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7 Great Biotech Stocks That Don’t Depend on a Coronavirus Cure in 2020

7 Great Biotech Stocks That Don’t Depend on a Coronavirus CurePosted on Monday, June 15th, 2020 by MarketBeat Staff

Biotech stocks are some of the most volatile for investors to include in their portfolio. And that volatility can be hard to predict. Biotech companies don’t have a firm correlation with the overall economy. And what can add to the challenge is that many of these companies are small-cap companies that are not well-known names.

These small biotech stocks may shoot higher based on a vaccine or drug candidate that gets national attention. But these small-cap stock also reflect the adage of letting the buyer beware. Because the stark reality for many investors is that the vast majority of these treatments never make it past clinical trials. And that means that a stock that goes up rapidly can move down just as fast. We’re seeing that right now with the multitude of companies that are competing in the race towards a vaccine and/or treatment for Covid-19 and the novel coronavirus that causes the disease. And if you’ve been good at timing the market, you could have made some good money on some of these candidates.

Of course, if you held the stock too long, you could have lost your shirt as well.

That doesn’t mean however that buy and hold investors should avoid the biotech sector altogether. There are still some attractively priced small-cap biotech companies that are working on treatments for a range of conditions that provide them with a large addressable base. And we’ve identified seven of these stocks in this special presentation.

#1 - ImmunoGen (NASDAQ:IMGN)

ImmunoGen logo

ImmunoGen (NASDAQ:IMGN) has been able to manage its balance sheet effectively despite not yet having brought a product to market. The company has done this by leveraging its technology in a variety of partnerships with a broad range of biopharmaceutical companies including Jazz Pharmaceuticals (NASDAQ:JAZZ), Amgen (NASDAQ:AMGN), Sanofi (NASDAQ:SNY), and Bayer (OTCMKTS:BAYRY).

More than likely, IMGN stock is trading flat for the year because investors are focusing on biotechs with direct exposure to the treatment of the novel coronavirus. However, when you back out a little bit, you can see the company has gained over 130% in the last 12 months. That’s a gain that investors won’t ignore once they start looking.

And ImmunoGen does have its own pipeline of attractive candidates. The company is specifically working on the development of antibody-drug conjugate (ABC) therapeutics as a form of cancer treatment.  ImmunoGen has two candidates in Phase 3 trials and another two candidates in Phase 2 trials.

About ImmunoGen
ImmunoGen, Inc, a clinical-stage biotechnology company, develops antibody-drug conjugate (ADC) therapies to treat cancer. Its product candidates include mirvetuximab soravtansine, an ADC targeting folate-receptor alpha, which is in Phase III clinical trial for the treatment of platinum-resistant ovarian cancer; IMGN779 that is in Phase I clinical trial for the treatment of acute myeloid leukemia (AML); and IMGN632, a CD123-targeting ADC that is in Phase I clinical trial for treating AML and blastic plasmacytoid dendritic cell neoplasm. Read More 

Current Price: $4.88
Consensus Rating: Buy
Ratings Breakdown: 3 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $10.50 (115.2% Upside)



#2 - Kadmon Holdings (NYSE:KDMN)

Kadmon logo

Our second small-cap biotech, Kadmon Holdings (NYSE:KDMN), is also flat in 2020. And like IMGN, it’s likely because investors have their attention diverted. However, also like IMGN, Kadmon stock is up over 140% for the year.

Kadmon is a relatively young stock having only traded since 2016. The company focuses on drugs to treat immune disorders, fibrotic diseases, and immune-oncology. A catalyst for the stock is its in-market drug Clovique that is generating some revenue for the company. However, the company is still not profitable. For that, it will need to bring other drugs through clinical trials and to market. The company has reported favorable preliminary results in a pivotal trial stage for its KD025.

One of the cautions about small-cap biotech stocks is the possibility of acquisition. There are whispers that Kadmon may attract attention because of its potential pipeline. But even if that’s the case investors should only consider buying the stock on its own merits. And KDMN stock looks strong in that capacity. It has a 12-month price target of $12 which would well reward investors who jump on the company’s stock at its current price of $4.50.

About Kadmon
Kadmon Holdings, Inc, a biopharmaceutical company, discovers, develops, and commercializes small molecules and biologics primarily for the treatment of inflammatory and fibrotic diseases. The company markets and distributes products in various therapeutic areas, including ribavirin products for chronic hepatitis C virus infection; and distributes products in various therapeutic areas, including tetrabenazine for the treatment of chorea associated with Huntington's disease. Read More 

Current Price: $4.72
Consensus Rating: Buy
Ratings Breakdown: 5 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $12.00 (154.2% Upside)



#3 - G1 Therapeutics (NASDAQ:GTHX)

G1 Therapeutics logo

One of the most investable fields in the biotech sector involves cancer research. And that’s the segue to introduce G1 Therapeutics (NASDAQ:GTHX). Analysts are encouraged by the possibility for its lead drug candidate, trilaciclib. In fact, they’ve given GTHX stock a $61.50 price target over the next 12 months. This would be a gain of nearly 200% from current levels. GTHX stock is down nearly 25% in the year-to-date.

