead drug candidate, Multikine, in phase III clinical trials. A little over two weeks ago, the company's CEO Geert Kersten even purchased almost 400,000 shares when Cel-Sci's stock was trading at $.25 a share. Cel-Sci stock has a 200-day moving average of $.30 a share and yet the 52-week high is $.58 a share giving it plenty of room to rise. With a market cap of just under $82 million, the stock could be worth more than its current trading levels.
Cel-Sci has a pipeline focused on immunology. Its lead drug candidate, Multikine, is a mixture of cytokines designed to produce an anti-tumor immune response. It is currently in a phase III trial for the treatment of head and neck cancer. Multikine was developed as a true first line therapy for the treatment of cancer looking to boost the immune system before any other form of treatment is considered. Cel-Sci additionally has a private "cold-fill" manufacturing facility outside of Baltimore to protect the Multikine formula and retains the marketing rights for Multikine in the US and Europe. Remember the fear that H1N1 (bird virus) elicited throughout the world? Cel-Sci has developed a Ligand Epitope Antigen Presentation System (LEAPS) for the treatment of Pandemic flu H1N1, Avian flu H5N1 and maybe Spanish flu and newer strains too like H7N9. The potential with this technology could be huge and NAIAD also appears to be a believer. Cel-Sci also has a vaccine (CEL-2000) for Rheumatoid Arthritis that is currently in preclinical testing. The company has plenty of potential, but the stock has been hurt primarily by having very few newsworthy events lately. Seems like some good news might not be too far off and the stock certainly looks to have more room to rise than to fall.
This company continues to have revenue ($32.7 million fiscal year ending June 2012) and even had a modest profit of a little under $1 million for the same year and yet its shares continue to gain little momentum. Immunomedics has no debt, a relatively modest market cap of $191.5 million and $21.4 million in cash to get through the phase III trials of epratuzumab, its lead drug candidate. The current share price of $2.53 (April 12th) is below the 200-day moving average of $2.94 a share and well below the 52-week high of $4.00 a share. The 50-day moving average of $2.45 a share is either an indication that the stock is finally on the rise or could continue to bounce around. Four analysts out of six rate the stock a strong buy while the 1-year price target is $5.75 a share. On top of all that, the best part of Immunomedics is still the potential of its pipeline.
Immunomedics has plenty in reserve after epratuzmab and its phase III trials for the treatment of systemic lupus erythematosus in non-Hodgkin lymphoma and acute lymphoblastic leukemia. There is also Yttrium-90-labeled clivatumuzab tetraxetan a monoclonal antibody for treatment of Pancreatic cancer that completed phase I/II trials. Veltuzumab for non-Hodgkin lymphoma that has completed phase II trials and Milatuzumab for antibody-drug conjugate therapy which is in phase I trials. There are more monoclonal antibody based candidates for the treatment of colorectal, breast, cervix, lung, pancreas, ovary and prostate cancers. Much of the excitement for Immunomedics, however, is in its Dock and Lock (DNL(TM)) platform technology that has led to the creation of a new class of antibody-cytokine conjugates that have thus far exhibited highly potent anti-tumor activity. One of its products from this group of antibody-directed interferon-alpha 2b complexes, Veltuzumab-IFN Alpha 2b is the most advanced product of the group and has the support of a $2.8 million grant with an arm of the National Cancer Institute. Furthermore, IFN-lambda complexes are also being considered with the same anti-tumor and anti-viral capabilities as IFN-Alpha complexes, but with more restricted cellular targets. This should enable the complexes to be safer and add the ability of delivering higher doses and greater potency.
The key with these complexes is that the binding action of DNL complexes will allow longer lasting re-direction of T-cells for killing various malignant cells with less frequent dosing while still being highly potent. All this without the need of additional recombinant engineering and protein production. This platform could be a huge breakthrough if human trials mirror the results thus far achieved in the lab.
Navidea Biopharmaceuticals (NYSEMKT:NAVB)
Navidea is a company that recently received FDA approval for one of its products, Lymphoseek, and stands ready to realize some revenue yet the stock is still reeling from a recent sell off. This drug approval comes with an agreement from Cardinal Health (NYSE:CAH) the largest distributor of isotope diagnostics (lymphoseek's market) in the US to market Lymphoseek and the stock is still languishing at $2.58 a share (April 12th). The fundamentals are not that great with a market cap of $288 million, cash of only $9.12 million and debt a little more than that, but FDA approval for a product with some good potential seems to give it more worth. The 1-year target estimate is at $5.29 a share with a 52-week high of $4.77 and 50-day moving average of $2.86 a share giving the stock plenty of room to grow. The question is more about Lyphoseek's potential and a question of what more Navidea can do for investors.
Lymphoseek is an injectable small molecule diagnostic agent used to locate metastic lesions in lymph nodes draining primary tumors. Cardinal Health is vending lymphoseek for use in diagnosing breast cancer and melanoma, however, Navidea has also announced its ability to identify sentinal lymph nodes in patients with head and neck cancers with a high degree of specificity. This one agent could eventually be used for other solid tumors like colorectal and prostate cancers adding to its value. Lymphoseek is also ph neutral, has greater capabilities for results and is easier for nuclear pharmacies to make than current suspension formulas. Even the agreement with Cardinal Health was signed at an early stage and favors Navidea and on top of that hospitals that use Lymphoseek can be reimbursed. This should pave the way for a great future for Lymphoseek. Navidea is also working on NAV4694 to aid in the diagnosis of Alzheimer's disease, NAV5001 for aiding in the diagnosis of Parkinson's disease and other movement disorders and RIGScan for surgical use to help locate occult or metastic cancer (primarily colorectal cancer). With Cardinal Health providing the push for Lymphoseek, Navidea can concentrate on pushing through these other candidates to ensure plenty of future growth potential.
These three companies still present investors with plenty of risk, but the upside seems to outweigh the downside for all three. The question might be more about patience or when things might happen, but the potential is there. Navidea and Cel-Sci might see things happen sooner than later, while Immunomedics might take some time. At least there is something there to offer, that glimmer of hope, that is good for science and can be a boon for investors.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.