Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
US COVID-19 Death Toll Higher Than China’s Now. Will Gold Rally? - 4th Apr 20
Concerned That Asia Could Blow A Hole In Future Economic Recovery - 4th Apr 20
Bracing for Europe’s Coronavirus Contractionand Debt Crisis - 4th Apr 20
Stocks: When Grass Looks Greener on the Other Side of the ... Pond - 3rd Apr 20
How the C-Factor Could Decimate 2020 Global Gold and Silver Production - 3rd Apr 20
US Between Scylla and Charybdis Covid-19 - 3rd Apr 20
Covid19 What's Your Risk of Death Analysis by Age, Gender, Comorbidities and BMI - 3rd Apr 20
US Coronavirus Infections & Deaths Trend Trajectory - How Bad Will it Get? - 2nd Apr 20
Silver Looks Bearish Short to Medium Term - 2nd Apr 20
Mickey Fulp: 'Never Let a Good Crisis Go to Waste' - 2nd Apr 20
Stock Market Selloff Structure Explained – Fibonacci On Deck - 2nd Apr 20
COVID-19 FINANCIAL LOCKDOWN: Can PAYPAL Be Trusted to Handle US $1200 Stimulus Payments? - 2nd Apr 20
Day in the Life of Coronavirus LOCKDOWN - Sheffield, UK - 2nd Apr 20
UK Coronavirus Infections and Deaths Trend Trajectory - Deviation Against Forecast - 1st Apr 20
Huge Unemployment Is Coming. Will It Push Gold Prices Up? - 1st Apr 20
Gold Powerful 2008 Lessons That Apply Today - 1st Apr 20
US Coronavirus Infections and Deaths Projections Trend Forecast - Video - 1st Apr 20
From Global Virus Acceleration to Global Debt Explosion - 1st Apr 20
UK Supermarkets Coronavirus Panic Buying Before Lock Down - Tesco Empty Shelves - 1st Apr 20
Gold From a Failed Breakout to a Failed Breakdown - 1st Apr 20
P FOR PANDEMIC - 1st Apr 20
The Past Stock Market Week Was More Important Than You May Understand - 31st Mar 20
Coronavirus - No, You Do Not Hear the Fat Lady Warming Up - 31st Mar 20
Life, Religions, Business, Globalization & Information Technology In The Post-Corona Pandemics Age - 31st Mar 20
Three Charts Every Stock Market Trader and Investor Must See - 31st Mar 20
Coronavirus Stocks Bear Market Trend Forecast - Video - 31st Mar 20
Coronavirus Dow Stocks Bear Market Into End April 2020 Trend Forecast - 31st Mar 20
Is it better to have a loan or credit card debt when applying for a mortgage? - 31st Mar 20
US and UK Coronavirus Trend Trajectories vs Bear Market and AI Stocks Sector - 30th Mar 20
Are Gold and Silver Mirroring 1999 to 2011 Again? - 30th Mar 20
Stock Market Next Cycle Low 7th April - 30th Mar 20
United States Coronavirus Infections and Deaths Trend Forecasts Into End April 2020 - 29th Mar 20
Some Positives in a Virus Wracked World - 29th Mar 20
Expert Tips to Save on Your Business’s Office Supply Purchases - 29th Mar 20
An Investment in Life - 29th Mar 20
Sheffield Coronavirus Pandemic Infections and Deaths Forecast - 29th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast - Video - 28th Mar 20
The Great Coronavirus Depression - Things Are Going to Change. Here’s What We Should Do - 28th Mar 20
One of the Biggest Stock Market Short Covering Rallies in History May Be Imminent - 28th Mar 20
The Fed, the Coronavirus and Investing - 28th Mar 20
Women’s Fashion Trends in the UK this 2020 - 28th Mar 20
The Last Minsky Financial Snowflake Has Fallen – What Now? - 28th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast Into End April 2020 - 28th Mar 20
DJIA Coronavirus Stock Market Technical Trend Analysis - 27th Mar 20
US and UK Case Fatality Rate Forecast for End April 2020 - 27th Mar 20
US Stock Market Upswing Meets Employment Data - 27th Mar 20
Will the Fed Going Nuclear Help the Economy and Gold? - 27th Mar 20
What you need to know about the impact of inflation - 27th Mar 20
