In our last article, we focused on radiation cancer stocks. In this article, we will take a general look at some new cancer stocks. We wanted to highlight at least one cancer biotech with an approved drug and two that are still working their way through development but have undervalued market caps. We looked for cancer biotech stocks that have had issues in recent weeks, priced under a $75 million market cap, as these could offer the most upside going forward for investors.
Dendreon Corp. (DNDN)
It has been a crazy ride for investors in Dendreon over the last several years. From rejection to approval and a run to $54 after FDA approval back to $3.69 in October, it certainly has been a wild ride. Over the last several weeks, shares of Dendreon have put in a very nice move, jumping 90% after the company gave upbeat guidance in early January. The company estimated $85.5 million revenue for the current quarter. On a yearly basis, this equates to $342 million assuming no growth. The company attributed this growth to their focus on community sales, which increased 25% in the quarter and now represent 71% of sales. Of the $81.6 million in product revenue, $57.9 million was community sales. Using the two criteria below, we come up with total product revenue for the year of approximately $428 million.
- Community sales continue to grow at 25% per quarter.
- All other segments remain stable.
This comes to $81.6 million this quarter, $96 million Q1, $114 million Q2 and $136.7 million Q3. This level of sales is within the breakeven point the company has previously mentioned. With a $1 billion market cap now this could be viewed as cheap, especially if the growth numbers continue. A quick look at the chart shows a breakout on a close above $7 leading to a move to the $8.50-10 area in the medium term.
AEterna Zentaris Inc. (AEZS)
You may recall this stock from last April when its Phase III drug trial for colorectal cancer with Keryx Pharmaceutical, (KERX) failed. Keryx has since recovered nicely on the back of its other indications. AEZS has a decent sized pipeline to fall back on with numerous cancer indications. The key hope for this company is its Phase III Endometrial cancer trial that was granted a special protocol from the FDA in December. This news means if the trial data continues to be good, we could see the drug on the market before the completion of the Phase III trial. There is also a third party review on the perifosine trial that failed last year that is expected in the coming weeks. While the odds of good news are slim, there is always a chance a subset of data worked. If there is positive news, shares could move substantially higher. In December, AEZS also announced that final Phase II data demonstrated that the combination of perifosine, its oral AKT inhibitor, and sorafenib, was well tolerated by heavily pretreated patients with relapsed/refractory lymphomas. Furthermore, promising clinical response activity was observed in patients with classical Hodgkin Lymphoma ("HL"), suggesting that this subgroup could represent the target population for future studies. The AEZS chart shows a potential breakout at $3.34 that could see shares move to the upside by 50% in the medium term.
Rexahn Pharmaceuticals (RNN)
Rexahn's profile is a development stage biopharmaceutical company, engaged in the discovery and development of treatments for cancer and other disorders of central nervous system. The company's product candidates include Archexin that is in Phase II clinical trials for the treatment of renal cell carcinoma, glioblastoma, ovarian cancer, stomach cancer, and pancreatic cancer; Serdaxin, which has completed Phase IIb clinical trial for the treatment of depression and Parkinson'?s disease. Rexahn strengthened its cancer portfolio in December with new anti-cancer patents. In November, Teva Pharmaceuticals (TEVA) purchased $750,000 worth of Rexahn stock under a previously announced partnership. Under a new amendment to the Research and Exclusive License Option Agreement, Teva will have the right to file the IND for RX-3117 with the FDA. RX-3117 is a small molecule, new chemical entity (NCE), nucleoside compound that inhibits DNA methyltransferase, a cyclin-dependent kinase, and DNA synthesis. Potential indications for RX-3117 are solid tumors. After this financing, the company raised more money in a financing that was priced at 33c, raising $6m in proceeds. Rexahn currently has eight drugs in its pipeline, three of those in Phase 2. The stock saw a nice high volume bounce this past week after upgrades from two firms and has since retraced that move. With a market cap of $32 million, a partnership with Teva and numerous cancer drug trials underway, this low-priced stock could give some nice upside for investors. A 50% move from here would take the stock back to its pre-financing level.
For investors looking to invest in Dendreon, AEterna or Rexahn, a closer examination is of course warranted. We have merely given a brief glimpse of what stands out right now on them. Positive or negative data in the future will influence where these stock move. Still, the cancer sector, even with its high risk, can return very high rewards if a drug indication works. In such a speculative segment of the market, a small investment could yield large rewards.
Disclosure: I am long RNN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Source: http://seekingalpha.com/article/1172001-cancer-stocks-to-watch?source=feed
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