Biotech is a thriving industry, driven by constant innovation and a search for daring new solutions to serious health problems.
After several years of struggle, with smaller companies losing out to rising costs and once-favored stocks taking a beating amidst bearish conditions, biotech is set for a comeback.
Each year, stroke and heart disease cost the U.S. nearly $1 billion every day in lost productivity and hospital bills, while untreated or untreatable medical conditions constitute one of the biggest burdens to the U.S. economy.
Fortunately, groundbreaking advances in medical technology have allowed innovative biotech firms to push the envelope, opening up opportunities for health-care proponents and investors alike.
Here are some of the most exciting biotech opportunities currently open to investors looking to take advantage of this emerging trend:
1. Amgen (NASDAQ:AMGN)
As one of the biggest players in medical research, testing and product development, Amgen is the original “blue chip” investment in pharmaceuticals. Trading above $180 as of September 7, Amgen has paid out a dividend to investors since 2011 and is currently yielding near 2.4 percent.
A significant amount of growth is locked up in Kyprolis, acquired in Amgen’s purchase of Onyx Pharmaceuticals in 2013. Year on year the drug has grown by 23 percent. With prices heading upwards and demand growing, Kyrprolis could see annual sales of close to $1 billion.
Amgen continues to innovate, purchasing new therapies and launching a new therapeutic focus on cardiovascular drugs. Along with new product launches, the company has made cost-cutting a priority: trimming about 20 percent of the workforce since 2014, resulting in annual savings of $1.5 billion.
This has helped Amgen enjoy healthy share growth, rising from November 2016 by nearly 30 percent. With a host of other products on-line and a sterling reputation, there’s no reason Amgen shouldn’t remain a go-too for investors looking for a solid earner, albeit at a steep price.
A smaller firm with big ambitions, CVR Medical is taking a hard look at one of the leading causes of death for adults worldwide: strokes. The company has pioneered a brand-new technology, the Carotid Stenotic Scan (CSS) to search for Ischemia, one of main indicators of a potential stroke.
Every year, some 15 million people suffer a stroke, and of that number, 6 million die while 5 million are rendered permanently disabled. In the United States, stroke deaths occur on average once every four minutes, and some 800,000 people are affected by the condition every year.
Blood flowing through the carotid arteries create wave patterns, which the CSS monitors for signs of stenosis within the arteries, an indicator of Ischemia. Using patented algorithms, the CSS analyzes the wave patterns and pinpoints potential trouble spots. The technology is similar to seismic imaging methods used in the oil and gas industry.
Currently, the main method for detecting early signs of strokes is the CT scan, which can be pricey: each CT scan machine can cost up to $2.5 million, yet this scan isn’t always accurate.
The CSS monitoring system is a steal compared to its competition. At the currently planned price of just $49,000 per unit, the CSS has the potential to become the main method for detecting early signs of a stroke.
So far, CVR Medical has developed this technology while attracting very little investor attention. With a minimum of fuss, CVR has slowly grown and could become a major disruptor in the field of stroke detection and prevention.
The company is progressing fast, in August, CVR announced a deal with Canon Virginia, Inc., to manufacture the CSS in larger numbers. This provides CVR with the ability to scale up quickly and offers a catalyst to potential success. A second catalyst came on September 7, when CVR released results from preliminary trials of the CSS. Together, these validate CVR’s claims and help to bolster confidence in the CSS technology. Assuming FDA approval, a completed agreement with Canon and the medical industry’s anticipating embrace of this technology, CSS units could be under mass manufacture quite soon, meeting the strong demand for stroke-prevention and detection methods in hospitals across the U.S.
The company’s approach, one which favors a slow build (CSS), has been in development for 10 years (and CVR has invested $23 million in the technology) rather than flashy promos, should favor both patients and investors who are interested in getting in at this stage and staying with a company as it creates value.
Trading at $0.40 a share, CVR Medical represents an exciting opportunity for investors looking to get in on the ground floor of a potential emerging biotech pioneer.
3. Medtronic (NYSE: MDT)
A manufacturer of medical devices based in Dublin, Ireland, with operational headquarters in Fridley, Minnesota, Medtronic has seen its share price tumble somewhat in 2017, falling from $89 to $79 a share, after an impressive rise on a bullish market from early 2017. Yet the company has a string of impressive products and is well-positioned to recapture its former momentum.
