It is quite amazing how many busted biotechs there are in the market. Getting new products to market can be extremely challenging in the space, and investors sometimes give up too early on some firms with promise. One biotech firm I recently came across was trading at exponentially higher levels a few years ago is now going for less $3 a share. However, it has a couple of new products finally coming to market by the end of the year and has had some other recent catalysts. The company is Discovery Laboratories (DSCO) and aggressive investors should consider it for a speculative investment.
Recent catalysts for Discovery Laboratories:
- The company has two products Surfaxin and Afectair, both for respiratory distress syndrome, set to launch in Q4.
- Stifel Nicolaus just upgraded the shares to a "Buy" with a $5 price target on the shares.
- Consensus earnings estimates for both FY2012 and FY2013 have improved over the past week.
- The stock was added to the Russell 2000 Index in June.
"Discovery Laboratories is a biotechnology company, focuses on developing products for the treatment of respiratory disease." (Business description from Yahoo Finance).
Three additional reasons DSCO is a solid speculative pick at under $3 a share:
- Revenues are set to explode. After booking under $2mm in sales in FY2012, analysts have Discovery racking up more than $30mm in sales in FY2013.
- The company has over $45mm in net cash on its balance sheet (over 40% of its market capitalization).
- This former highflyer once flew much higher, but looks like it has recently bottomed (See Chart).
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in DSCO over the next 72 hours.