CoronaVirus Herd Immunity, Flattening the Curve and Case Fatality Rate Analysis - 27th Mar 20
NHS Hospitals Before Coronavirus Tsunami Hits (Sheffield), STAY INDOORS FINAL WARNING! - 27th Mar 20
CoronaVirus Curve, Stock Market Crash, and Mortgage Massacre - 27th Mar 20
Finding an Expert Car Accident Lawyer - 27th Mar 20
We Are Facing a Depression, Not a Recession - 26th Mar 20
US Housing Real Estate Market Concern - 26th Mar 20
Covid-19 Pandemic Affecting Bitcoin - 26th Mar 20
Italy Coronavirus Case Fataility Rate and Infections Trend Analysis - 26th Mar 20
Why Is Online Gambling Becoming More Popular? - 26th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock Markets CRASH! - 26th Mar 20
CoronaVirus Herd Immunity and Flattening the Curve - 25th Mar 20
Coronavirus Lesson #1 for Investors: Beware Predictions of Stock Market Bottoms - 25th Mar 20
CoronaVirus Stock Market Trend Implications - 25th Mar 20
Pandemonium in Precious Metals Market as Fear Gives Way to Command Economy - 25th Mar 20
Pandemics and Gold - 25th Mar 20
UK Coronavirus Hotspots - Cities with Highest Risks of Getting Infected - 25th Mar 20
WARNING US Coronavirus Infections and Deaths Going Ballistic! - 24th Mar 20
Coronavirus Crisis - Weeks Where Decades Happen - 24th Mar 20
Industry Trends: Online Casinos & Online Slots Game Market Analysis - 24th Mar 20
Five Amazingly High-Tech Products Just on the Market that You Should Check Out - 24th Mar 20
UK Coronavirus WARNING - Infections Trend Trajectory Worse than Italy - 24th Mar 20
Rick Rule: 'A Different Phrase for Stocks Bear Market Is Sale' - 24th Mar 20
Stock Market Minor Cycle Bounce - 24th Mar 20
Gold’s century - While stocks dominated headlines, gold quietly performed - 24th Mar 20
Big Tech Is Now On The Offensive Against The Coronavirus - 24th Mar 20
Socialism at Its Finest after Fed’s Bazooka Fails - 24th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock and Financial Markets CRASH! - 23rd Mar 20
Will Trump’s Free Cash Help the Economy and Gold Market? - 23rd Mar 20
Coronavirus Clarifies Priorities - 23rd Mar 20
Could the Coronavirus Cause the Next ‘Arab Spring’? - 23rd Mar 20
Concerned About The US Real Estate Market? Us Too! - 23rd Mar 20
Gold Stocks Peak Bleak? - 22nd Mar 20
UK Supermarkets Coronavirus Panic Buying, Empty Tesco Shelves, Stock Piling, Hoarding Preppers - 22nd Mar 20
US Coronavirus Infections and Deaths Going Ballistic as Government Start to Ramp Up Testing - 21st Mar 20
Your Investment Portfolio for the Next Decade—Fix It with the “Anti-Stock” - 21st Mar 20
CORONA HOAX: This Is Almost Completely Contrived and Here’s Proof - 21st Mar 20
Gold-Silver Ratio Tops 100; Silver Headed For Sub-$10 - 21st Mar 20
Coronavirus - Don’t Ask, Don’t Test - 21st Mar 20
Napag and Napag Trading Best Petroleum & Crude Oil Company - 21st Mar 20
UK Coronavirus Infections Trend Trajectory Worse than Italy - Government PANICs! Sterling Crashes! - 20th Mar 20
UK Critical Care Nurse Cries at Empty SuperMarket Shelves, Coronavirus Panic Buying Stockpiling - 20th Mar 20
Coronavirus Is Not an Emergency. It’s a War - 20th Mar 20
Why You Should Invest in the $5 Gold Coin - 20th Mar 20
Four Key Stock Market Questions To This Coronavirus Crisis Everyone is Asking - 20th Mar 20
Gold to Silver Ratio’s Breakout – Like a Hot Knife Through Butter - 20th Mar 20
The Coronavirus Contraction - Only Cooperation Can Defeat Impending Global Crisis - 20th Mar 20
Is This What Peak Market Fear Looks Like? - 20th Mar 20
Alessandro De Dorides - Business Consultant - 20th Mar 20
Why a Second Depression is Possible but Not Likely - 20th Mar 20

