7 Biotech Stocks Sitting in the Sweet Spot
Biotech stocks aren’t for everyone. They require some additional research and as an investor you have to be comfortable having product pipelines with a long pathway to market. Biotech companies can pour millions into research and development and have nothing to show with it.
Biotech companies are on the leading edge of scientific innovation, and they bring in massive profits if they develop a drug that’s deemed to be safe and marketable.
Small biotech companies that have potentially attractive drugs in their pipelines can draw the attention of larger pharmaceutical companies. That could lead to buyouts that could be extremely profitable for investors who get in on the ground floor.
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So, if you’ve got a decent risk tolerance, biotech stocks could be really attractive. I’ve used the Portfolio Grader to pick out several here that are worthy of further scrutiny.
4D Molecular Therapeutics
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Durect (NASDAQ:DRRX) is one of my favorite cheap stocks to buy right now. It’s current price looks even more tempting given the company completed a 1-to-10 stock split late last year.
Durect is studying treatments for acute organ injuries and chronic liver diseases. It’s raising $10 million by selling 1.7 million shares of common stock to institutional investors so it can fund clinical trials, pay for general costs and have some more working capital.
Investors have high hopes that Larsucosterol, the company’s leading drug candidate to treat severe alcohol-associated hepatitis, will lead to profits.
Earnings for the fourth quarter were a mild disappointment, with revenues of $3.32 million coming in just under the expected $3.48 million. But the company’s losses per share were better than expected, as the company posted EPS of -46 cents while analysts were expecting a loss of 55 cents per share.
DRRX stock has massive potential and is up 32% so far this year. Analysts have a price target of $34.50, which would be a lofty 650% bump. DRRX stock has a “B” rating in the Portfolio Grader.
Dynavax Technologies (DVAX)
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Dynavax Technologies (NASDAQ:DVAX) is a commercial-stage biotech company focusing is on getting drugs over the finish line (approval from the Food & Drug Administration and other regulators in other countries) and available for sale.
It has a hepatitis B drug, Heplisav-B, that’s available commercially, and it’s partnered with several companies on drugs related to Covid-19 treatments. Additional drugs to treat tetanus, diphtheria and shingles are in clinical trials.
The company’s had a recent run the last three quarters, topping analysts’ expectations for both revenue and earnings. Fourth-quarter numbers included revenue of $184.49 million and EPS of 45 cents, versus expectation of $178.38 million in revenue and 44 cents EPS.
DVAX stock is down 10% so far this year, but analysts have a price target of more than $23. That shows potential for a 140% increase. DVAX gets a “B” rating in the Portfolio Grader.
EDAP TMS (EDAP)
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EDAP TMS (NASDAQ:EDAP) is a small-cap biotech stock you can buy in the U.S. on the Nasdaq exchange. It manufactures minimally invasive medical devices that use ultrasound technology.
Firms use its equipment for a variety of procedures, including to treat kidney stones and prostate conditions. It also recently announced a successful Phase 2 study of its high-intensity focused ultrasound for the use of treating rectal endometriosis.
EDAP is a small-cap company (a market cap of only $400 million), but it can still have some solid returns for your portfolio. Earnings for the fourth quarter were $12.74 million, which was better than the $12.12 million that the Street expected. And while analysts were forecasting an EPS loss of 6 cents, EDAP broke even.
EDAP stock is up 3% so far this year, but analysts are predicting an increase of 25% in shares. EDAP has an “A” rating in the Portfolio Grader.
Enliven Therapeutics (ELVN)
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This is a company on a roll. Enliven Therapeutics (NASDAQ:ELVN) saw its stock shoot up 430% so far this year to top $20 per share. It’s been an amazing ride for a company that started the year as a penny stock.
The stock jumped after completing a merger with a Imara, a Boston rare disease specialist whose Phase 2B trials for sickle cell and beta thalassemia both failed, sending the stock price plummeting and investors scrambling for cover.
Enliven swooped in, and announced it raised $165 million from institutional investors to give it a cash runway into 2026.
Enliven’s top drug candidates provide treatment for chronic myeloid leukemia and non-small cell lung cancer. The moves prompted TD Cowen to initiate coverage on ELVN stock with an “outperform” rating. It said the company is positioned to capture a significant share of the space for drugs to treat center nervous system disorders – a market valued at more than $100 billion by 2025.
ELVN stock has an “A” rating in the Portfolio Grader.
4D Molecular Therapeutics (FDMT)
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California-based 4D Molecular Therapeutics (NASDAQ:FDMT) is a clinical-stage biotherapeutics company. Its focus is on designing and commercializing gene therapeutic products. Its pipeline includes drugs that would treat eye disorders, cystic fibrosis and the rare genetic disorder Fabry disease.
The stock has been on a downswing as of late, losing 24% so far this year. And fourth-quarter earnings were a disappointment, with a revenue of $1.25 million missing analysts’ estimates of $2.18 million. Earnings per share came in at a loss of 84 cents per share.
However, the market is expecting a turnaround this year, nmeaning that this stock could be on sale. Jefferies Financial Group is forecasting earnings per share of $3.35 for the full year, which is an increase of 10 cents per share. And the consensus price target for the stock is more than $38, or 185% higher than the current price.
FDMT has a “B” rating in the Portfolio Grader.
Fennec Pharmaceuticals (FENC)
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Fennec Pharmaceuticals (NASDAQ:FENC) has a mission that’s hard to beat. Headquartered in Durham, North Carolina, the company works to treat children with cancer who have hearing loss caused by their chemotherapy.
It draws its name from the fennec fox, which is the smallest of the known fox species and is recognized for its oversized ears.
Its drug is called Pedmark, and can be used for children as young as one month old to decrease their risk of hearing loss. The FDA approved Pedmark in September 2022 and granted exclusivity in January 2023.
The company also completed a $25 million round of financing to help it launch Pedmark.
Fennec has yet to release fourth-quarter earnings. But in the third quarter, the company posted no revenue and an earnings loss of 31 cents per share. It ended the quarter with $29.8 million in cash on hand.
Now that Fennec is finally earning revenue, it becomes an intriguing stock. Analysts are giving it a potential price target of $15.83, which would more than double what it is now.
FENC stock has a “B” rating in the Portfolio Grader.
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Geron (NASDAQ:GERN) focuses on drugs that treat various types of blood cancers. It’s coming off a successful phase 3 clinical trial of Imetelstat, a drug that’s used to treat lower-risk myelodysplastic syndromes (MDS).
The California biotech company has high hopes – it believes Imetelstat sales could generate as much as $3 billion a year by the end of the decade. It says its planning for a commercial launch of Imetelstat in the U.S. later this year, and is also taking initial steps with European regulators.
Geron is a volatile stock and not for the faint of heart – the stock price has been all over the place so far this year and currently is down roughly 13% in 2023. But if you’re willing to accept some risk, this is a company that appears to be on the verge of profits. Analysts suggest that the price could nearly double in the next year, with a consensus price target of $5.33.
GERN stock has an “A” rating in the Portfolio Grader.
On the date of publication, Louis Navellier did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article held GERN. The research member did not hold (either directly or indirectly) any other positions in the securities mentioned in this article.
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