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Over 25 years individual investment experience in stocks, bonds, options, and Forex trading. I have developed my own model to find out of favor stocks, stocks with high short interest, and developing technologies for high value investment opportunities. Bachelor of Arts, Criminal Justice:... More
  • 3 Biotech Stocks Making Big Gains On Big Catalysts 2 comments
    Jun 17, 2014 11:14 AM | about stocks: DARA, ICPT, MNKD, NWBO

    Biotech stocks can be some of the riskiest and most rewarding investment decision an investor can make. Investors can make huge gains in a very short time, they can take huge losses in an even shorter time, and some can lie dormant forever with no real catalyst events. So far this year, biotech investors have had seen some very big winners, and some very big losers. However, 3 biotech companies in particular are making huge news in the markets and throughout the biotech community. Northwest Biotherapeutics (NASDAQ:NWBO), DARA BioSciences (NASDAQ:DARA), and MannKind (NASDAQ:MNKD) have leapt to the forefront with huge catalysts developing. All 3 companies also boast some of the highest short interest percentages among any other listed company.

    Northwest Biotherapeutics, Inc.

    Northwest's stock has been all over the map in the past few months, recently falling down to the $5.50 trading area, but today the company released some very impressive data from their DCVAX-DIRECT trial that sent shares roaring to the upside. "In the ongoing Phase I/II clinical trial of DCVAX-Direct for all types of inoperable solid tumors, all 9 out of 9 patients who have received 4 of the 6 planned injections are showing tumor cell death, tumor shrinkage, substantial immune cell accumulation in their tumors and/or stabilization (i.e., stopping the progression) of their advanced cancer. In addition, in 3 of these 9 patients, biopsies now showed no live tumor cells in the injected tumor." MD Anderson, who is conducting the trial, is one of the premier centers for cancer drug development in the U.S.

    The news released today is a major catalyst for the stock, and it is expected that the company will be releasing further updates soon. Some investors even expect that updates could begin coming on a weekly basis as the trials progress. In any event, the news today is very big for Northwest and investors should take notice of it. Although it is still early, the last news released of this magnitude from a company was when Intercept Pharmaceuticals (NASDAQ:ICPT) announced the early stoppage of their FLINT trial due to overwhelmingly significant improvement in January 2014. The same could happen for Northwest, and investors probably know the kind of gains ICPT made on their news. Some investors believe the news is even bigger and better than the news ICPT released when its stock soared over $440.00 a share. Northwest could make a similar run with huge gains, and investors should keep a close eye on developments as they are made public.

    With only 35.3 million shares in the float, over 21% of the float sold short, and a very undervalued $500 million market cap, NWBO could make some very strong gains should the DCVAX-DIRECT trial continue to prove to be a true "cancer killer." In my opinion, the current share price does not reflect the news that was issued today, even though the stock did gain $1.16 to close at $8.82 a share. I believe the shares have a very significant long term price appreciation ahead of it, and current prices are a ground floor opportunity for investors to consider climbing aboard. The idea of NWBO trading above $200.00 a share may sound absurd and like a complete fantasy, but the likelihood is very realistic if the trial continues to prove as successful as it has already shown.

    DARA Biosciences

    DARA Biosciences is small biotech company that made huge headlines in the news, when the stock gained 14.3% to close the session at $1.28 a share. The company announced that their intravenous, non-opioid, non-narcotic compound to treat Multiple Myeloma, KRN5500, was granted Orphan Drug status by the FDA. In 2011, the FDA designated KRN5500 as a Fast Track program which expedites the development pathway and consideration for priority review. Orphan Drug Designation provides DARA with seven years market exclusivity from the time of approval, tax credits, and the waiver of PDUFA filing fees, as well as access to federal grants.

    With only 6.4 million shares in the float, almost 14% of the float sold short, and a market cap of only $10.75 million, DARA Biosciences is definitely a long term story that investors may want to take notice of right now. Having a 2nd orphan drug status placed on KRN5500 only makes a stronger case for the possible success of this drug to reach market. The company boasts cash per share of $1.16, and even with the 14% gain after the KRN5500 news hit the markets, the shares should still be considered undervalued by a large margin. Investors who have a long term horizon could easily be looking at significant gains in the future, should DARA continue to release positive updates and developments. In my opinion, the news released today is not completely priced into the stock, and upward momentum should be expected to continue heading forward. With its current cash on hand, and taking into account the positive aspects surrounding KRN5500, I put DARA Biosciences stock value about $4.00 a share.

