U.S. biotech stocks are off to a strong start this week. It didn’t take long for investors to get over the Fed’s forecast for interest rate hikes by 2023 which rattled the markets late last week.
Concerns of inflation and sooner than expected rate increases have largely subsided allowing the major averages to climb higher. The Dow Jones Industrial Average had its best day in more than three months on Monday with cyclical energy, industrial, financial, and transport stocks leading the way. All 11 sector groups advanced to start the week, a sign of broad-based market strength.
With the markets seemingly back in “risk-on” mode volatile biotechnology stocks have been among the biggest movers and shakers.
The biotech industry includes a range of companies that research, develop, manufacture, and market therapies to treat human diseases. Their processes are typically based on some form of genetic analysis and engineering.
As a group biotechnology stocks are up approximately 8% this year which lags the broader S&P 500 year-to-date return of 12.5%. However, the gap has closed considerably in the last few weeks thanks to some big biotech headlines including the FDA’s controversial approval of Biogen’s Alzheimer’s disease treatment. Risk-seeking investors have also been rotating out of struggling cryptocurrencies and into biotech.
Here at Insider Financial, we have a keen interest in the biotech space because the life-changing nature of its products can translate to life-changing gains for investors.
Today we highlight four of the most intriguing biotech stocks generating buzz across social media platforms.
The first two, AMRN and AVXL trade on the Nasdaq. The next two are up-and-coming OTC penny stocks.
BIOTECH STOCKS TO WATCH #1 AMRN
Headquartered in Dublin, Ireland, Amarin Corp. (AMRN) is a commercial-stage pharmaceutical company focused on cardiovascular disease. Many of its treatments are based on omega-3 fatty acid which is an essential oil our bodies aren’t able to produce.
BIOTECH STOCKS TO WATCH #1 AMRN
Amarin has the only drug on the market called Vascepa. It has been approved in the U.S. and Europe to treat patients with high LDL-cholesterol and severe hypertriglyceridemia, conditions associated with increased risk of stroke, heart attack, and heart disease.
Last year Vascepa sales, Amarin’s main revenue source, were up 42% to $607 million. They are expected to exceed $650 million in 2021.
The European approval was granted in March 2021, so revenue results have yet to reflect the potential of the European market. Vascepa’s European debut is expected to happen by the end of the third quarter of 2021 starting with Germany. Amarin thinks Vascepa can become a multi-billion dollar blockbuster heart medication over time.
Unfortunately for the company, generic companies are now permitted to seek approval for generic versions of Vascepa following a district court ruling. In November 2020 the first generic version of the drug was launched by Teva Pharmaceuticals and Apotex putting downward pressure on the stock. Generic approvals for Dr. Reddy’s Laboratories and Hikma Pharmaceuticals soon followed.
AMRN rallied from there on hopes the company’s Supreme Court appeal would be successful. However, in February 2021, Amarin lost the appeal—and the stock has since trended lower.
The company was dealt another setback this week. The Supreme Court denied Amarin’s bid to overturn a March 2020 District of Nevada ruling that invalidated Vascepa’s core patents.
Still, momentum has built up over the past four weeks with increased attention on the company’s growth prospects. In that period, AMRN is up about 7% compared to 3% for the industry.
Aside from the upcoming launch of Vascepa in Europe, the stock could get a boost from a leadership change. On August 1st, the retiring President & CEO John Thero will give way to current Amarin executive Karim Mikhail.
Amarin has a strong balance sheet that contains no debt and $519 million in cash. This should support its ability to pursue growth in the global cardiovascular market that includes more than 200 million people in the U.S. and Europe alone.
BIOTECH STOCKS TO WATCH #2 AVXL
Anavex Life Sciences (AVXL) has been one of the most discussed biotech stocks at Insider Financial. It has also been one of the biggest winners for Insider Financial subscribers.
BIOTECH STOCKS TO WATCH #2 AVXL
We’ve repeatedly praised the company’s ANAVEX2-73 product as one of the most promising drugs in development.
Investors that made note of our December 2020 update on positive phase 2 trial results enjoyed a 395% run through February 4th. You can read about that here.
AVXL is on the run again having more than doubled off its March 13th low.
Earlier this month ANAVEX2-73 appeared in a peer-reviewed publication. The journal discussed the drug candidate’s ability to induce autophagy, a cell regeneration process that has been found to be defective in patients with Alzheimer’s disease, Parkinson’s disease, and other central nervous system disorders.
On June 16th we alerted Insider Financial subscribers to the increasing social media chatter around this development. That can be found here.
The elevated message board activity has spilled over into this week.
On June 21st, the company announced that ANAVEX2-73 showed positive biomarker correlating efficacy data in a phase 2 clinical trial for the treatment of patients with Rett Syndrome. Patients that received ANAVEX2-73 achieved higher scores in the Rett Syndrome Behavioral Questionnaire as well as improvements in balance, mood, and repetitive hand behavior. The drug candidate is said to activate the key Sigmar1 receptor resulting in “the restoration of complete housekeeping function within the body”.
The continued progress with the drug helped AVXL gap up and run as high as $27.85 on Monday.
As often happens with biotech stocks, the positive clinical headline was followed by news of an add-on equity offering. On Tuesday the company announced a $50 million direct offering agreement with Deep Track Capital at $21.00 per share.
AVXL pulled back a bit in response but expect more positive news around its lead candidate to dictate the longer-term uptrend.