Thursday was a huge day for two of the biotech stocks in my portfolio. Gilead Sciences (GILD), which I have been positive on for some time, is up 14% after the company posted positive results from a 12-week study of its Hepatitis C treatment GS-7977. Human Genome Sciences (HGSI) which I picked up late last year has doubled on reports it has spurned a $13/share off from GlaxoSmithKline (GSK). I have decided discretion is the better part of valor and took profits on both of these stocks. This kind of pop demonstrates the potential and volatility of investing in the biotech sector. Your stock does nothing for months and then spikes up or down radically based on test results or M&A activity. Two of my remaining biotech positions have done nothing since I bought and recommended them earlier in the year, but I plan to remain patient with them and hope to see the same kind of positive events at some point in the future.
Geron Corporation (GERN)
4 reasons Geron is a great high risk/high reward play at just over $1.50 a share:
- Insiders have added to their holdings over the past six months.
- The mean analysts' price target on the stock is $5 a share. The stock is only covered by three analysts. High target is $6 and the low target is $3 a share.
- Approximately 60% of this stock's market capitalization is net cash. This represents around 2 years of funding at current burn rates.
- Given the company's small size (Less than $100mm after stripping out cash), focus on cancer therapies and the increasing M&A activity in biotech; It is not hard to imagine company receiving a significant buyout offer in the future.
Vical Incorporated (VICL)
4 reasons Vical is a good investment for speculative, aggressive investors at $3 a share:
- One of company's vaccines just reached a key milestone which triggered a $10mm payment to the company. A malaria vaccine also shows promise.
- The mean analysts' price target on the stock is $6.25 a share. The stock is followed by 4 analysts. High target is $7 and the low target is $6 a share.
- The company has a solid balance sheet with over $60mm in net cash (Approximately 25% of market capitalization), which gives the company years of funding given its improving burn rate.
- Insiders seem to believe in company given that there has been $10mm in new buying so far in 2012.