    MannKind Corporation

    MannKind has been seeing very high volume over the past several weeks, as the company awaits an FDA decision for its ultra fast acting inhaled insulin, Afrezza, on July 15, 2014. After surging 97% after an overwhelming 27-1 Advisory Panel vote recommending approval on April 1, 2014, the stock plunged backwards after the company announced a PDUFA extension, but has now recovered and is sitting very near all-time highs at $10.65. The company recently updated investors on several occasions regarding talks with multiple potential partners to market Afrezza should the FDA approve the drug.

    MannKind has a much larger float than the two companies profiled above, but MannKind has a game changing product in the diabetes market, if they get the nod. With 242.2 million shares in the float, over 30% of the float sold short, and a market cap of $4.0 Billion, the company still demands huge attention from investors going forward. Afrezza would become the a first in kind treatment for both Type 1 and Type 2 diabetes, a global market worth roughly $35 Billion today and targeted to be close to $60 Billion in 2018. The company has also recently reported their interests and pre-clinical phase of entering the pain management market once they got approval on Afrezza. The pain management market is another $60 Billion global market.

    There have been several opinions written regarding MannKind's lack of a partnership announcement, but it sure appears that the company is closing in on a deal that could be announced at any time. An FDA approval and a major partnership announcement will almost surely send shares soaring to much higher levels. Should MannKind receive approval from the FDA for Afrezza, investors should sit tight and not sell the news so quickly, as a partnership announcement would likely not be far behind. Also, the next phase of MannKind taking their Technosphere platform into the pain management market would almost surely send the shares even higher. The Technosphere platform has many possibilities and could cross into a number of drug areas, so investors with a long-term horizon definitely have something to look forward to in the years to come. In my opinion, investors have not factored in the Technosphere platform future possibilities as of now, but validation of the platform with an FDA approval of Afrezza, will surely add significant value to MannKind's market cap. Nevertheless, a rejection by the FDA would be devastating and the shares would likely take a very nasty fall that an investor might never be able to recover.

    Summary

    Biotech stocks can make or break an investor. They can soar to unimaginable levels as good news hits the markets, and they can sink like the Titanic when bad news hits the markets. The 3 biotech stocks noted in this article are clearly some of the better risk vs. reward options for investors to consider. Each one of these stocks could keep making very big gains if developments continue to be positive. However, one small hiccup could be costly, so investors should always be cautious when investing in risky biotech stocks. Yet, the rewards from hitting the homerun could make an investor's portfolio very healthy.

    Disclosure: The author is long MNKD, NWBO. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

    Themes: long-ideas Stocks: DARA, ICPT, MNKD, NWBO
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Comments (2)
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  • sentimentstocks
    , contributor
    Comments (14) | Send Message
     
    Good analysis on the price possibilities for NWBO. Anyone contemplating entering this stock at this price point should not think they've missed the run up. I also would like to note that the reasons we will hear updates on a regular basis is that the trial for the inoperable tumor vaccine DCVax Direct is an open one. Updates were embargoed for a few months previously leading up and into ASCO by ASCO. Now the company is free to update whenever they have new information. And now that they are well into the first phase of the trial, the patients' immune systems will start killing those tumors more rapidly. Next on the bucket list - systemic response. :)
    17 Jun 2014, 02:43 PM Reply Like
  • johnnyola
    , contributor
    Comments (90) | Send Message
     
    Excellent article, putting things in perspective. NWBO seems like a monster stock in the making. If it succeeds even with brain cancer only, the stock will go ballistic, as I believe it is not in the process of going. However, the premiere product is their across the board platform in solid tumors, which puts the stock on the cover of Time Magazine. does anybody read that anymore? anyway, thanks for the article.
    17 Jun 2014, 11:01 PM Reply Like
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