Seeking Alpha
Long only, special situations, biotech, small-cap
Profile| Send Message|
( followers)  

All investors know the risks of biotechnology companies. The strong volatility of these companies makes their prices fluctuate in excess. This sector has the peculiarity that offers a high risk but with a possible high gain. Identify pharmaceutical companies that have bottomed out or that are undervalued can be a good investment strategy for medium-term and short-term.

In the following table will be able to see the readers, 3 Healthcare companies which have greatly reduced their quoted prices since on January 3, 2012.

Company Quote on January 3, 2012 Quote on October 12, 2012 %
Zalicus Inc (ZLCS) $1.22 $0.60 -50.82%
Dendreon Corp (NASDAQ:DNDN) $7.56 $4.18 -44.71%
Athersys Inc (NASDAQ:ATHX) $1.86 $1.21 -34,95%

As you have seen in the upper table these companies have been hit hard during October, 2012. To determine if these companies are undervalued I have made a fundamental analysis of each company.

1. Zalicus Inc

It is a biopharmaceutical company, discovers and develops drug candidates focusing on the treatment of pain and inflammation. The company’s clinical and preclinical product candidates include Z160, an N-type calcium channel blocker and Z944, an oral T-type calcium channel blocker. This small pharmaceutical company has agreements with major companies in the sector, such as Covidien (NYSE:COV), Novartis (NYSE:NVS), Sanofi (NYSE:SNY), Hydra biosciences, Amgen Inc (NASDAQ:AMGN) and the U.S. Army Medical Research Institute for Infectious Diseases.

Zalicus has a market cap of $69.36 million. Its trailing P/E is incalculable, and its forward P/E is just incalculable as the majority of pharmaceutical companies of small-capitalization. Zalicus' estimated growth rate for this year is -1.87%. It has a total cash position on its balance sheet of just $45.95 Million. The company announced a revenue on six months ended June 30 of $5.24MM.


(Click to enlarge)

This stock plunged from its June high of $1.62 to a recent low in October of $0.51. If you are bullish on this stock, I would look to be a buyer on the next high-volume move above some near-term overhead resistance at $0.61 a share. Look for volume that's tracking in close to or above its three-month average action of 2,287,525 shares. RSI marks an oversold and MACD marks a change of upward trend.

2. Dendreon Corp.

It is a biotechnology company, engages in the discovery, development, and commercialization of novel therapeutics to enhance cancer treatment options for patients. The company’s products portfolio includes active cellular immunotherapy and small molecule product candidates to treat a range of cancers.

Dendreon Corporation has a market cap of $625 Million. Its trailing P/E is incalculable and its forward P/E is just incalculable as the majority of pharmaceutical companies of small-capitalization. Dendreon's estimated growth rate for this year is 27.32%. It has a total cash position on its balance sheet of just $497.54 Million. The company announced a revenue on six months ended June 30 of $162.06 Million.


(Click to enlarge)

This stock plunged from its February high of $17.04 to a recent low in October of $4.05. If you are bullish on this stock, I would look to be a buyer on the next high-volume move above some near-term overhead resistance at $4.31 a share. Look for volume that's tracking in close to or above its three-month average action of 4,315,510 shares. RSI marks an oversold and MACD marks a downward trend.

3. Athersys Inc

It is a biopharmaceutical company, engages in the discovery and development of therapeutic products in various disease areas in the United States. Its clinical development programs are focused on treating inflammatory and immune disorders, neurological conditions, cardiovascular disease, and other conditions

Athersys has a market cap of $35.97 Million. Its trailing P/E is incalculable and its forward P/E is just incalculable as the majority of pharmaceutical companies of small-capitalization. Athersys' estimated growth rate for this year is 1.58%. It has a total cash position on its balance sheet of just $10.86 Million. The company announced a revenue on six months ended June 30 of $5.40 Million.


(Click to enlarge)

This stock plunged from its December, 2011 high of $2.42 to a recent low in October of $1.15. If you are bullish on this stock, I would look to be a buyer on the next high-volume move above some near-term overhead resistance at $1.24 a share. Look for volume that's tracking in close to or above its three-month average action of 351,385 shares. RSI marks an oversold and MACD marks a change of upward trend.

*Chart data sourced from finviz.com, all other data sourced from yahoo.com as well as the webs of the previously mentioned companies.

Source: 3 Small-Cap Healthcare Companies That Have Bottomed Out In October