Upcoming Catalysts For Biotech (Plus: 2 Small-Cap Picks)

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Includes: BBC, BBH, BBP, FBT, HQL, IBB, LABD, LABS, LABU, OCUL, OMER, PBE, UBIO, XBI, ZBIO
by: Brian Bain

Summary

Biotech's outperformance in 2017.

Will needed uptick in M&A materialize?

What to look for from Trump.

Two $10 small-cap stocks with analyst price targets in the $30 range.

Bret Jensen joins the show to discuss upcoming catalysts for the biotech in the second quarter, what the Trump factor will be on biotech, and a few small cap biotech stocks with upcoming catalysts.

  • Biotech has outperformed the market in 2017 even though February and March have been fairly flat.
  • Lots of resistance technically.
  • Will the needed uptick in M&A happen?
  • What to look for from Trump.
  • Two $10 small-cap stocks with analyst price targets in the $30 range.

I hope you enjoy the interview.

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Final Thought And Offer

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I hope you enjoy the interview as much as I did. I look forward to your thoughts and comments below.

-Brian

Interview Preview

Brian:

Well hey Bret, welcome back to the show.

Bret:

Hey Brian. Great to be back.

Brian:

Always glad to have you with us, and it's fun to kind of pick your brain, especially when it comes to biotech investing. As always, you've got a lot to offer, and so I'd love to ... We're here, mid, late March, so why don't you go ahead and kick us off and talk about what you see happening in terms of biotech going into second quarter 2017.

Bret:

Sure. It's definitely been an interesting year for biotech so far. The sector is actually outperforming the overall market after 18 months of being in a pretty significant bear market heading into year-end 2016. What's really helped so far is we had a huge uptick in M&A activity. In January, had three deals: One for 5 billion, one for 8 billion, one for 30 billion that really kicked that part of the market off to a good start after a very punk year in 2016. It's one of the reasons in February biotech was up about 10 percent.

So far in March, we're seeing some consolidation of those gains. We haven't really seen any follow-up on some of the M&A activity in January, and we're hitting really hard against some resistance levels that have been in place since the last part of 2015. Given that we're pretty much largely done with fourth quarter earnings, in order to get past those resistance levels, we're going to either see a uptick M&A, or we're going to have to wait for the next quarterly earnings go around.

Brian:

Excellent. Are you optimistic for that? Are you expecting next quarter earnings to be positive or flat?

Bret:

I think that we'll still consider to see good earnings and revenue growth from both the farm and the biotech name, especially with large caps. I also think that we will see a continue uptick in M&A even though it might be a little lumpy. Companies have a lot of cash flow, they need to replay a [inaudible 00:02:07] a pipelines. Obviously the new administration, from a regulatory point of view, is probably a little more benign that the previous administration as well.

Brian:

Speaking of administrations, how do you see biotech shaping under President Trump?

Bret:

It's interesting, you know. Every now and again he'll tweet out something, he'll tweet out a-

Brian:

Yes he does.

Bret:

... lot of things, but every now and again, he'll actually do something around the sector itself, and you get a one percent decline, although I think we're kind of getting where we ignore it. I think with a new President, you really do need to watch his actions, and not his tweets or words or sound bites. He has appointed two very free-market oriented people to head agencies...

Stocks Mentioned: Ocular Therapeutix (NASDAQ:OCUL), Omeros (NASDAQ:OMER).

Disclosure: This article is for information purposes only. Comments made by my guests do not necessarily represent the views of Brian or Investor in the Family. There are risks involved with investing including loss of principal. Brian and Investor in the Family make no explicit or implicit guarantee with respect to performance or the outcome of any investment or projections made. There is no guarantee that the goals of the strategies discussed by Brian and Investor in the Family will be met.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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.