Recently, the company announced a new series of tests of its radical new bone-growth product Infuse, which could be used to strengthen the spine in order to treat back pain, which is the most common reason Americans visit the doctor.
While the product was approved by the FDA in 2007, Infuse has been used most widely in procedures unrelated to its intended purpose, including some the FDA considered dangerous. Political pressure, as well as a U.S. Senate committee investigation, pushed Medtronic to do more studies on the drug.
Medtronic is a company which, like many in the U.S. healthcare market, will be heavily affected by changes in U.S. healthcare law. Under the Affordable Care Act (ACA), Medtronic benefited from 17 million new customers, as more people became eligible for health insurance. But a repeal of this law could upset Medtronic’s plans for growth, potentially making it a riskier investment option.
4. Epizyme (NASDAQ: EPZM)
A clinical-stage biopharmaceutical company, Epizyme has enjoyed a boost of investor confidence in Q3 of 2017, with its share price soaring above a 52-week high in September to reach $18.70. The company’s share price has enjoyed strong, steady growth since July 2017, after tumbling for a month on the back of disappointing Q2 results.
Based out of Cambridge, Massachuetts, Epizyme focuses on developing and commercializing unique epigenetic therapies for cancer patients. The company’s premier product is tazemetostat, an inhibitor of EZH2, and the company has studies underway on solid tumors and hematological malignancies. Positive interim data on the drug’s Phase 2 trial was announced in June 2017, with reports indicating it had a beneficial impact on patients with follicular lymphoma.
In August 2017 the company shifted its financial leadership, as management was reshuffled after a less-than-stellar June and July.
There are now strong signs the company is making its way towards a come-back, with a good Chaikin Money Flow indicator (CFI). Investors could buy into Epizyme now and hope the bounce that began in August continues.
5. Synergy Pharmaceuticals (NASDAQ: SGYP)
Though it’s in the midst of a year-long slump, having seen share price tumble from $7 to less than $3 since January 2017, Synergy Pharmaceuticals is posed to make a recovery, thanks to a fresh infusion of capital.
In September, the gastrointestinal-focused drug developer based in New York secured a $300 million debt financing deal from CRG. The deal is non-dilutive, so further drop in the share price is not to be expected.
The money should help the country push ahead its prize product, Trulance. The drug treats chronic idiopathic constipation (CIC) and enters a market with relatively little competition. Approved by the FDA in December 2016 and launched in 2017, Trulance has been hyped by the company’s spokespeople, yet its release was followed by disappointing Q2 earnings of $2.3 million, well below the estimate of $3.6 million investors predicted.
The share price tumbled some 40% since Trulance was approved by the FDA, but investors shouldn’t be too spooked about the fall, as it’s customary for a hyped stock to see its value tumble after the release of its first major product.
The recent debt financing deal should reassure investors that Synergy’s plans for the future remain unchanged. The company could see a recovery in its stock price fairly soon, especially if Q3 earnings come in above expectations.
By. Ian Jenkins
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FORWARD LOOKING STATEMENTS. Statements in this communication which are not purely historical are forward-looking statements and include statements regarding beliefs, plans, intent, predictions or other statements of future tense. Forward-looking statements in this press release include that CVR’s technology can successfully be deployed for early detection of stroke; that CVR’s technology may have a major impact on the medical device industry; that CVR can sign a definitive manufacturing agreement to give it state-of-the-art manufacturing capabilities with Canon Virginia, Inc and immediate scalability; that the CSS device can be sold profitably at $49,000 per unit; and that CVR is moving to pivotal trials and with that will be closer to FDA approval. Actual events or results may differ materially from those projected in any of such statements due to various factors, including the risks and uncertainties inherent in medical device development, which include, without limitation, the potential failure of device candidates to advance through clinical studies or demonstrate safety and efficacy in clinical testing; CVR’s ability to retain key employees; its ability to finance development; and its ability to satisfy the rigorous regulatory requirements for new medical devices. Costs may be higher than expected and CVR may need to increase the expected sales price of its device. Competitors may develop better or cheaper alternatives to CVR’s products. CVR may not be able to come to final agreements with expected contract partners, it may not be able to commercialize its products and even if it does, it may not realize any profit. All forward-looking statements are qualified in their entirety by this cautionary statement and we undertake no obligation to revise or update this information to reflect events or circumstances after today’s date. Readers should also refer to the risk factors disclosure outlined in CVR’s periodic reports filed from time-to-time with the securities regulators.
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