One thing that I have developed over the past couple of decades investing in the small biotech space is learning to recognize when a company and its stock start to have positive catalysts happening and also on the horizon. This is critical in spotting potential big winners in the market.
In spring of last year I noticed that Avanir Pharmaceuticals (NASDAQ: AVNR) had just won a major court victory to retain exclusivity on its primary drug through 2026 and also had phase II trial results coming up later on in the year for a promising compound to treat the agitation commonly found in Alzheimer’s patients. When results turned out to be positive a few months later, the stock shot up. Soon thereafter, the company received a substantial buyout offer from a bigger Japanese based pharma player in December bringing better than a 215% return to the Small Cap Gems portfolio.
Given the huge amount of volatility in the small cap biotech space it is crucial that investors know what if any potential positive catalysts are on the near and medium term horizon for a company when they consider making an investment in a speculative but promising stock in this sector. Here are a couple of small biotech equities that appear to have mounting positive catalysts, as well as promising futures.
Agenus Inc. (NASDAQ: AGEN), is a biotech company I have talked about a couple of times in 2015 on these pages. The shares are also up some 140% since their inclusion in late November into the Small Cap Gems portfolio. The stock was up another 20% last week as Agenus reported quarterly results. Evidently investors and analysts were impressed with the quarter and the conference call the company conducted afterward.
There are many reasons for optimism for the rest of 2015. Agenus adjuvant looks like it will get approval within a year for both a shingles and a malaria vaccine developed in conjunction with partner GlaxoSmithKline (NYSE: GSK). Both will be significant improvements from anything on the market for both of these widespread diseases. Malaria alone kills some 600,000 people a year in Africa, a death toll this new vaccine has the potential to greatly reduce. Shingles, although not lethal, is quite painful and affects some 300 million people in United States, Europe and Japan at some point in their lives. Agenus will get small milestone payments once final approval is given for both vaccines as well as royalty fees on all subsequent sales.
