Quest For 10-Baggers in BioHealth in 2010 (JAZZ, TRGT, VNDA, DNDN, HGSI, CGEN, BNVI, QCOR, ACHN, PSDV, ATHX, SNSS, AVNR, BIOD, ALXA, CTIC)
If one thing was noticed in biotech stocks, or BioHealth stocks as we often say, it was that investors, traders, and speculators all piled into the chase for the next ten-bagger late in the year. When you have as many biotech and BioHealth stocks that ran over 1,000% in 2009 that is only to be expected…. hence the 10-bagger comments. We had many biotech and biohealth shares rally from their lows significantly this year, with companies such as Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ), Targacept, Inc. (NASDAQ: TRGT), Vanda Pharmaceuticals, Inc. (NASDAQ: VNDA), Dendreon Corp. (NASDAQ: DNDN), and Human Genome Sciences, Inc. (NASDAQ: HGSI) all being in or having been in the 10-bagger club this year.
But late in 2009 we started seeing an onslaught of low-priced stocks with small cap or micro-cap values running rapidly higher on news. In some cases these faded, and in some not. We saw the traders run up shares of Compugen Ltd. (NASDAQ: CGEN), Bionovo, Inc. (NASDAQ: BNVI), Questcor Pharmaceuticals, Inc. (NASDAQ: QCOR), Achillion Pharmaceuticals, Inc. (NASDAQ: ACHN), pSivida Corp. (NASDAQ: PSDV), Athersys, Inc. (NASDAQ: ATHX), Sunesis Pharmaceuticals, Inc. (NASDAQ: SNSS), and AVANIR Pharmaceuticals, Inc. (NASDAQ: AVNR) on news late in 2009. Also covered as potentials for this are Biodel Inc. (NASDAQ: BIOD), Alexza Pharmaceuticals, Inc. (NASDAQ: ALXA), and Cell Therapeutics, Inc. (NASDAQ: CTIC).
We have reviewed each of these and given a synopsis for each to see if these could be the 10-baggers for 2010.
THE WINNERS OF 2009
Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ) has jumped over 1,400% from its 2009 lows in March. Shares closed out 2008 at $1.93, giving this one returns in excess of 300% for 2009 and a market cap of $250 million. It has Xyrem and Luvox already on the market, and it has a fybromyalgia under a new application at the FDA.
Targacept, Inc. (NASDAQ: TRGT) has jumped over 1,000% from lows. At $3.56 at the close of 2008, this one is up roughly sixfold for the year and the market cap is about $581 million. The company is now expected to be profitable in 2010 according to Thomson Reuters, although we would caution that the range of estimates is massive with some still listed as expecting a wide loss in 2010 (possible not updated). The huge catalyst here is the AstraZeneca buying the rights for its depression drug.
Vanda Pharmaceuticals, Inc. (NASDAQ: VNDA) has popped over 2,300% from its lows with shares close to $11.50. With shares at $0.50 at the end of 2008, this stock is up over 2,000% for 2009. Even after this run, the market cap is only $312 million. Its payment of $200 million and its agreement giving Novartis exclusive commercialization rights to Fanapt(TM) for schizoprhrenia in the U.S. and Canada.
Dendreon Corp. (NASDAQ: DNDN) closed out at $4.58 on Dec 31, 2008 but traded as low as $2.55 during the March market meltdown. That makes this one a 10-bagger off the lows and up close to 500% for 2009. The stock briefly traded over $30.00 this year. Dendreon’s market cap may be more because of secondary offerings we have not calculated in the float, but the market cap is now at least $3 billion. The pending FDA Approval (assuming it is approved) of PROVENGE as a last line of defense in prostate cancer patients is on tap for 2010.
Human Genome Sciences, Inc. (NASDAQ: HGSI) was under $0.50 in March at the lows, making those fortunate few who bought after the March price tank have a gain of 60-fold if had they still held on today. Shares closed out 2008 at $2.12, giving the year-long holders a gain of close to 1,500%. The market cap is now over $5 billion. Having a very promising drug candidate for lupus, where no effective new treatments have come in a generation, is what HGSI holders have to thank for this gain.
THE RECENT NEWS TRADE SET-UP STOCKS
Compugen Ltd. (NASDAQ: CGEN) has rallied sharply and even a secondary offering did not hit it much. We have a market cap listed as $141 million, but we’d note that it just closed upon the $19 million in shares sales. At $4.94 today, its 52-week trading range is $0.39 to $5.86. Technically that is a 10-bagger already, but the second wave of the price run-up came in December when shares rose from under $3.00 to as high as $5.86. The Israel-based company has raised capital twice but ran after it announced positive therapeutic effects of a novel peptide in an animal model of treating inflammatory bowel disease. Then came the next wave for the company.
