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Advaxis, Inc. (ADXS) Is Sending The Right Signals

|Includes: Advaxis Inc. (ADXS)

Without question, Biotech companies can generate some of the most explosive returns on Wall Street. It's not unusual to see 10 to 20 times return when a Biotech company gets approval for a new blockbuster drug or treatment. Conversely, these same high flyers can go bust almost overnight so it's important to know the signals to look for when searching for the next big winner. When picking Biotech stocks, it's about the risk-reward ratio.

One biotech company could be sending out just the right signals and may be poised for explosive performance. With the development and clinical trials of its innovative immunotherapy technology for treating multiple cancers, Advaxis is sending signals that investors should take into serious consideration.

Even though Advaxis is a development stage Biotech Company, the promise this immunotherapy technology holds for treatment of cervical cancer alone make it worth serious consideration. The company has targeted cancers related to HPV (human papillomavirus). HPV is a common sexually transmitted virus that typically has few side effects. However, in some cases repeated or untreated infections can lead to cervical and other types of cancer. Cervical cancer is the second most common cancer in women, and the fifth deadliest around the world. In clinical trials Advaxis already has shown remarkable efficacy in treating late stage cervical cancer.

Advaxis utilizes a bioengineered strain of bacterium (Listeria Monocytogenes) to trigger the body's own immune response system. This novel patent-protected approach redirects the body's natural and powerful immune responses to the engineered bacterium to the cancers themselves. This process also holds early promise for the treatment of anal cancers and head and neck cancer.

Besides the science, there are other factors to consider in Risk vs. Reward with Biotech. Experienced management is imperative to success and Advaxis has a strong, experienced team. Their key personnel have shepherded other Biotech companies to huge successes. Product pipeline and FDA approval are always concerns. Advaxis currently has multiple clinical trials and strategic collaborations underway in addition to filing multiple orphan drug designations with the FDA. Orphan drug designation often leads to FDA flexibility and the early approval of novel therapeutics. Cash burn is the Achilles heel of most development stage Biotech companies, but the cash burn of Advaxis is offset by a private equity commitment that easily should fund them through Phase III trials.

Taken together as whole: the science, the management, the financing, and the market commercialization risk; it would appear that the risk reward ratio for Advaxis is skewed heavily in favor of the investor. In fact, a recent Seeking Alpha article suggests that Advaxis may very well be currently undervalued by more than eight fold (seekingalpha.com/article/1678582-6-reaso...). An eight fold return at current valuations makes the risk-reward ratio of Advaxis more than just interesting.

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