Biotech Stocks to Watch Through the 2nd Half of 2019
The biotechnology industry is an exciting one. A mix of technology and a better understanding of the human body has led to several very exciting breakthroughs over the past several years, and we're seeing improved quality of life, less abrasive therapies and longer lifespans among patients than ever before.
Of course, good health is highly valuable. Let's face it, we all want to live with a high quality of life for as long as possible. In fact, it's the human sense of self preservation that led to a market that's expected to rise to generate more than $10 trillion in annual value by 2022.
As you would expect, where there's this kind of market size, there are opportunities for investors. In fact, small biotechnology companies quite often become monsters after inventing breakthrough treatments. Here are a few that I've been following closely:
Amarin Corp. (NASDAQ:AMRN): Vascepa could quickly become a blockbuster
Amarin's claim to fame is a product known as Vascepa. The treatment is a single-molecule product that consists of an omega-3 fatty acid. Derived from fish through a stringent and complex Food and Drug Administration-regulated process, Vascepa is free of impurities and provides an isolated, single-molecule active ingredient.
At the moment, Vascepa is approved as an adjunct to diet to reduce triglyceride levels in adult patients with severe hypertriglyceridemia. While this indication has led to sales, it is a relatively narrow indication with a limited market potential. Nonetheless, the company may break into the big leagues in September.
Amarin is currently awaiting a decision from the FDA with regard to a supplemental New Drug Application. The application was submitted in hopes of expanding the label to include a blockbuster indication.
If it is approved, Vascepa will be the first drug that is indicated to reduce residual cardiovascular risk in patients with statin-managed LDL-C cholesterol, but experience persistent elevated triglycerides. That's a big deal for two reasons:
If the sNDA is approved, it will greatly expand the patient population that could benefit from treatment with Vascepa. Of course, with a greatly expanded addressable patient population comes a greatly expanded revenue opportunity.
Moreover, the American Heart Association used to recommend patients that fall into this category take a baby aspirin daily to mitigate cardiovascular risk. However, the organization recently pulled this recommendation, leaving the patient population with no available options. So demand is likely to be very high from the very beginning.
It's also worth mentioning that the Prescription Drug User Fee Act date, or the date that the FDA will make a decision, for the sNDA is Sept. 28. That's just around the corner! Considering this, Amarin is a compelling opportunity to pay attention to.
INmune Bio Inc. (NASDAQ:INMB): Creating options for patients with few others
INmune Bio is a clinical-stage biotechnology company that packs a punch. The company's work is centered around harnessing the power of the body's innate immune system to provide new options for patients with debilitating conditions.
In particular, the company is currently focused on providing new options for Alzheimer's disease and cancer patients. On the oncology side, the company has INKmune and INB03.
INKmune is being developed in the clinic as a potential option to treat residual disease in cancer patients. Residual disease is the small amount of cancer cells left behind after the patient has reached remission, and it's the reason for relapse.
INB03 is the topic of a clinical trial of its own. The drug is being developed as a potential option to treat patients with various forms of cancer that are not responding to checkpoint inhibitor treatment. It is believed the drug may change the tumor microenvironment, increasing efficacy of checkpoint inhibitor therapies.
On the Alzheimer's side of the coin, INmune Bio has a treatment known as XPro1595 in the clinic. The program is being funded largely by a $1 million grant provided by the Alzheimer's Association.
It is believed that XPro1595 has the potential to suppress microglia, a signal that is commonly seen in high levels in Alzheimer's patients. Believed to be the reason for neuroinflammation leading to Alzheimer's disease, attacking microglia may hold the key to treating it. If this is the case, XPro1595 may become the go-to treatment option in an industry that is expected to grow to be worth more than $12 billion a year by 2026.
Considering a focus on high-value indications and multiple ongoing clinical trials that will likely result in several positive catalysts ahead, INmune Bio is a stock that is well worth paying attention to.
Heron Therapeutics Inc. (NASDAQ:HRTX): A big opportunity to rebound
Heron Therapeutics had a rough first half of 2019. The stock has given up well over a third of its value, fueled by a surprising upset from the FDA.
The company's claim to fame is its experimental non-opioid pain therapy that has been dubbed HTX-011. Unfortunately, the company received a Complete Response Letter from the FDA, which essentially rejects the treatment being submitted.
This came as a huge shock to many. In clinical studies, the drug seemed to perform well from both an efficacy and safety standpoint. If approved, the drug had the potential to earn $500 million or more in sales over time, so the rejection was not only shocking, it was painful.
Nonetheless, the declines could represent an opportunity ahead. According to Heron Therapeutics, the rejection was based on technical issues that are relatively easy to resolve. As such, the company may be resubmitting its application relatively soon.
Of course, if all is as Heron Therapeutics portrays it, a resubmission has the strong potential of yielding a regulatory approval and opening the door to incredible revenues ahead. So, this is a stock that's well worth keeping an eye on.
Final thoughts
With consistent medical innovation, opportunities in biotechnology are all around us. In my view, the stocks mentioned above represent some of these opportunities. With multiple catalysts ahead, these companies are well worth digging into.
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This article first appeared on GuruFocus.
