In this article, I analyze seven small cap biotechnology companies with market caps from just over $1 billion all the way down to just over $17 million. We'll use a table to keep us fixated on key factors relating to this unique equities segment. I will conclude each analysis by offering my opinion on each stock as an investment.
Acorda Therapeutics, Inc. (ACOR, Financial) is a small cap ($1.06 billion), trading at about $27.00 per share. Acorda Therapeutics, Inc. conducts research to identify, develop and commercialize new treatments for improving neurological function in those suffering from multiple sclerosis, spinal cord injury and disorders of the central nervous system. Acorda has two products on the market, Ampyra and Zanaflex capsules. They have 1 therapy entering phase II, 1 in Phase I, 1 in preclinical and 1 in research and development. Acorda has very limited collaborations so I am forced to give it fail on this point, but would be quick to point out that given the developmental stage of the other drugs in its pipeline, the absence of collaborations is not unusual. With two drugs on the market, Acorda is generating revenue, if not income, and its balance sheet and income statement would be considered robust in comparison to many biotech peers. ACOR has the ability to handle its debt as the debt/equity and current ratios demonstrate. The closest product to market is just entering phase II trials, so realistically they don't have anything nearing market. This is less of an issue for Acorda because it is currently marketing 2 therapies. I found no evidence of any roadblocks and the management team enjoys a high level of competence. With generic versions of ACOR's Zanaflex on the horizon, the success of Ampyra takes on critical importance. With 400,000 MS victims in the United States (2.5 million worldwide) there is clearly a substantial market for Ampyra which costs just over $1000 for a 30 day supply. If the drug reached only 10% of these people, it could generate $3 billion in annual gross revenues for Acorda. The majority of analysts favor a strong buy/buy position and institutional investors have warmed to the stock. I would concur that, with proper emphasis on marketing and sales, Ampyra and Acorda could reap some significant financial rewards. Zanaflex, by way of contrast, faces competition with other muscle relaxing drugs and now, generic versions of the drug. No such competition exists for Ampyra. It is the only player on the market with a proven ability to improve the MS sufferer's ability to walk. I would rate Acorda as a buy and would upgrade it to a strong buy if I were to see some evidence of an aggressive, strategic marketing effort.
Agenus Inc. (AGEN, Financial) is a small cap ($51.92 million) trading at around $2.50 per share. AGEN is developing and commercializing technologies to treat cancers and infectious diseases, based on an immunological approach. They collaborate with Russia's NewVac LLC on Oncophage, Agenus' personalized liver cancer immunotherapy. This partnershipwill include licensing the manufacture of the drug in Russia where it has been approved since 2008. Agenus has several other therapies in its pipeline. Agenus has flat revenues, significant debt, declining investment in research and development and only Oncophage on the market and that's in Russia. Other than money, I am not aware of any roadblocks the firm has encountered other than the FDA (mustread). The management team has the usual sprinkling of PH.D.'s and M.D.'s. I should add that Agenus, on its website, portrays Oncopahge as at market. While technically accurate (it is on the market in Russia), I find it disingenuous. The analyst community is fairly high on AGEN with 2 rating it a strong buy and 2 rating it a buy. I agree.
BioSante Pharmaceuticals, Inc. (BPAX, Financial) another small cap ($59.37 million) is trading at 4 bits. BPAX develops products for female sexual health and cancer. BPAX has one drug on the market, Elestrin, a topical hot flash treatment. It has several therapies in various stages of clinical trials. I found no evidence of significant collaborations. Capitalization may become increasingly difficult in view of recent pending litigation. Debt load is manageable at present but the aforementioned litigation is a huge roadblock for the firm. The management team has a dearth of Ph.D.'s and M.D.'s. The pending litigation, absence of therapies nearing market and light institutional investment combine to suggest this as an opportunity for further research.BioCryst Pharmaceuticals, Inc. (BCRX) is a small cap ($128.86 million) and trading at almost $3.00 share. BCRX designs, enhances, and develops small-molecule drugs that block key enzymes involved in infectious diseases, cancer, and inflammatory diseases. The firm has three therapies in its pipeline with Paramivir perhaps being the closest to reaching market in the United States. Paramivir is already on the market in Korea and Japan. Paramivir is also receiving a great deal of attention from the Department of Health and Human Services and BCRX is the beneficiary of a $234.8 million grant for further development. Biocryst has at least two significant collaborations. Like so many biotech firms, BCRX isn't in great financial shape, but I believe is positioned well to tender a public offering should the need arise. Current obligations seem to be under control. Biocryst has no existing roadblocks. The management team appears competent and I am favorably impressed with the company's transparency. BCRX seems to be on a roll. Paramivir is looking promising in terms of FDA approval and BCX4208 receivedpositive top-line results from its Phase 2b study as an add-on therapy in gout patients. Istitutional investors might want to give Biocryst a second look. I regard the company as a strong buy.
