Seven Small-Cap Biotech Stocks on the Upswing 2016

Companies / BioTech Mar 10, 2016 - 10:41 AM GMT

Biotech stocks—and the stock market in general—took a dive at the beginning of 2016, headed down on macroeconomic factors such as financial instability in China. The Life Sciences Report's 2016 Small-Cap Biotech Watchlist was not immune to that movement, heading into negative territory almost from the moment the selected companies were introduced. But as the market has shown signs of rebounding, so too has the Watchlist.

The NASDAQ composite index hit its lowest point year-to-date in mid-February, down ~15%; likewise the NASDAQ Biotech Index was off ~29% over the same time frame. As both indices have bounced back toward positive territory, so too has the Small-Cap Biotech Watchlist, posting an increase of about 17% from its low.

As can be the case with all biotech baskets, a single company posting a single loss can skew the big picture. Of the 22 companies on the Watchlist, seven have posted significant gains in spite of the overall market drop. The others have begun to climb back toward the black, regaining losses suffered in the overall winter downturn.

The 2016 Small-Cap Biotech Watchlist Portfolio Tracker

Watchlist companies that have shown marked improvement in share price from the mid-February low include Agenus Inc. (AGEN:NASDAQ), a company developing cancer immunotherapeutics, which has shown steady stock-price growth since the beginning of March. The stock of Asterias Biotherapeutics Inc. (AST:NYSE.MKT) has also been on the rise since the end of February, when the company, which is focused on stem cell therapies for spinal cord injury and cancer, announced a positive end-of-Phase 2 FDA meeting for AST-VAC1, a treatment for acute myeloid leukemia.

Evoke Pharma Inc. (EVOK:NASDAQ), focused on therapies for gastrointestinal disease, is up nearly $1/share following its mid-February announcement that data from a successful study of drug candidate EVK-001 were accepted for presentation at Digestive Disease Week 2016. CorMedix Inc. (CRMD:NYSE.MKT), working on a catheter lock solution for the prevention of catheter-related blood infections, has seen its stock increase nearly $1/share since late February, when it presented a report on its 2015 milestones and 2016 objectives.

Pain Therapeutics Inc. (PTIE:NASDAQ), working on abuse-deterrent pain therapies; Verastem Inc. (VSTM:NASDAQ), targeting cancer stem cell pathways; and WAVE Life Sciences Ltd. (WVE:NASDAQ), working on a platform of therapies aimed at Duchenne muscular dystrophy, Huntington's disease and inflammatory bowel disease, have also seen their stock prices turn to the positive in late February and early March, following financial reporting and/or corporate announcements.

Those slowly building back include Abeona Therapeutics Inc. (ABEO:NASDAQ), which saw a nice bump following its Feb. 29 announcement that the FDA had cleared its investigational new drug application (IND) with the FDA for its drug candidate, ABO-102, for treatment of Sanfilippo Syndrome Type A (MPS IIIA). Others in the slow-rise category include ADMA Biologics Inc. (ADMA:NASDAQ), a company focused on plasma products; Akebia Therapeutics Inc. (AKBA:NASDAQ), treating anemia associated with kidney disease; Applied Genetic Technologies Corp. (AGTC:NASDAQ), developing gene therapies for rare ophthalmic diseases: Array BioPharma Inc. (ARRY:NASDAQ), developing cancer therapies; and Fate Therapeutics Inc. (FATE:NASDAQ), focused on cellular immunotherapies.

Additional companies in the slow-growth category include FlexPharma Inc. (FLKS:NASDAQ), addressing neuromuscular disorders including leg cramps; Galena Biopharma Inc. (GALE:NASDAQ), developing cancer vaccines and therapies; Ignyta Inc. (RXDX:NASDAQ), developing integrated cancer diagnostics and therapeutics; Karyopharm Therapeutics Inc. (KPTI:NASDAQ), targeting cancer and other diseases by regulating intracellular transport between nucleus and cytoplasm; Oramed Pharmaceuticals Inc. (ORMP:NASDAQ), developing orally bioavailable insulin for diabetics; Pieris Pharmaceuticals Inc. (PIRS:NASDAQ), with a focus on "Anticalin" therapeutics for a variety of indications; and Synergy Pharmaceuticals Inc. (SGYP:NASDAQ), developing therapies for gastrointestinal diseases. The last company, Sorrento Therapeutics Inc. (SRNE:NASDAQ), is focused on intracellular immunotherapies and immuno-oncology antibodies.

Peregrine Pharmaceuticals Inc. (PPHM:NASDAQ) stock plunged following its Feb. 25 announcement that it was discontinuing its Phase 3 SUNRISE trial of bavituximab in non-small cell lung cancer (NSCLC) on news following an interim data analysis that patients being treated with bavituximab + docetaxel did not show a sufficient improvement in overall survival over the control arm.

Companies on the 2016 Small-Cap Biotech Watchlist were announced at the 2016 Biotech Showcase in San Francisco in January. The analysts who selected the firms are George Zavoico of JonesTrading International Services, Mara Goldstein of Cantor Fitzgerald, Reni Benjamin of Raymond James, Raghuram (Ram) Selvaraju of Rodman and Renshaw, and Mike King of JMP Securities.

The Approval Process in Action Infographic

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