Market Oracle FREE Newsletter


Highly Undervalued Biotechnology Stocks To Watch

Companies / BioTech Aug 28, 2019 - 06:45 AM GMT

By: Joshua_Rodriguez

Companies The biotechnology industry is an exciting one. As continued innovation drives a better scientific understanding of the human body and the ailments that weigh on it, we are seeing better outcomes for patients who are living longer, more fulfilling lives.

However, it’s not only the patients that are seeing tremendous benefit out of this innovation. Investors are benefiting greatly as well. After all, as new medications hit the market, tremendous revenue opportunities are being created for the companies creating these treatments.

Nonetheless, 2019 hasn’t been a great one for the biotechnology industry as a whole.

Nektar Therapeutics (NKTR): Beaten Down YTD But Creating A Compelling Opportunity

Nektar Therapeutics has had an incredibly rough year so far in 2019. Unfortunately, the stock has been cut nearly in half throughout the year. Nonetheless, it is showing incredible promise, and recent declines may be nothing more than a half-off discount.

Nektar Therapeutics is an immuno-oncology company. Their flagship candidate, known as NKTR-214, has the potential to treat several different types of cancer.

With regard to the development of the drug, Nektar Therapeutics partnered with Bristol-Myers Squibb (BMY) after the large pharma player made a $1.85 billion investment in Nektar back in 2018. As part of the deal, Nektar has the potential to receive up to $1.8 billion in milestone payments associated with NKTR-214.

At the moment, there’s a Phase 3 clinical program surrounding the drug in more than 20 indications involving 9 different types of cancer. Not to mention, with a strong focus on lung cancer, the company is addressing high-value indications.

Maybe that’s why analysts seem to be so impressed with the stock. According to Tip Ranks, the average price target on the stock is $40.80, suggesting an upside well over 100%. Even the most bearish of analysts give the stock a price target of $21.00, suggesting upside potential of more than 20%. All in all, the undervaluation here is clear!

AbbVie (ABBV): Tumbles In 2019 With A Strong Recovery Ahead

AbbVie is a massive player in the biotechnology space with a name that’s well known globally. Unfortunately, that name has slipped into the mud a bit in 2019, with year-to-date declines of more than 30%.

The company’s claim to fame is its Humira product. Unfortunately, it’s this product that’s leading to all of the concern. Humira currently generates about 61% of the revenue seen by AbbVie, creating a heavy dependence on the drug’s success.

In October of 2018, biosimilars to Humira found their way onto the European market. This competition has already begun to take part of Humira’s market share. Investors are also concerned about competition in AbbVie’s core market, the United States, as biosimilars have the greenlight to compete in 2023. 

I believe that the concerns with regard to competition are overblown. The truth of the matter is that AbbVie is working on multiple phase 3 clinical studies for a long line of existing drugs. These drugs are likely to see label expansions soon, giving the company more opportunities to expand revenue.

The company also has multiple new drugs in late stages of clinical development. Between two of these, risankizumab and upadacitinib, AbbVie said that it expects to reach revenues of $10 billion annually by 2025.

It’s also worth keeping in mind that the company has several drugs in blockbuster indications that have raked in great sales. Imbruvica, a cancer drug, and Mavyret, a hepatitis C virus drug, are both generating strong revenues.

Although concerns about Humira are rising, investors can’t deny the 16% year-over-year growth in revenue seen in 2018, nor the adjusted EPS growth of 41%. With a market acting on fear and an opportunity that should elicit greed, I believe that AbbVie is primed for strong growth ahead.