Trilaciclib is designed to improve the outcomes for patients that have received chemotherapy. The company began the process for a new drug application (NDA) in the fourth quarter of 2019. On its most recent earnings call, company executives emphasized that the company was on track to complete that process in the second quarter. The company also said the FDA was doing a great job of balancing existing as applications with the demand for fast-track approval of potential Covid-19 treatments and/or vaccines.

Approval of trilaciclib would be a key in buying time for the company to get some of its other early stage candidatesthrough the pipeline. This is particularly important because like many of these small biotech companies, G1 Therapeutics is not yet profitable. 

About G1 Therapeutics
G1 Therapeutics, Inc, a clinical-stage biopharmaceutical company, engages in the discovery, development, and commercialization of novel small molecule therapeutics for the treatment of patients with cancer. It is developing trilaciclib, an intravenous cyclin-dependent kinases (CDK) 4/6 inhibitor that is in Phase Ib/II clinical trials for patients with extensive-stage small cell lung cancer, as well as Phase II clinical trial for patients with first-/second-/third-line metastatic triple-negative breast cancer; lerociclib, an oral CDK4/6 inhibitor that is in Phase Ib/IIa clinical trials for the treatment of breast cancer and in Phase Ib/II clinical trial for non-small cell lung cancer; and G1T48, an oral selective estrogen receptor degrader, which is in Phase I clinical trial. Read More 

Current Price: $21.54
Consensus Rating: Buy
Ratings Breakdown: 8 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $59.86 (177.9% Upside)



#4 - Dynavax (NASDAQ:DVAX)

Dynavax Technologies logo

The next small-cap stock on our list is Dynavax (NASDAQ:DVAX). Unlike the other companies on this list, Dynavax does have indirect exposure to a Covid-19 vaccine. The company’s CpG1018 adjuvant is being used by a number of other drug makers who have vaccine candidates.

On the one hand, this could be a tremendous boost for the stock, which is already up 10% for the year. Essentially, Dynavax is getting several bites at the apple. One of its most encouraging opportunities is stemming from its partnership with Sinovac. DVAX stock got a lift on news that Sinovac’s vaccine candidate was showing early promise. But remember, we’ve seen this movie so far this year with companies such as Novavax (NASDAQ:NVAX), Gilead Sciences (NASDAQ:GILD), and Moderna (NASDAQ:MRNA).

So it’s important to evaluate Dynavax on the strength of its existing portfolio. And unlike some small-cap firms, Dynavax does have an approved hepatitis B vaccine on the market. Sales of its Heplisav-B missed analysts’ revenue expectations of $11.3 million in the first quarter. However the miss could easily be chalked up to declining demand due to the pandemic.

About Dynavax Technologies
Dynavax Technologies Corporation, a biopharmaceutical company, focuses on leveraging the power of the body's innate and adaptive immune responses through toll-like receptor stimulation. The company markets HEPLISAV-B, a hepatitis B vaccine for prevention of infection caused by all known subtypes of hepatitis B virus in adults age 18 years and older. Read More 

Current Price: $8.67
Consensus Rating: Buy
Ratings Breakdown: 5 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $16.50 (90.3% Upside)



#5 - Alexion Pharmaceuticals (NASDAQ:ALXN)

Alexion Pharmaceuticals logo

With a market cap of over $25 billion, Alexion Pharmaceuticals (NASDAQ:ALXN) is the first large-cap company to make this list. Alexion is involved in the treatment of rare conditions. That’s why many of the drugs that they have on the market fly under the radar of many Americans.

Alexion is a polarizing stock. Overall, it has a price target that suggests the stock has a strong upside from its current level. And the company recently received support for that assessment by resolving a patent dispute that will keep its lead drug patent protected through 2025. The company has several drugs on the market and more in its pipeline.

On the downside, some investors are not as keen on the company’s debt level caused by acquisition. Like all biotech stocks, ALXN stock does not come without risk. However, in this case it’s a risk that is supported by-products that are delivering actual revenue. In fact, the company posted record revenue in its most recent quarter.

About Alexion Pharmaceuticals
Alexion Pharmaceuticals, Inc, a biopharmaceutical company, develops and commercializes various therapeutic products. The company offers ULTOMIRIS (ALXN1210/ravulizumab-cwvz), a monoclonal antibody for the treatment of paroxysmal nocturnal hemoglobinuria (PNH), a genetic blood disorder; and Soliris (eculizumab), a monoclonal antibody for the treatment of PNH, atypical hemolytic uremic syndrome (aHUS), and generalized myasthenia gravis. Read More 

Current Price: $112.30
Consensus Rating: Buy
Ratings Breakdown: 17 Buy Ratings, 6 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $143.95 (28.2% Upside)



#6 - Sarepta Therapeutics (NASDAQ:SRPT)

Sarepta Therapeutics logo

Sarepta Therapeutics (NASDAQ:SRPT) is a good example of how fast biotech stocks can move. On June 8, SRPT stock climbed over 8% on positive news regarding its experimental gene therapy for a rare type of muscular dystrophy. Early results from the early-stage clinical trial showed that patients receiving a higher dose manifested greater benefits than those receiving a lower dose.

