In 2010, Reckitt Benckiser's Suboxone(NYSE:R) and Subutex(R) became the first addiction drugs to achieve "blockbuster" status with combined U.S. sales of over $1 billion. Recognition of this milestone, along with the looming "patent cliff" faced by the world's largest pharmaceutical companies, has increased the number of companies interested in discussions about partnering opportunities for CPP-109 and CPP-115. While no definitive partnering agreements have been entered into to date, Catalyst's goal is to make significant progress on this front before the end of 2011.
Biotechs and healthcare stocks have been outperfoming the market. These dirt-cheap biotech companies all have interesting products in the pipeline that could become major catalysts in the future. The lower-priced stocks tend to have more risk, but far more potential reward. The stocks below are trading at valuations that appear to be a buying opportunity that could provide for very substantial gains. Many of these stocks fell from their long term highs, on analyst downgrades and other issues. Others have been seemingly ignored by the stock market and do not appear to be fully valued. There is nothing better than buying a stock at a very low price and watching it become worth several times your initial investment. Some of these stocks have spiked up lately -- names like Inhibitex (NASDAQ:INHX), Acorda (NASDAQ:ACOR), and Biosante (BPAX) -- so I would wait for pullbacks. However, others like Catalyst Pharmaceutical Partners (NASDAQ:CPRX) and Antares (AIS) offer incredible potential gains and will probably follow the rest of the group and spike higher soon.
Most of the companies discussed here are potential takeover targets but all of them have tremendous upside potential whether or not they are acquired. There is tremendous interest from pharmaceutical companies to buy biotech companies and create partnerships with them to gain access to high potential drug pipelines. Even Amgen (NASDAQ:AMGN) could be a buyout target; read more here about the likelihood for many more biotech buyout deals. Below, I detail why these biotech stocks could be poised for major gains in the near future.
Antares Pharma Inc. is trading around $1.85. Antares is a biotechnology company based in New Jersey. These shares have traded in a 52-week range between $1.32 to $2. The 50-day moving average is $1.71 and the 200-day moving average is $1.59. Earnings estimates for AIS are for a loss of 4 cents per share for 2011 and profit of 18 cents for 2012. Insiders have been buying, as you can see here.
Antares recently announced that the FDA has agreed to review its application to market Anturol Gel as a treatment for overactive bladders, and expects to make a decision by early December. Approval of this application could send the shares up significantly.
Catalyst Pharmaceutical Partners, Inc. shares are trading for about $1.29. Back in 2007, First Albany had a $10 price target, while Stifel Nicolaus and Rodman and Renshaw both had $9 price targets with buy ratings. The buy ratings and $9 to $10 price targets were just before the financial crisis, and it seems like everyone has forgotten about this little biotech that clearly still has potential and has made significant progress over the past four years. One analyst still has a $9 price target, which you can see here. CPRX has a very low burn rate compared to most biotechs; management has been conservative and made substantial purchases of this stock. The 52-week high is $1.54 and with volume picking up and the shares only about 30 cents away from that level, it looks like these shares could be ready to make new highs soon. The chart for this stock looks good as well, with the 50-day moving above the 200-day moving average, the chart shows a new golden cross formation, which often indicates the start of a new upward trend.
Catalyst has some big players invested in its stock. Federated Investors owns nearly 12% of this company and FMR, LLC (Fidelity) owns about 6%. Late last year, Catalyst began a $10 million clinical trial, the majority of which (about $7.2 million) is being paid by the government. The trial is for CPP-109, "Vigabatrin," to treat cocaine addiction. The company also has CP-115, which it says "has the potential to address a broad range of diseases affecting the central nervous system beyond addiction, such as adult epilepsy and infantile spasms." What intrigues me most about this is the following portion:
An agreement to partner with a major pharmaceutical company would potentially send this stock soaring from current levels. CPP-109 has been granted fast track status by the FDA for the treatment of cocaine addiction, which indicates that the FDA has recognized that CPP-109 is intended for the treatment of a serious or life-threatening condition for which there is no effective treatment and which demonstrates the potential to address unmet medical needs. With a market cap of only about $24 million and the potential to bring a blockbuster drug to market, it would not be surprising to see a major company takeover CPRX or announce a major partnership agreement, which is one of the company goals for 2011.
Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) is trading around $10.47. ALNY is a biotechnology company based in Massachusetts. These shares have traded in a range between $8.79 to $17.59 in the last 52 weeks. The 50-day moving average is $9.77 and the 200-day moving average is $11.12. ALNY is estimated to lose about $1.22 per share in 2011 and post a loss of about $1.61 per share for 2012. In the product development pipeline, Alnylam has candidates for Huntington's disease, liver cancer, RSV infections, anemia and more.
According to the latest data on shortsqueeze.com, there are about 3.6 million shares short. Based on average volume of just about 182,000 shares traded per day, it would take about 20 days worth of volume to match the number of shares short.
Acorda Therapeutics is trading around $32. Acorda is a biotechnology company based in New York. These shares have traded in a range between $20.43 to $38.24 in the last 52 weeks. The 50-day moving average is $25.92 and the 200-day moving average is $26.90. ACOR is estimated to earn about 64 cents per share in 2011 and $1.21 in 2012.
Acorda has seen a surge in revenues from sales of its multiple sclerosis drug called Ampyra. You can read more about its latest quarter here. An analyst at Cowen Healthcare Royalty Partners recently said he thinks Acorda is a likely takeover target.
Biosante Pharmaceuticals, Inc. is trading around $3. Biosante is a biotechnology company based in Illinois. These shares have traded in a 52-week range between $1.29 to $2.60. The 50-day moving average is $2.26 and the 200-day moving average is $1.81. Earnings estimates for BPAX are for a loss of 49 cents per share for 2011 and loss of 13 cents for 2012.
BPAX has a licensing agreement with Teva Pharmaceuticals (NASDAQ:TEVA) for Bio-T-Gel, which treats low testosterone levels. The NDA is pending with the FDA for this product and Teva is responsible for all regulatory and marketing. BPAX also has the right to receive up to $140 million in sales-based milestone payments from Azur for Elestrin (which targets estrogen) if it reaches certain predefined sales per calendar year. You can read more about this and other products in the pipeline here. Insiders were buying BPAX shares at the begininng of this year. It's easy to see why one of Biosante's existing partners or another major pharmaceutical company might buy this company outright. Biosante has a strong balance sheet with about $51 million in cash; see this and other financial details here.
Keryx Biopharmaceuticals, Inc. (NASDAQ:KERX) is trading around $5.42. Keryx is a biotechnology company based in New York. These shares have traded in a 52-week range between $3.03 to $5.92. The 50-day moving average is $5.03 and the 200-day moving average is $4.63. Earnings estimates for KERX are for a loss of 35 cents per share for 2011 and loss of 41 cents for 2012. In the product development pipeline, Keryx has a number of interesting candidates.
A number of analysts have recently put buy and market outperform rating on KERX shares. This company has two candidates -- Perifosine for multiple myeloma and colorectal cancer, and Zerenex, which targets hyperphosphatemia in patients with end-stage renal disease -- both of which are currently in phase 3 trials.
Inhibitex, Inc. is trading around $4.59. Inhibitex is a biotechnology company based in Georgia. These shares have traded in a 52-week range between $1.31 to $5.23. The 50-day moving average is $3.88 and the 200-day moving average is $2.66. Earnings estimates for INHX are for a loss of 41 cents per share for 2011 and loss of 44 cents for 2012. In the product development pipeline, Inhibitex has a number of interesting candidates.
Inhibitex's pipeline targets viral and bacterial infections, including herpes zoster (shingles), chronic hepatitis C, and S. aureus infections. Inhibitex has a license and collaboration agreement with Pfizer (NYSE:PFE) for the development of vaccines against staphylococcus.