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3 Biotech Stocks with Cutting Edge, Targeted Therapies

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April 16, 2018 – Comments (0) | RELATED TICKERS: CELG , BIVV , CTIC

The biotechnology and pharmaceutical industries are in recovery mode as of late. But overall, the market has performed well since the presidential elections took place in 2016. In fact the S&P biotech index (XBI) has risen by more than 120% since February of 2016. Biotech is a typically known to be a risky sector.  One bad phase trial and stocks crumble under pressure.

Many therapies do not hit the desired end point, while others fail to gain approval in the commercial marketplace. Then again, when a therapy succeeds, investors can surely make a lot of money. The key to many of these big windfalls is timely investments into the up and comers in the market; the companies that are still in Phase I and Phase II but have sound leadership and a propensity for future growth.

Look At Small Cap Stocks To Offer Opportunity

There is certainly a lot of attention on the market leaders but take a look at some of the smaller companies in the market as many of them are a bit more nimble than the overweight large caps you read about in the news.  Many times, these smaller companies can be ripe targets for mergers and acquisitions with early shareholders reaping the benefits.

GT Biopharma (GTBP) has managed to attract several industry veterans to its leadership team and they’ve come from long stints at places like Pfizer (PFE), Sanofi (SNY), and Deutsche Bank (DB). GT Biopharma has a pipeline of therapies that includes several treatments in or about to be in Phase II trials.  Lead by Shawn Cross (experience at Deutsche Bank), the company is carving a foothold in areas of interest that include oncology and pain management.

Recent news suggests that the company’s treatment for myasthenia gravis (GTP-004) could be accelerating Phase II trials for the upcoming third quarter of this year. Phase 1 clinical trials for GTP-004 showed favorable results in the five healthy volunteers observed in Phase I.  Myasthenia gravis is characterized by weakness and rapid fatigue of any of the muscles under your voluntary control. Because there is no known cure for it at this point, treatments can help relieve signs and symptoms, such as weakness of arm or leg muscles, double vision, drooping eyelids, and difficulties with speech, chewing, swallowing and breathing.

Late last year, Alexion Pharmaceuticals (ALXN) stock jumped after the biopharmaceutical firm scored FDA approval for its myasthenia gravis drug, Solaris. Furthermore, Argenx (ARGX) recently granted orphan status for its ARGX-113 for the treatment of myasthenia gravis. Shares of arGEN-X have climbed by as mugh as nearly $6 or roughly 7% since the announcement.

Diversity In Pipeline Treatments

But look at diversity in the small companies and their pipelines.  The simple fact is that if you find a “one trick pony,” one miss on a Phase trial would essentially mean that that company could end up closing shop or spending who knows how long on finding another indication for their drug.  GT Biopharma also has a number of oncology treatments in its pipeline. 

Most notably the company’s OXS-1550 and OXS-3550 therapies are targeting leukemia and lymphoma treatment initially with the goal of being able to offer a more universal therapy for certain types of cancers as well.  The market for immunotherapies has grown recently and certain events like the buyout of Kite by Gilead Sciences (GILD) for nearly $12 billion helped to shed much more light on the potential that some of these larger companies are seeing in immunotherapy.

But where Kite and Novartis (NVS) have focused on CAR-T based treatments that involve using a patient’s own T cells for the therapy, GT Biopharma has taken a different approach that could end up being more effective and less costly.  GT Biopharma is advancing the emerging field of NK therapeutics in collaboration with

Dr. Jeffrey Miller of U. Minnesota, a recognized leader in NK cell therapy and IL-15 biology.

There are two Proprietary technology platforms: Tri- and Tetra-specific Killer Engagers (TriKE) & (TetraKE) as well as bi-specific Antibody Drug Conjugates (ADC). GT has exclusive license to broad IP estate covering oncology pipeline with exclusive rights to TriKE and TetraKE platform, ADC conjugate platform and the portfolio of CNS product candidates like its myasthenia gravis therapy.

Key Mergers And Acquisitions Boost The Appeal Of Clinical Stage Companies

Investing In Small Caps For Big Profit?

Investors seem to be favoring smaller biotech companies. The performance of the market-cap-weighted iShares Nasdaq Biotechnology ETF (IBB) gained 12% over the past 12 months, and the equal-weighted SPDR S&P Biotech ETF jumped 34% during the same period.

In line with the market a few years ago, it was the investors who found opportunity in discounted biotech stocks that capitalized on some of the biggest moves in stock price as well as some of the largest sums of money spent on M&A leading into 2017 and 2018.

The last 14 months have seen some of the hottest climate for mergers and acquisition within the biopharmaceutical industry in history. In addition to Gilead Sciences Inc. acquiring Kite Pharma Inc., this year we’ve already begun to see the trend continue. Celgene Corp. (CELG) has officially acquired Juno Therapeutics Inc. as of March. Much of the excitement circled around Juno’s CAR-T therapy targeting B-cell lymphoma, JCAR017.

Additionally, Bioverativ Inc. (NASDAQ:BIVV) was bought out by French biotech company, Sanofi SA ADR (NYSE:SNY) in a deal pegged at $11.6 billion. You have companies like Novartis beginning to jump into the M&A arena too. The company is set to acquire AveXis for $8.7 billion to further expand its gene therapy treatments for chronic illness. French firm, Servier recently acquired the oncology business of Shire (SHPG) for 2.4 billion. And CTI BioPharma (CTIC) has just seen Jane Street Group LLC take a position of over $470,000. The company focuses on novel targeted therapies for blood-related cancers.

Keep in mind that for a company like GT Biopharma, their team has seen the buyout scenario many times in the past. The company’s current Chief Medical Officer, Dr. Raymond Urbanski, was the former business unit chief medical officer and senior director of oncology research and development with Pfizer. Dr. Urbanski has played a vital role in developing and overseeing clinical studies, including phase 3b and phase 4 studies for Pfizer’s sunitinib (Sutent), exemestane (Aromasin), irinotecan (Camptosar), epirubicin (Ellence), axitinib (Inlyta) and tremelimumab; now in investigation by MedImmune, a wholly owned subsidiary of AstraZeneca (AZN).

President of Neurology and Vice Chairwoman of GT Biopharman, Dr. Kathleen Clarence-Smith co-founded Chase Pharmaceuticals Corporation, which was later bought by Alergan (AGN) in 2016. As the head of CNS development at Sanofi, Hoffmann-La Roche and Otsuka, Dr. Clarence-Smith oversaw and supported the launches of significant neurological treatments. This includes Abilify® (aripiprazole), which is a $7 billion peak-year sales pharmaceutical drug used in the treatment of schizophrenia and bipolar disorder.

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