Biotech

 

Investing in the small biotech sector differs from investments in other areas of the stock market. Hedge funds employ PhDs in biochemistry yet most get it wrong as much as they get it right. The performance of drugs and compounds in actual trials is next to impossible consistently predict. Anyone that says differently has something to sell.

 

Biotech sector calls for a different investing strategy. Taking much smaller positions in a larger amount of selections than in other sectors is a philosophy that has proven successful. However, there will be many misses within this biotech portion of your portfolio but offset with the occasional five or ten winners. 

 

Shotgun Investing will post articles and analyst reports that will highlight these types of biotech gems that consist of promising, attractive but speculative stocks.

Summary

Ardelyx has been stood up by both AstraZeneca and Sanofi

due to recent clinical trial failures.

 

Nevertheless, Ardelyx is trudging on with its lead candidate Tenapanor for IBS.

 

The IBS indication is the best chance for Tenapanor to succeed, as issues with side effects seem mitigated and phase 2 did meet its primary endpoint last year.

 

Last month, Ardelyx, Inc. (NASDAQ:ARDX) rocked markets with its Q2 2015 financials. Analysts had forecast an EPS of $0.09, but instead, on net income of $9 million, the company hit EPS of $0.43, a 367% upside surprise. The company's stock gained about 6% on the announcement and has been gyrating in a 20% range since.

 

In any normal situation, such a beat would translate into sustained gains. However, markets are still uncertain about Ardelyx at the moment, primarily as a result of a failed primary endpoint in one of its recent lead candidate trials. Can the company overcome this failure, and what does its recent earnings beat suggest?

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NEW

The tremors reverberating through the stock market on Monday left a score of biotechs big and small shaken, alarmed and bruised by the end of the day. But the avalanche of share prices that started early retreated later in the day as the experts weighed in on the long-term implications.

 

Celgene ($CELG) was an early bellwether stock, with the $90 billion biotech seeing its shares drop 21% and then come back to wind up down 4.76%. In premarket trading this morning the stock is up 3.55%, bringing it back to near break-even after a 24-hour roller coaster ride. The closely-watched Nasdaq biotech index ended the day down about the same amount as Celgene, as (most) investors and traders breathed a sigh of relief as the threatened tsunami failed to hit. 

Analysts fret as market turbulence threatens biotech IPO market

 

by John Carroll, fiercebiotech.com

 

Summary

  • Tuesday, the stock of a small biotech concern named Omeros Corporation surged more than 70% in trading, as the company announced positive Phase II results for its lead drug candidate.

  • OMER was profiled and put into the Biotech Forum portfolio on July 9th because it had all the traits of an attractive high-risk/high-reward small-cap selection.

  • Among the company's desirable qualities were its multiple "shots on goal", strong analyst support, and the potential of its pipeline. Outlined below are the reasons why the shares could still go higher.

Summary

  • Current revenues are underwhelming early projections.

  • New prescriptions have plateaued and now are trending down.

  • Resolutions of August debt hasn't gone well for converting debt holders into MannKind stock.

  • MannKind continues to add new debt and more outstanding stock.

  • MannKind cash reserves are quickly diminishing.

 

One Year Since FDA Approval and Sanofi Partnership Announcement:

 

The thesis for this article is taking historical data from MannKind's partner, Sanofi, and pointing out the arduous task and mounting financial difficulties that lie ahead for MannKind. Being more specific, their stock price and market capitalization valuations can't be sustained as more and more debt is loaded onto their balance sheet. I'm opting to use Sanofi's financial ratios as the source of data that I will apply. Now, one year after signing the partnership, MannKind is still unable to provide what any normal biotech partnership would have provided their shareholders. This being a simple explanation as to why they can't figure out their cost structure for their part of the 65%/35% divisions of profits and expenses generated in the MannKind/Sanofi partnership.