WHITEFISH, MT / ACCESSWIRE / June 29, 2015 / Small-cap biotech stocks have been top performers so far this year, with the PowerShares S&P SmallCap Healthcare ETF (PSCH) returning 25%, which is 5x better than the SPDR S&P 500 ETF's (NYSE:SPY) 5% return. Investors may want to consider adding exposure to this asset class given its outperformance and lower correlation with the overall U.S. equity market.
In this article, we'll take a look at three micro-cap and small-cap companies that are taking a different approach to the status quo within multi-billion dollar industries.
Diabetes, a disorder of blood sugar metabolism, is a prevalent and serious disease of major public health importance. Currently there are approximately 387 million people in the world living with diabetes with an expected increase to nearly 600 million by 2035. Diabetes has major adverse effects on people's health, but also presents a large economic burden. Global healthcare expenditures on diabetes currently exceeds $420B. Experts agree that a significant portion of the morbidity, mortality and cost of diabetes could be avoided with improved control of blood sugars.
Cell MedX Corp. (CMXC) has discovered a potentially valuable new, proprietary technology for the treatment of diabetes - one that encompasses electrical micro-currents delivered in distinctive patterns of waveform, amplitude, frequency, and duration leading to alterations in metabolic pathways which may result in improved blood sugar control. The treatment is believed to be of exceptionally low risk, and can be self administered at home. It is a uniquely new category of treatment.
In a pilot clinical discovery phase trial in two diabetic subjects, the company found that its e-Balance technology increased sensitivity to insulin and up-regulated glycolytic processes, with subjects demonstrating enhanced glucose utilization.
Further explorations of these pathways will continue, along with endpoints like HbA1C, in an expanded clinical trial that is currently recruiting subjects in Newport Beach, CA.
Investors in Cell MedX can look forward to multiple potential catalysts in the near future including a series of clinical trials, expanded basic research, intellectual property pursuits, exploration of new form factors with innovative industrial designs, and growth and expansion of the enterprise as their technology is productized and readied for introduction into a global market.
Drug resistant organisms and hospital-acquired infections have become an enormous global problem, especially given the lack of new antibiotics capable of fighting these serious infections. According to the CDC, one in five hospital patients has at lest one healthcare-associated infection. Accelerated Diagnostics Inc. (NASDAQ:AXDX) aims to rapidly identify these pathogens for treatment.
While traditional testing to determine a pathogen's susceptibility to a certain antibiotic may take upwards of 50 hours, which is often too late to help patients, the company's BACcel platform is capable of performing the analysis in just three steps taking less than five hours to complete. These tests have 98% sensitivity (identification of target) and 97% specificity (identification of non-target).
The company plans on launching its Accelerate ID/AST System in the U.S. in early 2016, after having initiated its BSI trial and secured a CE Mark in mid-2015. Over the long-term, the company could capture a significant piece of the $7.5 billion (estimated 2019) market with peak gross margins of over 70% - an attractive proposition for investors in the biotechnology space.
Pancreatic cancer is one of the deadliest forms of cancer, with less than half of patients surviving more than a year. In addition to the diseases rapid progression, many patients experience unbearable and, unfortunately, untreatable pain from malignant fluid (known as ascites) in the abdominal cavity. PharmaCyte Biotech Inc. (PMCB) is attempting to combat both the cancer and its side effects.
Rather than injecting patients with high doses of toxic chemotherapy drugs, the company's approach is to place its Cell-in-a-Box(R) ifosamide-activating capsules in close proximity to the tumor and then intravenously inject low doses of ifosamide - a cancer-killing drug - to attack the tumor. Unlike other approaches, there's no immune response or damage to tissue near where the capsules are placed.
The company has demonstrated the effectiveness of the low dosage (as opposed to regular dosages that harms the body) in two early clinical trials and is preparing to conduct a more advanced Phase 2b clinical trial in the near future. Early evidence also suggests that the treatment may be effective in delaying the accumulation of ascites fluid in mice bearing an aggressive form of ovarian cancer.
Key Takeaway Points
Small-cap biotech stocks have been top performers so far this year and they don't seem to be ready to stop anytime soon. Investors looking for exposure to the industry may want to consider small-cap opportunities in the space, such as the three companies discussed in this article, which are targeting multi-billion dollar industries with platform technologies.
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SOURCE: Emerging Growth LLC