The Biotech industry has had its fair share of winners this year with names like Ariad Pharmaceuticals Inc. (ARIA), Oncothyreon Inc. (ONTY), Vical Inc. (VICL), Jazz Pharmaceuticals Inc. (JAZZ), Pluristem Therapeutics Inc. (PSTI), Heska Corp. (HSKA), Genetic Technologies Ltd. (GENE) and Questcor Pharmaceuticals Inc. (QCOR) all currently posting returns of over 100% year to date (YTD). But what about the sleepers-- those stocks that have yet to dish out those big returns that analysts are expecting?
Here is a look at 4 Biotech micro caps that could very well be next in line to produce 100% returns, or more:
1. China Botanic Pharmaceutical Inc. (CBP) develops, manufactures, and distributes botanical products, bio-pharmaceutical products, and traditional Chinese medicines in the People's Republic of China. The company's botanical anti-depression and nerve-regulation products include Acanthopanax and Tianma. According to China Botanic Pharmaceutical Inc., Acanthopanax is a Siberian Ginseng that regulates the nervous system, delays aging process, strengthens the body, and treats neurasthenia, insomnia, cerebrovascular and cardiovascular diseases and fatigue. Tianma is a botanic drug used for treating headaches and regulating nerves.
The company recently received a patent for its proprietary process to separate and extract effective parts of Siberian Ginseng, Acanthopanax. As stated in a recent Yahoo Finance article:
"The patent for 'Extraction of Effective Parts of Siberian Ginseng and their Preparation and Application' is the catalyst that will continue to drive the development of the Company's innovative Acanthopanax series. Among recent successes using these processes are Lyophilized Syringin Powder and Total Flavonoids capsules. These medicines are powerful new tools in combating depression and senile dementia and have been recognized as 'class one new drugs' and 'innovative drugs' by the State Food and Drug Administration of China. The patent covers a wide variety of possible Siberian Ginseng extraction methods and applications, creating a high barrier to entry for competitors seeking to develop similar Siberian Ginseng products, and, as a result, it confers significant independent intellectual property rights on the Company."
China Botanic Pharmaceutical Inc.'s stock has struggled over the past year, falling from a $2.80 high last November to a recent 52-week low of $0.71 in late June. News of the above-mentioned patent approval, however, has driven the stock back up to a current $1.09, 53.52% above its price just one month ago. The company has a current analyst rating of one strong buy with a price target of $4.88. Based on this target, the stock has an upside potential of 347.71% and may very well continue to produce significant returns, similar to those experienced over the past month.
2. IntelGenx Technologies Corp. (IGXT.OB) is currently awaiting approval of its new drug, CPI-300. CPI-300 is a novel, high strength dosage of Bupropion Hydrochloride (HCl), the active ingredient in Wellbutrin XL®. Valeant Pharmaceuticals International Inc. (VRX), the current manufacturer of Wellbutrin XL®, has been unable to successfully develop a single dose 450mg (must take multiples of lower strengths). IntelGenx Technologies Corp., however, has found success in producing this higher dosage with the help of its VersaTab technology, a cutting edge, multilayer, controlled-release tablet. IntelGenx Technologies Corp. is expecting approval of its CPI-300 tablet on the FDA decision date, November 13, 2011.
IntelGenx Technologies Corp. is currently trading at $0.80, 128.57% above its $0.35 price level a year ago. The stock's volume has also increased significantly in the past year, from a 5k daily average to a current 500k daily average. The company currently holds one buy analyst recommendation with a price target of $2.06, 157.50% above the stock's current price. All things considered, IntelGenx Technologies Corp. looks to have a bright future ahead and, if all goes to plan with its new drug, CPI-300, is very likely to produce significant returns.
3. Adventrx Pharmaceuticals Inc. (ANX) is a specialty pharmaceutical company focused on acquiring, developing, and commercializing proprietary product candidates. The Company's lead product candidates are Exelbine™, or ANX-530, a novel emulsion formulation of the chemotherapy drug Vinorelbine (Navelbine®); ANX-514, a novel, detergent-free emulsion formulation of the chemotherapy drug Docetaxel (Taxotere®); and ANX-188, a novel, purified, rheologic and antithrombotic compound initially being developed as a first-in-class treatment for pediatric patients with sickle cell disease in acute crisis.
Adventrx Pharmaceuticals Inc. is currently in its second attempt to gain approval for its leading candidate drug, Exelbine™. As stated in a recent article from The Motley Fool, "In late 2009, Adventrx submitted its application for Exelbine, but the agency refused to accept the application. The FDA wanted stability data to set the expiration dates, which took about a year to assemble and refile."
According to Adventrx Pharmaceuticals Inc., however, the drug's 12-month data were consistent with the six-month and nine-month time points. The 2009 refusal doesn't say much about the approvability of the drug and, as the FDA is requesting proven stability of Exelbine™, the above data should provide the agency with the required information. In other words, the approval of Exelbine™, though not yet certain, is likely.
This time last year Adventrx Pharmaceuticals Inc. was trading at $2.00; now trading at $2.95, the stock holds a current one year price return of 47.50%. Volume has also increased, year over year, from a 250k daily average to a current 1 million daily average. The company currently holds a strong buy analyst recommendation with a $16.00 price target, a very significant 442.37% above its current price. With strong price performance, likely approval of its new drug, Exelbine™, and significant analyst confidence, Adventrx Pharmaceuticals Inc. is definitely a stock to watch.
4. Discovery Laboratories Inc. (DSCO) develops surfactant therapies to treat respiratory disorders and diseases based on its KL4 surfactant and capillary aerosol-generating technologies. Its development stage products include Surfaxin, a synthetic, peptide-containing surfactant in phase III clinical trial for the prevention of respiratory distress syndrome in premature infants; Surfaxin LS, a Phase III trial product to improve ease of use for healthcare practitioners; and Aerosurf, an aerosolized KL4 surfactant that has completed first pilot Phase II clinical trial for the treatment of respiratory distress syndrome in premature infants.
Surfaxin, the company's first drug product candidate, has gone seven years without approval. But the company is still very confident in its drug's future. As stated in a recent Philadelphia Business Journal article, Discovery Laboratories Inc.'s Chairman and CEO, Thomas Amick, believes that "...the elusive approval could occur as early as the first quarter of 2012."
“We have made considerable progress in our comprehensive preclinical program intended to gain FDA approval for Surfaxin,” Amick said.
Surfaxin aside, the company has also made significant progress with its aerosolization research program, yielding a new experimental drug-delivery device named Afectair, a disposable adapter that simplifies the delivery of any aerosolized medication to critical-care patients requiring ventilatory support from either intermittent mechanical ventilation or continuous positive airway pressure.
Discovery Laboratories Inc.'s stock has fallen from $4.07 a year ago to a current price of $2.47, yielding a dismal -39.01% yearly return. But after hitting its $1.71 52-week low in March of this year, the stock has since rebounded, yielding a 44.44% return. Analyst opinion currently stands at one buy recommendation with a $5.00 price target, 102.43% above the stock's current price. Though it may not happen in the immediate future, progress on the Surfaxin approval and Afectair development should push this stock closer to analyst expectations.
In conclusion, with a combined, average upside potential of 262.63%, these four Biotech sleepers may not be dormant for much longer.
Disclosure: I am long ANX, IGXT.OB.