Biotechs have been on fire lately, and I have been scouring through some Biotech that have yet to move. I have been acquiring shares of Sickle Cell biotech Adventrx Pharmaceuticals (ANX). Adventrx Pharmaceuticals' leading drug is ANX-188, a rheologic, antithrombotic and cytoprotective agent that improves microvascular blood flow and has potential application in treating a wide range of diseases and conditions, such as complications from Sickle Cell disease. The study of ANX-188 in sickle cell disease has completed phase II drug testing and they are preparing for the phase 3 stage. The stock currently trades 20 percent below its cash position. As of the last quarter end, filed August 6th, the company has no debt and a strong cash position of over $43 million or .90 cents per share.
$665 Million Dollar Elephant
The discount to cash alone is reason to pounce on this undiscovered biotech. However the big reason I am long and so bullish on the stock is the recent $665 million agreement competitor Selexys Pharmaceuticals made with Novartis. Selexys Pharmaceuticals is a biotech whose leading drug also helps Sickle Cell disease and its drug is ready to begin a broader Phase 2 clinical study. Selexys has agreed to provide Novartis Pharmaceuticals, an exclusive option to buy Selexys and its developing drug called SelG1 after the successful completion of the Phase 2 study. The deal, which includes upfront, acquisition and milestone payments, could total up to $665 million.
The $665 million dollar price gives an idea of the value of this medical technology. Selexys Pharmaceuticals is still in Phase 2 stages compared to Adventrx which is commencing Stage 3. The current market cap for ANX is $36 million. In my opinion the Novartis deal made with Selexys is cheap and Adventrx knows it, as ANX-188 is not just beneficial for Sickle Cell disease but other diseases as well such as Acute Chest Syndrome and Hemorrhagic Shock. I have been accumulating shares at these levels and anxiously await further developments from the company.
Investors should take note, (or take under consideration), that this stock is considered a microcap stock and trades below a dollar per share. Trading in sub-dollar micro cap stocks can be a risk due to extreme volatility. The risk to any biotech stock is that their drugs in development may never get approved by the FDA.
Disclosure: I am long ANX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.