Micromet, Inc. (MITI), also a small cap ($811.39 million), is trading at about $9.00 per share. MITI is committed to discovering, developing, and commercializing antibody-based drugs for the treatment of cancer. MITI has several therapies in various stage s of clinical trial. Micromet has a number of significant collaborations and/or partnerships. At present, capitalization appears adequate. The debt load is zero and the current ratio suggests sufficient resources on hand to meet current obligations. Micromet's blinatumomab therapy for acute lymphoblastic leukemia is nearest to market with no roadblocks to date. In fact, Micromet recently inked adeal with the National Cancer Institute to expand its development. The company's management team has a high number of Ph.D.'s and this extends to a couple of board members as well. High institutional ownership, favorable analyst ratings and high profile collaborations persuade me that MITI is a stock well worth considering.
Tengion, Inc. (TNGN, Financial) at 6 bits per share and a market cap of $17.61 million is the smallest company we'll analyze today. TNGN defines itself as a regenerative medicine company, which, develops, manufactures, and commercializes a variety of new organs created to address medical needs in urologic, renal, gastrointestinal, and vascular diseases and disorders. The company creates these functional organs using a patient's own cells vis-Ã -vis its Organ Regeneration Platform. Although this sounds like the stuff of science fiction, it is real and was even featured on CBS's 60 Minutes. That program actually became the impetus for an IPO which raised $30 million of an expected $40 million. . I recommend this one as a great candidate for further research.
MannKind Corp. (MNKD, Financial) is a small cap ($335.20 million) and trades at about $3 per share. MNKD's focus is the discovery, development, and commercialization of therapeutic products for diabetes and cancer in the United States, Europe, and Asia. The firm has but two products in its pipeline and the FDA, about this time last year, issued a complete response letter on MNKD's lead therapy Afrezza. This should have been a relatively easy 'fix' but Mannkind had anothersetback. I have confidence in this stock for a variety of reasons (see table) and cannot recommend it at this time; however, for comparisons I recommend looking at dirt cheap alternatives in this space.
Acorda Therapeutics, Inc. (ACOR, Financial) is a small cap ($1.06 billion), trading at about $27.00 per share. Acorda Therapeutics, Inc. conducts research to identify, develop and commercialize new treatments for improving neurological function in those suffering from multiple sclerosis, spinal cord injury and disorders of the central nervous system. Acorda has two products on the market, Ampyra and Zanaflex capsules. They have 1 therapy entering phase II, 1 in Phase I, 1 in preclinical and 1 in research and development. Acorda has very limited collaborations so I am forced to give it fail on this point, but would be quick to point out that given the developmental stage of the other drugs in its pipeline, the absence of collaborations is not unusual. With two drugs on the market, Acorda is generating revenue, if not income, and its balance sheet and income statement would be considered robust in comparison to many biotech peers. ACOR has the ability to handle its debt as the debt/equity and current ratios demonstrate. The closest product to market is just entering phase II trials, so realistically they don't have anything nearing market. This is less of an issue for Acorda because it is currently marketing 2 therapies. I found no evidence of any roadblocks and the management team enjoys a high level of competence. With generic versions of ACOR's Zanaflex on the horizon, the success of Ampyra takes on critical importance. With 400,000 MS victims in the United States (2.5 million worldwide) there is clearly a substantial market for Ampyra which costs just over $1000 for a 30 day supply. If the drug reached only 10% of these people, it could generate $3 billion in annual gross revenues for Acorda. The majority of analysts favor a strong buy/buy position and institutional investors have warmed to the stock. I would concur that, with proper emphasis on marketing and sales, Ampyra and Acorda could reap some significant financial rewards. Zanaflex, by way of contrast, faces competition with other muscle relaxing drugs and now, generic versions of the drug. No such competition exists for Ampyra. It is the only player on the market with a proven ability to improve the MS sufferer's ability to walk. I would rate Acorda as a buy and would upgrade it to a strong buy if I were to see some evidence of an aggressive, strategic marketing effort.