Sarepta is a leader in the area of gene therapy. The company has made a name for itself based on its novel approach for treating Duchenne muscular dystrophy (DMD). This latest treatment is being developed to treat a rare condition that has a much smaller addressable market than those with DMD. However, the results are further validation of the company’s overall gene therapy platform.

The aforementioned drug candidate, SRP-9003, is one of more than 20 drug candidates that Sarepta has in its pipeline. The company has completed enrollment for a Phase 3 functional study for an additional candidate SRP-9001. According to Kiplinger, the Swiss multinational Roche Holdings (OTCMKTS:RHHBY)  has purchased rights for the drug which could bring Sarepta over $2.85 billion in revenues.

About Sarepta Therapeutics
Sarepta Therapeutics, Inc focuses on the discovery and development of RNA-based therapeutics, gene therapy, and other genetic medicine approaches for the treatment of rare diseases. The company offers EXONDYS 51, a disease-modifying therapy for duchenne muscular dystrophy (DMD). Its products pipeline include Golodirsen, a product candidate that binds to exon 53 of dystrophin pre-mRNA, which results in exclusion or skipping of exon during mRNA processing in patients with genetic mutations; and Casimersen, a product candidate that uses phosphorodiamidate morpholino oligomer (PMO) chemistry and exon-skipping technology to skip exon 45 of the DMD gene. Read More 

Current Price: $162.75
Consensus Rating: Buy
Ratings Breakdown: 23 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $198.91 (22.2% Upside)



#7 - Vertex Pharmaceuticals (NASDAQ:VRTX)

Vertex Pharmaceuticals logo

Last, but certainly not least we will take a look at Vertex Pharmaceuticals (NASDAQ:VRTX). Vertex is the industry leader in the treatment of cystic fibrosis. It has four drug treatments currently on the market. It’s most recent addition is Trikafta. In the first quarter, sales of Trikafta were largely responsible for boosting the company’s revenue up to a record high of $1.52 billion. What makes Trikafta so appealing is that, unlike some of the company’s other drug candidates, it is capable of treating 90% of patients with cystic fibrosis. That’s a huge addressable market and one that gives Vertex a near-monopoly.

Once is lucky, but last quarter made it two consecutive record-breaking quarters for the company. And it has posted four consecutive quarters of revenue growth. Not surprisingly, the company’s stock is up an impressive 25% so far in 2020. Looking out over a longer 12-month horizon, VRTX stock is posting a gain of nearly 60%.

But, biotech companies are frequently measured on what’s next. In the case of Vertex that appears to be gene editing. To that end, Vertex recently acquired Exonics Therapeutics and is leveraging that in a partnership with Crispr Therapeutics (NASDAQ:CRSP)

About Vertex Pharmaceuticals
Vertex Pharmaceuticals Incorporated engages in developing and commercializing therapies for treating cystic fibrosis. The company markets SYMDEKO/SYMKEVI, ORKAMBI, and KALYDECO to treat patients with cystic fibrosis who have specific mutations in their cystic fibrosis transmembrane conductance regulator gene. Read More 

Current Price: $291.10
Consensus Rating: Buy
Ratings Breakdown: 22 Buy Ratings, 7 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $284.23 (-2.4% Upside)

 

In the introduction to this presentation, we pointed out some of the inherent risks in biotech stocks. One of the risks that we left off was the balance sheet risk. In many cases, companies will flood their balance sheet with debt to invest in drug treatments or vaccines. And when these products don’t make it through clinical trials, it can financially hamstring these companies for years to come.

And speaking of time, that’s another consideration for many investors. The risk-reward dynamic for investors is magnified because clinical trials take time. As much as vaccine candidates are being “fast-tracked”, it will – and should – take time to bring a safe, effective vaccine to market.

That’s another important point to remember about the stocks in this presentation. They are all showing sound management of their balance sheets. This means that there is less risk for investors, even if it may be several years before these companies bring a product to market.

6 Stocks That Will Benefit From a Dovish Federal Reserve

The quaint correction that was labeled the “tech wreck” of 2018 seems like a distant memory to investors. What also seems like a distant memory is any thought of the Federal Reserve raising interest rates.

At the end of 2018, the Federal Reserve had raised its benchmark federal funds rate. With the trade dispute with China dragging on, there was increasing pressure on the Fed to lower interest rates. When interest rates are lower, stocks will generally rise as investors have no other option for growth.

In July 2019, the doves got their wish. But in a move that now seems to be a “what did they know move”, the Fed dropped rates again in October. The market soared to record highs in January and early February. Since mid-February however, the market has fallen dramatically, and the Fed juiced the market one more time by cutting rates down to levels not seen since the financial crisis.

None of us know for sure when the U.S. economy will be opened up. And while stocks are still a good investment, not every stock is a smart investment at this time. But some stocks perform well when interest rates are falling and that’s why we’ve prepared this presentation.

These six stocks stand to benefit from both low-interest rates and the unique economic conditions being brought on by the Covid-19 pandemic.

View the "6 Stocks That Will Benefit From a Dovish Federal Reserve" Here.






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