Investing in Microcap Biotech Stocks
Investing in microcap biotech stocks offers investors the opportunity to participate in a wide range of companies with limited market capitalization. However, there are some important things to keep in mind before deciding which stocks to buy.
Unlike many companies, Moderna has a diversified pipeline that includes COVID boosters, flu vaccines, and more. The company is leveraging mRNA technology to develop medicines and vaccines.
For instance, Moderna is developing a COVID-19 shot that the company claims will be a "major innovation" for the treatment of COVID. It is approved for immunocompromised children as young as 12 and adults over the age of 16. Its mRNA molecule can be delivered to the inside of a cell to make medicine.
Moderna is also developing molecules for I/O, autoimmune, and rare diseases. In addition to its COVID vaccine, the company is also working on a melanoma vaccine. It has also won authorizations for an updated omicron-blocker booster.
Its pipeline includes four assets in Phase 3 trials. It is also working on a VEGF-A candidate, which may prove to be a key therapeutic for cardiac tissue regeneration.
Despite its high-flying stock price, Moderna has a lot to prove. The company has a $48B market cap, but it is trading at a cheap price. Its stock is in the top 9% of all stocks. It has a Composite Rating of 65. However, its EPS is a meager 16. Its financials are relatively unimpressive. It burned cash to develop its vaccines, and its full-year sales guidance has been cut.
The company's COVID vaccine franchise delivered $4.7B in revenue in the second quarter of the year. That was a significant increase from the $4.3B it obtained a year earlier. However, the company's third-quarter sales declined by nearly three-fifths to $3.1 billion. The company also missed its revenue guidance.
Moderna has a lot of work ahead of it to achieve its goal of delivering a COVID-19 vaccine that will be a "major innovation" and an alternative vaccine for 6 to 17 year-olds. The company also has a lot to prove with its other products, including a vaccine for a new Ebola pandemic. But, it may be worth a look.
In January, Moderna's Board of Directors approved a $2B share repurchase program. It plans to repurchase another $3B in August. In addition to its share repurchases, the company has a substantial amount of cash on hand.
During the summer months, the biotech sector saw a major rally. Some of the biotech stocks took advantage of the economic recovery and some took advantage of the red hot IPO market. But in the past five weeks, the biotech sector has seen a 8% pullback. And microcap biotech stocks haven't fared as well.
Incyte (INCY) is a biopharmaceutical company engaged in the discovery of proprietary therapeutics. The company has a number of products in development, including a drug called Jakafi, which treats myelofibrosis and steroid-refractory acute graft-versus-host disease. It also has other drugs in late stage development, including a new treatment for a novel coronavirus.
Jakafi is expected to see significant revenue growth over the next few years, and Incyte sees potential for growth across all indications. However, its overreliance on a single product may make the stock less appealing.
INCY's revenue growth is driven by its top drug, Jakafi. During the fourth quarter, Jakafi accounted for 80% of the company's total revenue. Jakafi treats myelofibrosis and other conditions. The company also has a number of products in development, such as topical treatments, oral treatments, and topical medications.
In the past two years, INCY shares have risen more than 300 percent. It is currently trading at a price to earnings multiple of 15.7. That's lower than the price to earnings multiple of 17.5 it traded at in early 2009. However, the company's free cash flow is rising, and it has a rich pipeline of products.
As of April 25, Incyte has an optimistic outlook for its future earnings. The company has 12 drug development candidates. Its clinical trial for its lead candidate, COVID-19, is underway. The company also has a phase 3 trial to study Jakafi. If the company's clinical trials turn out to be successful, Jakafi may be approved by the FDA for treatment of COVID-19.
Incyte has a large pipeline of products, and it has a strong presence at the upcoming ASH Annual Meeting. Its late-stage dermatology program is also in progress. It has an unconfirmed earnings date of November 1 before the market opens.
Lixte Biotechnology (AUDC)
Founded in 2005, Lixte Biotechnology is a drug discovery company that specializes in protein phosphatase inhibitors and other pharmacologically active compounds. They have just wrapped up a Phase one trial of their lead compound, LB-100. The company has a couple of other compounds in the pipeline, including a PP2A inhibitor that has shown promise in a Phase 2 trial and a triumvirate of adenosine triphosphate (ATP) binding proteins. Lixte is also working on novel structures to treat chronic hereditary diseases.
The company is also making waves with their novel approach to drug discovery. One of their drugs has the potential to treat several types of cancer. Another has the potential to treat metabolic diseases. The company has already been able to demonstrate the safety of their lead compound, and plans to start Phase 2 trials in the near future. They also have an IPO on the docket in the near future. As of this writing, the company hasn't announced a price or an expected timetable for its IPO. Lixte is backed by Westpark Capital and WallachBeth Capital. The aforementioned IPO is expected to fetch a fully diluted market value of $84 million.
Lixte Biotechnology has a well defined product pipeline, and has the audacity to put its money where its mouth is. The company has been able to prove its mettle in the lab, and has a proven track record of delivering the goods in the real world.
Biogen Idec (BIIB)
Earlier this week, Biogen Idec (BIIB) stock hit a multi-year high. Its newest treatment for multiple sclerosis (MS) is available now in capsule form, and could become a blockbuster by the end of the decade. During a conference call with analysts, Biogen CEO George Scangos said that the company would begin searching for its next leader.
Biogen is a biopharmaceutical company based in Cambridge, Massachusetts. It has a portfolio of medicines for Alzheimer's disease, Multiple sclerosis (MS), and SMA. It also has collaboration agreements with Neurimmune SubOne AG.
Biogen Idec is part of the S&P 500. It has a market cap of $31.8 billion. It is a global biopharmaceutical company primarily focused on neurodegenerative diseases. It has license agreements with Samsung Bioepis Co., Ltd. and Sage Therapeutics, Inc. It also develops therapies for hemophilia and autoimmune disorders.
The company's recent earnings report beat Zacks Consensus Estimates on revenues and earnings. Biogen's Q2 revenues increased 12 percent compared to Q2 FY15, primarily due to its MS franchise. Its Hemophilia division saw 68% growth to $125 million.
Biogen Idec's latest MS treatment could become a blockbuster by the time it hits the market in less than a week. The drug is available in capsule form in the U.S. It is used to help patients stop painful treatments. It is estimated that Tecfidera could bring in billions of dollars.
In 2008, Biogen's net income was $3.4 billion. It will not be easy to replace that. Biotech is a profitable industry, but revenue growth has slowed because of greater scrutiny from providers and payers. In some cases, biotech firms have a hard time raising money or conserving cash.
A growing number of small and microcap biotechs have gone belly up in recent years. These companies are unable to raise money or cut spending as quickly as larger firms. They are also harder hit by the market. But they may be worth adding to your portfolio if you are willing to take a risk.
Biogen Idec's Tecfidera drug is sold in capsule form in the U.S. The drug helps MS patients stop painful treatments.
by paul walkner on 2022-11-25 02:34:37
No comments yet.