Agenus Inc. (AGEN, Financial) is a small cap ($51.92 million) trading at around $2.50 per share. AGEN is developing and commercializing technologies to treat cancers and infectious diseases, based on an immunological approach. They collaborate with Russia's NewVac LLC on Oncophage, Agenus' personalized liver cancer immunotherapy. This partnershipwill include licensing the manufacture of the drug in Russia where it has been approved since 2008. Agenus has several other therapies in its pipeline. Agenus has flat revenues, significant debt, declining investment in research and development and only Oncophage on the market and that's in Russia. Other than money, I am not aware of any roadblocks the firm has encountered other than the FDA (mustread). The management team has the usual sprinkling of PH.D.'s and M.D.'s. I should add that Agenus, on its website, portrays Oncopahge as at market. While technically accurate (it is on the market in Russia), I find it disingenuous. The analyst community is fairly high on AGEN with 2 rating it a strong buy and 2 rating it a buy. I agree.
BioSante Pharmaceuticals, Inc. (BPAX, Financial) another small cap ($59.37 million) is trading at 4 bits. BPAX develops products for female sexual health and cancer. BPAX has one drug on the market, Elestrin, a topical hot flash treatment. It has several therapies in various stages of clinical trials. I found no evidence of significant collaborations. Capitalization may become increasingly difficult in view of recent pending litigation. Debt load is manageable at present but the aforementioned litigation is a huge roadblock for the firm. The management team has a dearth of Ph.D.'s and M.D.'s. The pending litigation, absence of therapies nearing market and light institutional investment combine to suggest this as an opportunity for further research.BioCryst Pharmaceuticals, Inc. (BCRX) is a small cap ($128.86 million) and trading at almost $3.00 share. BCRX designs, enhances, and develops small-molecule drugs that block key enzymes involved in infectious diseases, cancer, and inflammatory diseases. The firm has three therapies in its pipeline with Paramivir perhaps being the closest to reaching market in the United States. Paramivir is already on the market in Korea and Japan. Paramivir is also receiving a great deal of attention from the Department of Health and Human Services and BCRX is the beneficiary of a $234.8 million grant for further development. Biocryst has at least two significant collaborations. Like so many biotech firms, BCRX isn't in great financial shape, but I believe is positioned well to tender a public offering should the need arise. Current obligations seem to be under control. Biocryst has no existing roadblocks. The management team appears competent and I am favorably impressed with the company's transparency. BCRX seems to be on a roll. Paramivir is looking promising in terms of FDA approval and BCX4208 receivedpositive top-line results from its Phase 2b study as an add-on therapy in gout patients. Istitutional investors might want to give Biocryst a second look. I regard the company as a strong buy.
Micromet, Inc. (MITI), also a small cap ($811.39 million), is trading at about $9.00 per share. MITI is committed to discovering, developing, and commercializing antibody-based drugs for the treatment of cancer. MITI has several therapies in various stage s of clinical trial. Micromet has a number of significant collaborations and/or partnerships. At present, capitalization appears adequate. The debt load is zero and the current ratio suggests sufficient resources on hand to meet current obligations. Micromet's blinatumomab therapy for acute lymphoblastic leukemia is nearest to market with no roadblocks to date. In fact, Micromet recently inked adeal with the National Cancer Institute to expand its development. The company's management team has a high number of Ph.D.'s and this extends to a couple of board members as well. High institutional ownership, favorable analyst ratings and high profile collaborations persuade me that MITI is a stock well worth considering.
Tengion, Inc. (TNGN, Financial) at 6 bits per share and a market cap of $17.61 million is the smallest company we'll analyze today. TNGN defines itself as a regenerative medicine company, which, develops, manufactures, and commercializes a variety of new organs created to address medical needs in urologic, renal, gastrointestinal, and vascular diseases and disorders. The company creates these functional organs using a patient's own cells vis-Ã -vis its Organ Regeneration Platform. Although this sounds like the stuff of science fiction, it is real and was even featured on CBS's 60 Minutes. That program actually became the impetus for an IPO which raised $30 million of an expected $40 million. . I recommend this one as a great candidate for further research.
MannKind Corp. (MNKD, Financial) is a small cap ($335.20 million) and trades at about $3 per share. MNKD's focus is the discovery, development, and commercialization of therapeutic products for diabetes and cancer in the United States, Europe, and Asia. The firm has but two products in its pipeline and the FDA, about this time last year, issued a complete response letter on MNKD's lead therapy Afrezza. This should have been a relatively easy 'fix' but Mannkind had anothersetback. I have confidence in this stock for a variety of reasons (see table) and cannot recommend it at this time; however, for comparisons I recommend looking at dirt cheap alternatives in this space.
