6 Biotechnology Stocks With Upcoming Catalysts
Michael is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Biotechnology can be one of the most volatile industries to be invested in. A lot of the time, investors can own shares in various companies and not even know there is an event coming up. This article will serve to inform investors of 6 biotechnology stocks that have upcoming catalysts in 2013. These catalysts are likely to have a significant impact upon each company.
1) Celsion Corporation (NASDAQ: CLSN)
Celsion Corp. is an oncology drug development corporation focused on the development and commercialization of treatments for those suffering from different forms of cancer. The primary focus is on treating liver cancer but the company hopes to be able to apply its treatment to other forms of cancer in the future. The company is also currently being evaluated for a Phase II clinical trial for recurrent chest wall breast cancer and a Phase II trial for colorectal liver metastasis.
As you can see in the cart below, the stock has had quite a wild ride over the past year. This has been due to a lot of momentum over the upcoming catalyst.
Catalyst: ThermoDox Phase III Trial
Catalyst Date: Results will be reported by the end of January 2013
Drug Use: ThermoDox is used to treat primary liver cancer
The upcoming catalyst is likely to have a huge impact on the company's valuation. The company has a current market capitalization of $310 million but this is likely to be drastically different by the end of the month. The CEO of Celsion has stated that this liver cancer treatment will have the potential to generate yearly revenues of $1 billion. With no other overly successful treatments for liver cancer, ThermoDox has the ability to become the primary treatment around the world. Because of the importance of these results, volatility has been soaring.
2) Celgene (NASDAQ: CELG)
Celgene Corp. is engaged in the discovery, development, and commercialization of various therapies to treat cancer and immune-inflammatory related diseases primarily in the United States and Europe.
As shown in the chart below, the stock has had a recent run-up due to an extremely strong earnings report.
Catalyst: Abraxane FDA Approval Decision
Catalyst Date: Decision will be reported by February 10, 2013
Drug Use: Abraxane will be used to treat metastatic breast cancer
While Celgene is well known among almost all biotechnology investors, people may not be as familiar with their potential breakthrough treatment for breast cancer. Breast cancer is one of the leading causes of death every year. If Celgene can find a way to make Abraxane successful, expect the stock to seen an even larger run-up in the share price than shown above.
3) Arena Pharmaceuticals (NASDAQ: ARNA)
Arena Pharmaceuticals is a developmental biopharmaceutical company focused on discovering, developing, and commercializing oral drugs that target G protein-coupled receptors. The company's current focus is on developing the primary drug to treat obesity. Their product is called Belviq.
As shown in the chart below, the stock has had an incredible run over the past 52 weeks. There was a point when the market felt that the obesity drugs had no chance to be successful and gain FDA approval. That mentality has certainly changed.
Catalyst: Belviq Official Product Launch and European Marketing Approval
Catalyst Date: The launch news and approval decision will be given by the summer of 2013
Drug Use: Belviq is used to treat obesity
In 2013, Arena will announce several major developments. First, the company will launch Belviq, its obesity drug, in the early part of the year. Analysts will quickly determine whether the drug can compete against its main rival Qsymia. Qsymia is an obesity drug created by Vivus (VVUS). One advantage that Arena has is its marketing plan. While Vivus had to stay within a limited range of marketing opportunities, Arena will have no such limitation.
4) Sanofi-Aventis (NYSE: SNY)
Sanofi-Aventis researches, develops, manufactures, and markets healthcare products worldwide. Its principal pharmaceuticals include Lantus and Apidra analogs of human insulin, blood glucose meters, enzyme replacement therapies to treat Gaucher disease, and a taxane derivative to treat various cancers.
Sanofi-Aventis had an incredible 2012 in terms of share performance and that doesn't appear to be stopping anytime soon as the stock continues to ride the momentum that the biotechnology industry has carried into the new year.
Catalyst: Lemtrada FDA Approval Decision
Catalyst Date: Decision will be reported by April 12, 2013
Drug Use: Lemtrada is used to treat multiple sclerosis
Sanofi-Aventis is a very well known company but Lemtrada has been almost forgotten by the market. Multiple sclerosis is a life changing illness that causes muscles to weaken and eventually deteriorate to the point where people can no longer function in their daily lives. Eventually it causes death after a long period of time has passed. This treatment will have the potential to be a game-changer, change many people's lives, and cause investors to celebrate.
5) Johnson & Johnson (NYSE: JNJ)
Johnson & Johnson engages in the research and development, manufacture, and sale of various products in the health care field worldwide. It offers products for use in baby care, skin care, oral care, wound care, and women's health fields. The company also has a pharmaceutical division which provides products in the areas of anti-infection, antipsychotic, contraceptive, dermatology, hematology, immunology, neurology, oncology, and pain management.
Catalyst: Zytiga FDA Approval Decision
Catalyst Date: Decision will be reported by April 15, 2013
Drug Use: Zytiga is used to treat prostate cancer
Johnson & Johnson has had a strong performance over the past year but perhaps not quite as strong as a few other biotechnology stocks. The reason for this is that the stock has been unable to generate a lot of enthusiasm over its earnings and new product developments. This may change should Zytiga be approved in the early part of 2013.
Zytiga will go head to head with Dendreon's Provenge (NASDAQ: DNDN). While Dendreon's Provenge had the head start, it has had some struggles. Initially, the company struggled to receive medical reimbursement which affect the amount of physicians who were willing to prescribe it. Then the cost came into question. Provenge requires a total cost expenditure of $93,000. That puts it into the stratosphere as far as medical treatment costs go. Additionally, Dendreon itself is having difficulty. Analysts have projected that the company needs to generate revenues of $500 million just to break even. Currently, the company is on track to generate less than $400 million.
Zytiga has some benefits. The cost is a lot less at $5,500 per month and it appears that physicians will be more willing to prescribe Zytiga as a first line treatment and Provenge as a second line. This will certainly give it a strong advantage.
6) Threshold Pharmaceuticals (NASDAQ: THLD)
Threshold Pharmaceuticals is a development stage company, focused on the discovery and development of drugs for the treatment of various forms of cancer.
As the chart below shows, the stock has a wild ride over the past 52 weeks.
Catalyst: TH-302 Phase III Trial
Catalyst Date: Results will be reported by the fall of 2013
Drug Use: TH-302 is used to treat pancreatic cancer.
There are many reasons to be bullish about Threshold Pharmaceuticals.
On March 30, 2012, the FDA granted orphan drug designation for TH-302. This is extremely positive for THLD as it puts the primary drug on the fast-track path. If Phase III is a success, the FDA approval process will take much less time than normal.
The drug demonstrated a median progression free survival of 6.7 months, a median overall survival (OS) of 21.5 months, and an acceptable safety profile. In the single-arm component of the study, the median PFS was 3.7 months and the median OS was 18.0 months in the extension.
The drug will be going head to head with Celgene's Abraxane which is why the stock sold off over the past few months of 2012. It is unclear which will win but one thing is clear, the stock has a lot going for it, and a potentially explosive move coming later this year.
Fool Blogger Michael Meyer owns call options in Celsion Corporation. It is important to know that biotechnology stocks can result in large losses for an investor. Before investing in any of the above mentioned companies please consult your financial advisor to determine suitability.