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Buy 5 Attractive Biotechs at Bargain Prices

Zacks Equity Research

In retrospect, we had a roller coaster ride in the first half of this year. 2016 started off on a negative note for the U.S. markets.  The markets rallied back only to be thrown in the storm of uncertainty after a shock Brexit vote during late June. The markets have recuperated the losses and have come back strongly afterward laying aside Brexit fears. 

The healthcare sector was also turbulent right at the onset of 2016 while the ever-volatile biotech sector continues to maintain its negative streak as we stand midway. The NASDAQ Biotechnology Index has declined 19.8% year to date.  The biotech sector was hit hard in the second half of 2015 as well due to pricing issues.

It’s anybody’s guess how the second half will turn out to be. Yet, we believe it might be a good time for investors to put their bets on the dynamic biotech sector which of late has plunged into a series of mergers & acquisitions. Last month, Shire acquired Baxalta to further strengthen its rare disease portfolio.  The company has an important event coming up with a Prescription Drug User Fee Act (PDUFA) date of Jul 22, 2016 for ophthalmology lifitegrast. A potential approval of lifitegrast will give a significant boost to Shire’s efforts to build an ophthalmology unit.  Aegerion Pharmaceuticals and QLT Inc entered into a definitive merger agreement in Jun 2016 to form a new company, Novelion Therapeutics Inc., as both are looking to overcome their existing challenges. Earlier, pharma major Pfizer, Inc. acquired Anacor Pharmaceuticals. Meanwhile, Sanofi is looking to acquire Medivation, Inc.

Alongside, regular trial updates and approval of new drugs will continue to hold center stage. Amid this recent wave of consolidations, it makes sense to zero in on some low-priced biotechs below $10 carrying a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy). These stocks look poised to emerge as winners in the second half of 2016 with impressive portfolios/healthy pipelines.

Attractive Biotechs at Bargain Prices

Cambridge, MA-based Merrimack Pharmaceuticals MACK primarily focuses on innovative therapies in combination with companion diagnostics for the treatment of cancer. Merrimack gained FDA approval for its first product, Onivyde, in Oct 2015 in combination with fluorouracil and leucovorin for the treatment of patients with metastatic adenocarcinoma of the pancreas after disease progression following Gemzar-based therapy. The initial uptake of the drug has been encouraging while Merrimack works on expanding its label for other oncology indications. The company also has four candidates in its pipeline. The stock currently carries a Zacks Rank #1.

MERRIMACK PHAR Price and Consensus

MERRIMACK PHAR Price and Consensus | MERRIMACK PHAR Quote

New York-based Anavex Life Sciences Corp. AVXL is a clinical stage biopharmaceutical company which is focussing on the development of drugs/therapies for the treatment of neurodegenerative and neurodevelopmental diseases. The company’s efforts to develop its lead candidate, ANAVEX 2-73, for Alzheimer’s disease (phase II) and Rett syndrome are encouraging. In Jun 2016, the FDA’s Office of Orphan Product Development granted Orphan Drug Designation to ANAVEX 2-73 for the treatment of infantile spasms. The company also enjoys an orphan drug status for Rett syndrome in the U.S. The stock currently carries a Zacks Rank #2 (Buy) and the 2016 loss per share estimate has narrowed by 18 cents in the last 60 days.

ANAVEX LIFE SCI Price and Consensus

ANAVEX LIFE SCI Price and Consensus | ANAVEX LIFE SCI Quote

Cambridge, MA-based AVEO Pharmaceuticals, Inc. AVEO also focuses on therapeutics for oncology and other areas of unmet medical need. The company’s lead candidate, tivozanib, is being developed for the treatment renal cell carcinoma (RCC). The company has collaborated with other companies to fund development programs for its other pipeline candidates including AV-380, ficlatuzumab, AV-203, and tivozanib in non-oncologic indications along with oncology indications outside North America.  The company continues to progress with its pipeline and recently dosed its first patient in a randomized, controlled, multi-center, open-label study to compare tivozanib to Nexavar in subjects with refractory advanced RCC. The stock currently carries a Zacks Rank #2 and the 2016 loss per share estimate has narrowed by 12 cents over the past 60 days.

AVEO PHARMACEUT Price and Consensus

AVEO PHARMACEUT Price and Consensus | AVEO PHARMACEUT Quote

Next up on our list of buys is Durham, NC-based Argos Therapeutics. Inc. ARGS, a clinical stage company, focused on the development and commercialization of individualized immunotherapies for the treatment of cancer and infectious diseases, which it is developing using its technology platform called Arcelis. The company’s lead candidate, AGS-003, is currently being evaluated in phase III for the treatment of metastatic renal cell carcinoma (mRCC). The company is also developing AGS-004, currently in phase II, for the treatment of HIV. The 2016 loss per share estimate for this Zacks Rank #2 stock has narrowed by 48 cents in the last 60 days.

ARGOS THERAPEUT Price and Consensus

ARGOS THERAPEUT Price and Consensus | ARGOS THERAPEUT Quote

Cambridge, MA-based Idera Pharmaceuticals, Inc. IDRA is a clinical-stage company which also focuses on the development of drug candidates for oncology and rare diseases. The company uses two distinct proprietary drug discovery technology platforms to develop drugs – toll-like receptor (TLR) targeting technology and third-generation antisense (3GA) technology. The company’s TLR antagonist candidates include IMO-8400 and IMO-9200, which are both antagonists of TLR7, TLR8 and TLR9. These antagonists can be potentially developed in the immune-oncology space. Meanwhile, the 3GA technology has the potential to reduce the immunotoxicity and increase the potency of earlier generation antisense and RNA interference, or RNAi, technologies. The stock currently carries a Zacks Rank #2.

IDERA PHARMACT Price and Consensus

IDERA PHARMACT Price and Consensus | IDERA PHARMACT Quote

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IDERA PHARMACT (IDRA): Free Stock Analysis Report
 
AVEO PHARMACEUT (AVEO): Free Stock Analysis Report
 
ARGOS THERAPEUT (ARGS): Free Stock Analysis Report
 
MERRIMACK PHAR (MACK): Free Stock Analysis Report
 
ANAVEX LIFE SCI (AVXL): Free Stock Analysis Report
 
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