These 3 Biotech Stocks Look Interesting
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Three biotech companies are making themselves heard in the stock market. They are making a mark in the life sciences space with their unique mix of science and strategy.
Ariad Pharmaceuticals (NASDAQ: ARIA) is on the focused approach trajectory, using its solid foundation in the sciences to fill the holes left open by big pharma. Celldex Therapeutics (NASDAQ: CLDX) is exercising first-mover advantage by developing a novel but potent approach to disease treatment. Array BioPharma (NASDAQ: ARRY) is utilizing the overlaps in research areas to hasten the speed and increase the likelihood of drug discovery while attacking diseases in a more effective manner.
What are these companies doing differently?
On the face of it, Ariad doesn't seem to be following the path of diversification. It has selected a specific market (a very large one at that) - cancer. However, cancer can be of several types, and it has been increasingly plaguing the world for the past few years.
Within the realm of cancer, Ariad has lot of opportunities to diversify. In fact, staying under the cancer umbrella will allow it to benefit from the overlap in research areas among various types of cancers, which could help in developing therapies sooner and for multiple variations of the disease.
The second good thing Ariad is doing (commercially) is targeting the needs not met by existing big pharma medications. The idea is to find out the strengths of the best-selling big pharma medications and beat them to take over the market.
Following a different path, Celldex has figured out a novel and potent way to attack disease. The body already has a system in place to fight diseases - our immune system. So, why not create a platform of potent antibodies and immunomodulators (immune response modulators) that can be used to develop novel drugs and drug combinations for disease treatment?
They would be the first-in-the-market to utilize such an approach to treat complicated diseases. While Celldex is acquiring smaller companies like CuraGen to add to its collection of antibodies, it is also partnering with companies like Pfizer to obtain the financial resources and expertise to develop potential therapy candidates.
Array BioPharma, charting its own course, has channeled its efforts towards cancer and inflammatory disease. These two research areas have a lot of potential for overlap, which can lead to faster development of medications. The company seeks to develop first-in-class drugs, targeting important players in already identified molecular pathways. They also look at increasing the efficacy and safety of existing drugs, or improving upon drugs currently in clinical development by creating superior clinical candidates.
News and financials
Ariad recently presented new preclinical data which shows that its recently approved drug, Iclusig (ponatinib), overcomes drug-resistant mutations found in gastrointestinal stromal tumors. The company currently has four drugs in its pipeline developed in-house, which are being explored for various indications.
The company reported a net loss of $220.9 million for FY 2012, while loss in FY 2011 was $123.6 million. Its operating expenses increased by $103.5 million in 2012 from 2011. This increase was attributed to the development of the company's product candidates and the preparations involved in the commercial launch of their drug Iclusig.
On April 8, Celldex presented positive data showing that their drug candidate, CDX-1127, is effective in activating a patient's own T cells (type of cell that plays an important role in immune response) against their cancer.
The company incurred a $14.3 million loss in 2012 compared to 2011, mainly due to increased R&D expenditure, especially for late-stage trials. General and administration expenses increased by $0.8 million in 2012 compared to 2011, primarily due to increased personnel-related expenses and rindopepimut-commercialization planning.
Array BioPharma recently reported positive results on two ongoing trials on drug candidates for multiple myeloma. Results of both trials showed that the drug was well tolerated in patients as single agent and in combination therapy. The drug in question, ARRY-520, is a strong multiple myeloma drug with a distinct mechanism of action compared to existing medications.
Revenue has been going up consistently for the past four years, however, the company still operates at a loss. The company has been able to rein in its operating expenses by about 24%.
Top investors holding these stocks
Ariad, Celldex, and Array have caught the attention of top investors who are strongly betting on them. BlackRock Advisors, Baker Bros Advisors LLC, and Barclays are invested in Array BioPharma. BlackRock and Baker Bros. have more than a million shares of the company.
Ariad Pharmaceuticals has BlackRock and FMR LLC invested in it. BlackRock has invested in more than 9 million shares, while FMR LLC has over 15 million shares of the company. For Celldex, SEC filings indicate that the largest number of its shares are owned by BlackRock (more than 5 million shares), followed by Prudential Financial (about 3 million shares).
Certainly, if large investors are placing their confidence in these companies, it indicates that they are headed in the right direction.
Ariad, Array, and Celldex are on the track to quick future growth given their unique approach to disease treatment and their smart commercial strategies. The companies can be expected to transition into profit soon, as their drugs get established in the market and they are able to forge strong partnerships for the development of their future drug candidates. Big investors have spotted potential in these companies, and it would be advisable to follow in their footsteps.
This article is written by Shilpi Ghosh (BS, MS in Biomed, UCLA, MBA in Finance, IIFT) and edited by Shas Dey, StockRiters' Editor-in-Chief. Neither StockRiters nor any of its Directors or employees have any position in any stock 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!