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3 Biotech Stocks with Cutting Edge, Targeted Therapies

Courtesy of Stankevicius MGM

Investors seem to like small biotech companies lately. Just look at the performance of ETF's like iShares Nasdaq Biotechnology ETF (IBB), which gained 12% over the past 12 months. The equal-weighted SPDR S&P Biotech ETF jumped 34% during the same period. Just like the market a few years ago, we're stating to see growing interest from investors who search for opportunity during a down turn in the market. Even though there is a sustained bull market, the ebb and flow could be a key indicator for investors to look for new opportunity in discounted biotech stocks.

The recent trend for some of the largest mergers and acquisition activities could also be signaling to investors that it's time to start looking at smaller biotechs that could be fish food for the whale-sized, large cap companies circling the waters. This trend may have begun with the Gilead Sciences Inc. acquisition of Kite Pharma Inc. but the new overflow of multi million and multi-billion dollar buyouts & investments are quietly signaled new opportunity for investors in this space.

Other Notable Buyouts & Investments:

  • Celgene Corp. (CELG) officially acquired Juno Therapeutics Inc. as of March
  • Bioverativ Inc. (NASDAQ:BIVV) was bought out by French biotech company, Sanofi SA ADR (NYSE:SNY) in a deal pegged at $11.6 billion.
  • Novartis is set to acquire AveXis for $8.7 billion to further expand its gene therapy treatments
  • French firm, Servier recently acquired the oncology business of Shire (SHPG) for 2.4 billion.
  • CTI BioPharma (CTIC) has just seen Jane Street Group LLC take a position of over $470,000. The company focuses on novel targeted therapies for blood-related cancers.

If there's one common trend we're seeing right now it's that these companies are looking to buy up clinical stage companies that are involved with the development of immunotherapies and targeted treatment for cancer & other chronic diseases. In fact, Merck (MRK), known as MSD outside North America, and Viralytics Limited (ASX: VLA, OTC: VRACY) announced the signing of a definitive agreement where Merck, through a subsidiary, will acquire Viralytics in a deal valued at just shy of $400 million, It just so happens that Viralytics is focused on oncolytic immunotherapy treatments for a range of cancers.

So with such a hot climate for M&A, it should come as no surprise that investors should look at the writing on the wall that's pointing toward smaller companies involved in the development of immuno and targeted therapies.

GT Biopharma (GTBP)

Market Cap: $77,845,878

The company has two proprietary technology platforms: Tri- and Tetra-specific Killer Engagers (TriKE) & (TetraKE) as well as bi-specific Antibody Drug Conjugates (ADC). GT Biopharma has an exclusive license to a broad IP estate covering an oncology pipeline with exclusive rights to TriKE and TetraKE platform, ADC conjugate platform and the portfolio of CNS product candidates like its myasthenia gravis therapy.

GT Biopharma's pipeline of therapies have attracted several industry heavyweights that hail from companies like Pfizer (PFE), Chase Pharmaceuticals, Sanofi (SNY), and Deutsche Bank (DB). GT Biopharma's pipeline includes numerous treatments in or about to be in Phase II trials as well as other treatments in preclinical trials.

Most notably the company's OXS-1550 and OXS-3550 therapies are targeting leukemia and lymphoma initially, with the goal of being able to offer a more universal therapy for certain types of cancers as well.

Sorrento Therapeutics, Inc. (SRNE)

Market Cap: $596,233,983

Better days could be just around the corner for the biotech. In fiscal 2017, Sorrento Therapeutics generated total revenue of $151.8 million compared to $8.1 million in fiscal 2016. Sales and services revenue rose from $3.1 million in fiscal 2016 to $11.2 million in fiscal 2017. The boost in the company's total revenue was thanks to an increase in royalty and licensing revenue. This figure increased from $4 million in fiscal 2016 to $140.3 million in fiscal 2017. The jump was a result of revenue that was recognized from the intangibles Sorrento transferred to Celularity under the contribution agreement between the companies in 2017.

Sorrento and Celularity have begun the process of screening patients for its CD38 chimeric antigen receptor (CAR) T cell therapy drug development program. The CD38 CAR-T program is their most advanced program that targets the difficult-to-treat condition: relapsed or refractory multiple myeloma. According to the company, this trial is currently the only active US-based clinical trial targeting CD38 using a CAR-T cell therapy.

Verastem, Inc. (VSTM)

Market Cap: $ 211,008,000

The company announced that the U.S. Food and Drug Administration accepted its New Drug Application filing with priority review for its duvelisib, a treatment for lymphoma.

What are the odds that the drug gets a green light? Well, duvelisib has received Fast Track Designation from the FDA for patients with chronic lymphocytic leukemia (CLL) or peripheral T-cell lymphoma who have received at least one prior therapy and for patients with refractory follicular lymphoma (FL) who have received at least two prior therapies. In addition, duvelisib received orphan drug designation in the US and the EU for patients with CLL, FL and small lymphocytic lymphoma.

Focus for Investors

The biotechnology and pharmaceutical industries are in recovery mode as of late. But overall, the market has performed well since the presidential elections took place in 2016. In fact, the S&P biotech index (XBI) has risen by more than 120% since February of 2016. Biotech is a typically known to be a risky sector. One bad phase trial and stocks crumble under pressure.

These three biotech companies have several things in common. Each company could win approval for new drugs in the future. None of them have drugs already on the market. With the current M&A trend in the biotech segment especially for immunotherapy candidates, investors shouldn't write off any viable opportunity for an early piece of what could be a very big pie.

Disclaimer: The author of this article owns ZERO shares of any company mentioned in this article. The Author was paid by MIDAM VENTURES LLC a marketing company currently engaged by GT Biopharma Inc., to publish this article. Please read the full MIDAM VENTURES LLC disclaimer here.

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