Spherix (SPEX): A Small Company With Dynamite Potential

Spherix is by far the smallest company on this list, but it’s definitely not the smallest opportunity. At the moment, the company primarily acts as a hedge fund, making investments in biotechnology companies and reaping the rewards of their growth.

Interestingly, the argument that Spherix is undervalued is very easy to make. Just take a look at the company’s market cap and the book value of the company’s assets. When you do, you’ll see that the company trades on a market cap that represents less than half of the value of its assets.

The book value has seen dramatic growth in recent years. These gains have largely been due to an investment made in Hoth Therapeutics worth about $700,000. Today Hoth Therapeutics is a NASDAQ listed company worth around $50 million. The original ~$700,000 investment is now worth more than $10 million.

The company also made a relatively large investment in CBM recently, purchasing a 20% stake in the oncology-focused biotechnology company. Moving forward, Spherix intends to acquire CBM Biopharma, with a vote expected to take place early next month to decide the fate of the deal.

It’s also worth mentioning that the company recently proposed a dividend worth about $500,000 and intends on proposing more down the road. This is something that you don’t see companies of this stage doing, making it that much more of an eye catcher.

Should all go well, Spherix would immediately become a development-stage biotechnology company with plenty of cash to get through several catalysts. Moreover, considering the fact that the stock has lost nearly a third of its value this year, the opportunity is heavily discounted, making this stock one that’s hard to ignore.

Ligand Pharmaceuticals (LGND): Looked At As Speculative; In Reality, Anything But

Ligand Pharmaceuticals is another stock that has had a pretty rough year. Year to date, the stock has lost nearly a third of its value as analysts largely pass it off as a speculative investment. When you dig into the opportunity, you’ll likely find that it’s anything but.

In my view a large part of the value in Ligand Pharmaceuticals is its business model. While it is a biotechnology company, the company doesn’t actually develop drugs. Well, at least, it doesn’t do it on its own.

The company is focused on developing platforms and licensing them out to drugmakers. These platforms essentially help developers producer new treatments more effectively.

At the moment, Ligand’s technologies are used in 10 different products on the market, inclusive of products from very big names. These technologies are found in Kyprolis by Amgen (AMGN) and Promacta by Novartis (NVS).

To put an end to the speculation conversation, just take a look at the company’s revenues. In 2018, the company generated 78% year-over-year growth. EPS was up more than 10 times on a year-over-year basis.

Moving forward, there are several opportunities to watch for. The company’s technologies are used in 8 late-stage candidates, 21 Phase 2 candidates, and 24 phase 1 candidates. Any positive news out of any of these may act as positive catalysts ahead.

While Ligand has taken a beating so far this year, the stock seems to be doing nothing more than presenting a discount on long-run growth.

Aerie Pharmaceuticals (AERI): Rocklatan Could Quickly Become A Blockbuster

Aerie Pharmaceuticals is another stock that has felt quite a bit of pain this year. The stock is down by almost 40% year to date, but again, this may prove to be a strong opportunity.

Recently, Aerie Pharmaceuticals has announced the regulatory approval of two different treatments; Rhopress was launched in 2018 and Rocklatan was approved in early 2019.

Although Rhopress had a strong start in 2018, the most valuable of these two drugs is Rocklatan, in my view. Indicated as a potential option for patients with glaucoma, the treatment has limited competition in the space.

Considering a strong start with the company’s first drug, Rhopressa, I’m expecting to see more of the same with Rocklatan in an indication that offers up a larger opportunity.

In my view, once sales reports start to show growth in Rocklatan revenues, the stock will start to find its way back up to a more realistic valuation. This is likely why analysts followed by Tip Ranks suggest a potential to see 200% gains based on average price target. All in all, Aerie Pharmaceuticals is a stock that’s well worth watching.

Final Thoughts

While the stocks listed above have lagged behind their peers in the biotech space, I believe that they each represent a strong opportunity. Due to a rough year in 2019, these stocks are trading at incredible discounts. Based on the assets they possess, these discounts shouldn’t last long!

This article is a paid advertisement. View all relevant disclosures here.

By Joshua Rodriguez

© 2019 Copyright Joshua Rodriguez - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules