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The risk associated with investing in biotechs becomes evident when the shares of a given biotech come tumbling down to new lows. Five examples of biotechs that have met or are approaching new lows are outlined below. Can any of them make it back into the good graces of investors? When share prices reach such lows, it is always a good time to take a look at the upside of each in order to get a better idea if money can be made by jumping on board with the lower risk. This should not be the end of the game for each of these, but the time it takes to turn things around might be too much of a concern despite the prospects of money that can be made.

Titan Pharmaceuticals (OTCQB:TTNP) -- 74% loss (May 1-2)

Titan Pharmaceuticals dropped like a rock last week when they received a Complete Response Letter from the FDA rejecting their lead drug, Probuphine. Probuphine is a matchstick sized implant designed to release buprenorphine continuously over a six-month period. This FDA rejection came as a surprise to Titan's leadership and investors alike due to the fact that an outside Psychopharmacologic Drug Advisory Board to the FDA voted 10-4 to approve the drug in March. The panel raised some valid concerns which pretty much mirrored the concerns in the FDA Complete Response Letter. The FDA would like to see if Titan can boost the dosage of Probuphine to be more in line with blood plasma levels achieved by buprenorphine delivered by competing drug Suboxone.

Additionally, they seem to believe that the current dosage is ineffective against relevant doses of antagonists which again kind of points to the plasma levels achieved by the continuous action implant. Another major issue seems to be in the implanting of the device and how or if addiction medicine specialists or psychiatrists would be trained to implant the device. Having to do this by outsourcing to a surgeon or improper training would both be problematic.

The FDA rejection was shocking to Titan and its partner for Probuphine, Braeburn Pharmaceuticals, but investors seemed to react accordingly. The shares closed at $1.68 on April 30 and fell to a close at about $.45 a share on May 1. This beleaguered company now has a market cap of only $36.4 million (May 3) and still has a product in Fanapt for the treatment of schizophrenia. Probuphine might not be dead as the FDA is still out to approve tamper resistant drug formulations, but it is unclear where Titan will head until they get some questions answered by the FDA. Many questions remain, like how long their $18 million in cash will last, but at this price Titan still might be worth watching.

Aveo Pharmaceuticals (NASDAQ:AVEO) -- 64% loss (April 29 to May 2)

Aveo Pharmaceuticals and partner, Astellas Pharma, recently received the kiss of death from the advisory panel to the FDA for their drug Tivopath (tivozanib). The FDA panel voted 13 to 1 against recommending the once a day pill for the treatment of advanced renal cell carcinoma. The panel basically found the drug to be unworthy of approval because the benefit to risk evaluation was unfavorable and results were mixed when compared to Onyx Pharmaceuticals (NASDAQ:ONXX) and Bayer's (OTCPK:BAYRY) drug, Nexavar. The median survival fell short of Nexavar even though the progression-free survival of tivozanib was significantly better.

One of the trials for tivozanib had results indicating that patients were less likely to be alive a year after starting treatment when compared to Nexavar. The side effects of tivozanib appeared to be less pronounced; however, severe high blood pressure was more common in tivozanib patients. Some of the patient survival edge associated with Nexavar might have had to do with the fact that Nexavar patients were able to receive additional treatments following the trial endpoint. The milder side effect with tivozanib did lead to fewer patients going off treatment or lowering doses compared to Nexavar, but the FDA might be looking for more of a difference between the two drugs in both safety and efficacy in order to strengthen tivozanib's cause.

The question now is how to proceed. The advisory panel is most often a precursor to the FDA's action and that is why this stock had such a big fall. The drug might not be dead, but the prospect of additional trials is pretty real. The original trials were conducted in Eastern Europe and were "crossover" trials that did not favor tivozanib in these trials. Aveo also has Taurus for renal cell carcinoma and more drugs in its pipeline like monoclonal antibodies to fall back on, but tivozanib was its lead drug candidate. Shares just closed at $2.52, putting Aveo's market cap at just under $110 million. Aveo does have over $160 million in cash and short term investments to work with making its situation better than most. The stock could fall more, but is still intriguing at this current price.

Delcath (NASDAQ:DCTH) -- 67% loss (April 30 to May 3)

Delcath Systems also received bad news from an FDA advisory panel that voted 16-0 against approving its only major product, the Melblez kit for liver cancer that originated in the eye. This rejection centered around the risks of the treatment which were evident in the 7% mortality rate due to side effects of the 122 people treated in trial. The advisory panel further asserted that the treatment did little to improve the overall patient survival rate and the delayed disease progression. Most of the issues involve the filter in Delcath's proprietary Hepatic Delivery System and its inability to function properly to filter the chemotherapy drug, Melphalan hydrochloride, from the bloodstream following administration of high doses in the treatment process. The goal of the device is to protect the patient from these high doses that are used to saturate the liver in the first place. Delcath insists that data from trials would be significantly better with its new Gen2 filter, but the FDA's response was to basically "prove it." This means that Delcath's Melblez kit is dead in the water unless they want to go through with 18 months or more of new trials with the Gen2 filter in order to gain approval.

This news has not been met with any sympathy from investors. Delcath's shares plunged from a close of about $1.39 a share on April 29 to where it stood at $.46 a share on May 3. Since Delcath Systems is really more like Delcath "System," this advisory panel rejection really puts on the brakes on any stock performance for quite some time. If Delcath can get approval on the system, it might actually find additional cancers and organs where it can be used, which will bring a significant boon to investors. It is now just the time and money that it will take to prove the Gen2 filter works and the high doses of melphalan hydrochloride also offers a signifiant improvement. As it stands now, with a market cap of about $36 million and $23.7 million of cash in hand, Delcath has a long road ahead to recover from this loss.

Discovery Laboratories (NASDAQ:DSCO) -- 26% loss (April 14-16)

Unlike the other companies mentioned here, Discovery Labs already has approval from the FDA for its product, Surfaxin. Surfaxin was set to become the new standard in critical respiratory care by its introduction of a synthetic surfactant to replace animal-derived surfactants in use today. The FDA apparently has wet feet and has requested "clarification" and further details regarding the product specifications following a change in analytical chemistry methods used by Discovery to assess Surfaxin's conformance to these specifications. While Discovery was looking to improve these methods in a routine review, the FDA now wants to know more about the process and documentation of the new methods. This is far from a knockout blow to Surfaxin's future, but it is going to cost Discovery more time and money to advance the drug any further.

Among the FDA's recommendations are for new documentation of Surfaxin's product specifications, a request for two existing documents related to the improved analytical chemistry methods, and a request for supporting data using the improved methods as it pertains to the new Surfaxin batches. These steps are more or less asking Discovery to show their work in writing and could lead to a couple months of extra work -- or even more -- if the FDA is unsatisfied. Discovery still plans on introducing Surfaxin to the marketplace in the fourth quarter of this year, but this bump in the road is enough to scare off some investors as the recent sell off seemed to support.

Discovery shares fell from $2.39 a share on April 12 to $1.85 a share on April 15 and closed at $1.66 a share on May 3. These changes to the analytical chemistry methods could turn out to be better for Surfaxin in the long run, but time is money when it comes to biotechs. Discovery only has about $27 million (as of January 2013) left in its tank after burning through roughly $37 million in 2012. Discovery still has Afectair airway connecting devices and has Aerosurf, drug-device combination, in development along with KL4 surfactant, but Surfaxin is the lead candidate that has taken its bumps along the way with the FDA's processes. Discovery looks to have plenty to offer science, but the question with investors is more of a "when" along with why it seems to be taking so long for its advancements. At $1.66 a share and a market cap under $100 million at $72.5 million, this certainly makes Discovery a very compelling prospect.

Unilife Corporation (NASDAQ:UNIS) -- 29% loss (April 10 to May 3)

I recently wrote about Unilife and was very interested in their niche drug delivery market along with their capabilities. It seems like little can pull this stock up from sinking further down. In April, Unilife entered into an agreement with an undisclosed U.S. pharmaceutical company to provide its EZMix dual chamber syringe for delivering the company's lyophilized pipeline drug. This agreement has the potential of generating significant revenues over a 15-year period, while also providing $3 million to help fund the production of the device and $3 million during the one to two years of trials for using the device. This is a big step for a company that specialized in syringes and drug delivery devices as more agreements like this are necessary to better position the company within the pharmaceutical industry.

This supports Unilife's strategy of going after pharmaceutical companies to provide its products in the developmental stages of drugs to gain FDA approval as a system and realize royalties and future revenues based on these partnerships. This allows Unilife to operate with less of a sales force and provides long term revenue sources without having to go up against hospital and institutional giant, Becton, Dickinson and Co. (NYSE:BDX) and its large sales force. This strategy appears to be working as Unilife just presented at Phamapak Europe and is doing the little things necessary to get more attention from the pharmaceutical industry. Although Unilife appears to be taking positive steps, the investor community has avoided jumping on board.

Unilife's stock has been sinking while the stock market surges to new highs. The current price of $1.88 a share (as of May 3) is hovering just above its 52-week low of $1.80 a share. This poor performance is despite not losing a battle with the FDA and having the love of analysts and many others in the scientific community as well. Sure, the financials are far from impressive as money continues to burn and movement is far from fast, but Unilife would appear to have a better life ahead. Unilife did have a stock offering in early February for $10 million, but that might not be enough unless more agreements with pharmaceutical companies can be struck. The direction and approach are solid and if investors can look a little beyond the cash situation, there should be plenty of room for growth.

The FDA has plenty to say about the valuations of most biotechs, but once the hurdles are cleared the marketing and direction can make a huge difference in maintaining any momentum and growth. If the product is right and the market is receptive, buying shares on the dip can make a big difference in money realized when a breakout occurs. Take a look at any of these five companies and consider if you think any of them has the right stuff. Remember the risk, but at these lower valuations it might at least diminish the chances of suffering a big loss.

Source: Looking For Opportunity - 5 Biotechs That Crashed