Three Biotech Movers to Watch in 2013
Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Biotechnolgy is the ultimate industry of speculation. As investors, we learn to invest on fundamentals, but when investing in this particular space, the stocks are moved by rumors and news that “might” indicate a future FDA approval. With that being said, let’s look at a few of the industry’s biggest movers on Friday; those that might trade higher in 2013.
- Despite Cytokinetics having a market cap of more than $110 million, it trades at only $0.80. This is rare in biotechnology, as companies typically issue fewer shares to reflect a greater stock price. However, according to Piper Jaffray, the stock will not trade below $1.00 for too long. The firm initiated coverage on Friday with a $4.00 price target. The firm believes that its platform for treating diseases by improving muscle function is undervalued and that its positive data for its Phase 2 study on tirasemtiv could lead to a partnership or buyout in 2013.
- Corcept Therapeutics rallied for the second day in a row following an upgrade to “buy” by Piper Jaffray; and the initiation of coverage with a “buy” rating by Janney Capital. The company’s had a rough year losing nearly 50% of its value. However, there is upside potential tied to the success of its drugs for the treatment of psychiatric and metabolic disorders. This is a small company with a solid pipeline and an FDA approval for Korlym; an oral medication for the treatment of Cushing’s syndrome. Some analysts have projected that this particular drug has sales potential of $400 million within the next three years. Therefore, it is possible that Corcept sees a 2013 rally.
- Last month, Amicus Therapeutics, along with GlaxoSmithKline, announced data from a Phase 3 study for its HCI monotherapy in patients with Fabry disease, which was unsuccessful. As a result, the stock lost almost 50% of its value, which has also led to an early year rally of 33.5%, due to the stock being oversold. However, the gains have also been related to positive preliminary results from all four dose cohorts in a Phase 2 study of its treatment on Pompe disease. Therefore, it might be discouraging that its Fabry disease was unsuccessful, but perhaps there is still light at the end of the tunnel for this company due to newly announced data.
There is one other fact that investors should consider in regards to these three stocks: Each has traded with market leading gains in the first three days of the new-year. Investors are always attempting to find the next great momentum stock in biotechnology. Every year there are certain biotechnology stocks that lead the market in performance, and strangely enough, these stocks are rarely predicted and are often quick to rise at the start of the year. The fact that each of these stocks are seeing such strong 2013 gains indicate to me that each are good candidates for the next group of potential biotech bull stocks.
When you invest in a clinical stage biotechnology company an extraordinary amount of due diligence is required. These are companies that don’t typically return sales while in the clinical stage, and are driven by the likelihood of an FDA approval. These stocks can be the ultimate investments of disappointment, or riches; but is an industry that always sees a great level of support from investors. Therefore, I suggest further research into these three stocks, but would still follow each in 2013 nonetheless.
BrianNichols has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!