Bionovo, Inc. (NASDAQ: BNVI) is not exactly a household name and is a penny stock, but the publication of results from its study on the anti-tumor mechanism of BN107 in the International Journal of Cancer describing the potential molecular mechanisms mediating the selective pro-apoptotic effect induced by BN107 on estrogen receptor negative breast cancer cells was the culprit. Shares are back down under the post-pop news at $0.47 in the last day of 2009. The 52-week trading range is $0.17 to $1.15 and the market cap is only $51 million.
Questcor Pharmaceuticals, Inc. (NASDAQ: QCOR) ran sharply before Christmas as the FDA now considers that the firm has provided a complete response to all prior action letters for its supplemental New Drug Application to market H.P. ActharGel for the treatment of infantile spasms. The FDA has set the PDUFA in June 2010 for this sNDA, giving this an upcoming binary event for options traders. At $4.77 it has a $306 million market cap and its 52-week trading range is $3.10 to $9.63.
Achillion Pharmaceuticals, Inc. (NASDAQ: ACHN) ran earlier in December on “proof of concept data” as a hepatitis C fighter. Brokerage firm Roth Capital currently expects to see exponential gains in this stock on an as-is basis. At $3.20 after a big gain on December 31, the 52-week trading range is $0.65 to $3.89. The market cap here is a mere $85 million.
pSivida Corp. (NASDAQ: PSDV) also ran late in December. Shares were up over 65% to $5.83 giving the company a market cap of $106 million at the time the news of the 24 month results from the Phase III FAME study of Iluvien for the treatment of Diabetic Macular Edema. This one is back down to $3.80 and has a market of $69 million; the 52-week range is $0.60 to $6.25. Technically, this already became a 10-bagger briefly, but the market cap is tiny here.
Athersys, Inc. (NASDAQ: ATHX) soared in December after it entered into a development and commercialization pact with Pfizer Inc. (NYSE: PFE) for MultiStem(R) for the treatment of Inflammatory Bowel Disease. Athersys shares were up 192% at $2.92 on the day the news broke. The stock doubled again after that and hit as high as $6.40 before Christmas and shares sit at $4.30 on the last day of 2009 with a market cap of about $81 million.
Sunesis Pharmaceuticals, Inc. (NASDAQ: SNSS) is a micro-cap stock with a market cap of almost $38 million with shares at $1.10 on the last day of 2009. It has a 52-week trading range of $0.05 to $2.43, so the crazy volume around this one now is easy to see. The catalyst was positive data from its two Phase II clinical trials showing strong efficacy and safety profile when used as a single agent or in combination with chemotherapy in patients with difficult to treat acute myeloid leukemia. The volume went exponential on this when the news was out.
AVANIR Pharmaceuticals, Inc. (NASDAQ: AVNR) first surged when Zenvia™ in the treatment of pseudobulbar affect among patients with underlying multiple sclerosis (MS) or amyotrophic lateral sclerosis (ALS) was announced. Then it took the leaderboard again in December on additional drug data. Shares are well off of the highs here. At $1.88 on the last day of 2009 the market cap is small at $156 million and the 52-week trading range is $0.25 to $4.09. This stock has been around since the early 1990′s and briefly traded above $30.00 earlier this decade.
OTHER LESS-COVERED CANDIDATES, MAYBE
Biodel Inc. (NASDAQ: BIOD) is at $4.47 after an 8% gain on the last day of 2009 on massive volume. Wedbush Morgan reiterated its outperform rating and $17.00 target. The market cap is only $106 million and the 52-week trading range is $3.29 to $6.02. The catalyst here is an upcoming FDA hopeful acceptance of the VIAject NDA filing in Q1 2010. That wouldn’t mark a ten-bagger return, but it would make an exponential return.
Alexza Pharmaceuticals, Inc. (NASDAQ: ALXA) has submitted its NDA for StaccatoÂ® loxapine to the FDA and has a PDUFA expected date in late-2010. This is an inhalation product candidate being developed for the rapid treatment of agitation in patients with schizophrenia or bipolar disorder. At $2.34 the market cap is $120 million and the 52-week trading range is $1.40 to $3.40. This has been public since 2006 and traded up from $10 to $15 very briefly in 2007.
Cell Therapeutics, Inc. (NASDAQ: CTIC) cancer drug received an orphan status in Europe and has a FDA Oncologic Drugs Advisory Committee decision in February 2010 and an expected decision in what appears to be April-2010.. At $1.14 and at a $654 million market cap, this one has a 52-week trading range of $0.05 to $2.23. This one has been around since the 1990′s and it used to trade far higher… unbelievably higher.
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You probably noticed how little coverage was given on stem cell stocks, obesity and diabetes candidates and more. We are covering these individually in sectors again in January for 2010 and 2011 outlooks. As always on these stocks, we have featured some stocks which have already moved based on the big trader chases we have seen in 2009. Some of the stock moves have been outright silly, but some will have very large trading days based upon FDA news and presentation of news and events in 2010. Some of these might become the next ten-baggers, but there is always the chance that none of these will live up to great expectations.
Have a great 2010! Stay tuned.
JON C. OGG