"Palatin is eligible for milestone payments totaling to $145 million, with up to $85 million contingent upon development and regulatory milestones and the balance on achievement of sales targets, together with the payment of royalties on sales of approved products. AstraZeneca assumed responsibility for product commercialization, product discovery and development costs, with both companies contributing scientific expertise in the research collaboration. In addition, Palatin is providing certain research services to AstraZeneca." (Read more about that agreement here).
These dirt cheap biotech stocks have just had new, highly positive analyst upgrades, with price targets that are about triple the current price (or more). Some of these biotechnology companies-- such as Palatin Technologies, Inc. (NYSEMKT:PTN)-- have not yet been discovered by most investors, which adds to their upside. Positive results on clinical trials, partnership agreements, and other news are just some of the catalysts that could send these stocks much higher.
Huge gains are possible when buying a biotech stock at a very low price and it's always a thrill to watch it become worth many times your initial investment. Those are the kinds of gains that can substantially boost your portfolio, sometimes in a very short period of time. Almost all of these biotech companies have very substantial amounts of cash or cash equivalents on their balance sheets. Most of them also have either little to no long term debt. These companies all have interesting products in the pipeline (some could even be "blockbusters"), which could become major catalysts in the future. Also, it's worth noting that (except for Keryx (NASDAQ:KERX)) all of these stocks have held up well, and even shown some strength in what has been a very negative market for weeks. This could be indicating they are ready to move higher, especially when markets turn. Below, I detail why these biotech stocks could be poised for major gains in the near future. Here are the stocks that have upside potential of about 300% to even about 600%:
Adventrx Pharmaceuticals, Inc., (ANX) is trading around $2.85. Adventrx is a biotechnology company, based in California. Shares have traded in a 52 week range between $1.50 to $3.45. The 50 day moving average is $2.49 and the 200 day moving average is $2.28. According to Yahoo Finance, ANX has about $46.5 million in cash and no long term debt. They also have the book value at $1.89. You can see all that data here. Early this year, the U.S. Food and Drug Administration accepted a filing for Exelbine (one of their lead drug candidates), and established a goal date of September 1, 2011 to finish its review of the Exelbine NDA.
Why Adventrx shares could surge higher: Rodman & Renshaw recently raised the price target to $16. The company is expecting an update on its Exelbine NDA around September, which if positive could be a huge catalyst for the shares. If the price target of $16 is reached, investors buying now will gain over 500%.
Palatin Technologies (PTN) has been building a solid base in the 80 to 90 cent range. Palatin is a biotechnology company, based in New Jersey. These shares have traded in a range between 78 cents to $2.70 in the last 52 weeks. The 50 day moving average is 88 cents and the 200 day moving average is $1.14. PTN is developing a diverse range of products for the treatment of sexual dysfunction and other ailments such as congestive heart failure, obesity and metabolic syndrome. Palatin has a partnership agreement with drug giant AstraZeneca (NYSE:AZN) whereby:
Although Palatin is not well know amongst most retail investors, famed biotech investors "Deerfield Capital Management" and "BVF, Inc., (Biotechnology Value Fund)" are also heavily invested in this company. You can see that each of these investment companies own a about a 10% stake (for a total of almost 20%) in PTN here. Finally, PTN has at least one more exceptional biotech investor with a major stake of 3,250,000 shares (which is about 9.3% of the company), and that is Jeffrey R. Jay, MD, of Great Point Partners. Jay has an MBA from Harvard as well as an B.A./M.D., (magna cum laude and honors), from Boston University. You can read more about Great Point Partners, and his education and investment experience here. These three very savvy investors are a testament to the tremendous amount of upside in PTN shares.
Why Palatin shares could surge higher: Roth Capital just recently rated PTN a buy with a $5 price target. Palatin raised capital earlier this year, and now has a strong balance sheet with about $22 million in cash and a book value of about 46 cents. The high cash levels and partnership agreement with AstraZeneca for its obesity drug candidate takes a great deal of risk away for current investors. Palatin expects that current cash on hand will fund the company through the end of 2012, which should allow it to make significant clinical progress on its drug candidates and partnerships. You can see that statement and their latest quarterly report here.
A few days ago, Palatin announced that it was issued a U.S. Patent for a key component in its PL-3994 drug candidate. PL-3994 is a compound in development for treatment of asthma, heart failure and refractory hypertension. This new patent issuance could be the key to a future partnership agreement with a major pharma company. This stock looks like an opportunity to buy at the bottom, and with a handful of smart money investors owning a significant stake in PTN, the downside appears very limited and the upside from about 85 cents looks exceptional. If the price target of $5 is reached, investors buying now will gain about 600%. If the stock even reaches half of that price target, it would still be a home run. The ultimate target price remains to be seen, but what I do know is that shares are way too cheap now.
Chelsea Therapeutics (NASDAQ:CHTP) is trading around $5. CHTP is a biotechnology company, based in North Carolina. These shares have traded in a range between $2.73 to $8.20 in the last 52 weeks. The 50 day moving average is $4.59 and the 200 day moving average is $5.04.
Why Chelsea shares could surge higher: I first started writing about this company when the stock was lower, but there is still a lot of upside and a new analyst upgrade to consider. Chelsea is pursuing an orphan drug strategy for a drug called Northera (Droxidopa) for the treatment of hypotension. (Yes, that's Hypotension, not hypertension.) This treatment has been approved and marketed in Japan for over 15 years, and generates about $50 million in revenue in that country. You can read more about this and other key products in their pipeline here. Recently, Chelsea released positive data on this drug and it caused an analyst to raise the price target to $18 due to their belief this will be approved early in 2012, see that here. If the price target of $18 is reached, investors buying now will gain over 300%.
Rexahn Pharmaceuticals, Inc., (NYSEMKT:RNN) is trading around $1.20. Rexahn is a biotechnology company, based in Maryland. These shares have traded in a range between 97 cents to $3.68 in the last 52 weeks. The 50 day moving average is $1.24 and the 200 day moving average is $1.26. This company is working on treatments for cancer, central nervous system disorders, sexual dysfunction, and other medical problems.
Why Rexahn shares could surge higher: Just days ago, analysts at Brean Murray set a price target at $3: If the price target of $3 is reached, investors buying now will gain nearly 300%.
Keryx Biopharmaceuticals, Inc. (KERX) is trading around $4.57. Keryx is a biotechnology company, based in New York. These shares have traded in a 52 week range between $3.03 to $5.91. The 50 day moving average is $4.92 and the 200 day moving average is $4.71. Earnings estimates for KERX are for a loss of 35 cents per share for 2011 and loss of 41 cents for 2012. Keryx has a number of interesting candidates in the product development pipeline. 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.
Why KERX shares could surge higher: A number of analysts have recently put buy and market outperform ratings on KERX shares. MLV Capital recently put a buy rating on KERX with an $18 price target. If the price target of $18 is reached, investors buying now will gain over 300%.