The smaller cap biotech space offers two key advantages for investors right now: cyclical diversification and diversification away from the vaccine monolithic theme.
To break that down a bit, the stock market has been volatile over the past month, with many growth plays getting smacked down as risk comes off the table with Wall Street analysts focused on a rough Q3 earnings season hampered by supply chain woes, underperforming growth drivers, and policy tightening fears, not to mention fears of the potential economic fall-out that could come from gridlock in Washington DC on key votes related to the debt ceiling and infrastructure legislation.
But none of these issues matter for biotech stocks. Let me say that again: None of these issues matter for biotech stocks. The economy doesn’t matter – within reason – for the demand function of a new cure for cancer. You get the point.
In addition, the only stocks in the biotech space that have really become flooded with momentum investors over recent months are the vaccine players. Hence, if we are seeing a big momentum bets come of the table, that could help to spur a rotation among biotech funds from big vaccine plays to smaller biotech names.
Either way, the group that stands to pick up significant interest in this mix is the undervalued small-cap biotech space. With that in mind, we take a closer look at a handful of names in this space that feature interesting recent catalysts.
G1 Therapeutics Inc (NASDAQ:GTHX) engages in the development of small molecule therapeutics for the treatment of patients with cancer. The company is focused on the development and commercialization of next generation therapies that improve the lives of those affected by cancer, including the Company’s first commercial product, COSELA™ (trilaciclib).
According to its materials, G1 has a deep clinical pipeline and is executing a tumor-agnostic development plan evaluating COSELA in a variety of solid tumors, including colorectal, breast, lung, and bladder cancers.
G1 Therapeutics Inc (NASDAQ:GTHX) recently announced that the permanent J-code for COSELA™ (trilaciclib) that was issued in July 2021 by the Centers for Medicare & Medicaid Services (CMS) is now effective for provider billing for all sites of care. The permanent J-code for COSELA, J1448 (Injection, trilaciclib, 1mg.), published online on the CMS website here (page 5).
“Given the emergent presentation of extensive-stage small cell lung cancer, and the clinical benefits of COSELA as a proactive multilineage myeloprotection drug when give prior to chemotherapy, it is absolutely essential that patients have timely access to it,” said Jack Bailey, Chief Executive Officer of G1 Therapeutics. “We are pleased to receive this new permanent J-code for all sites of care as it will enable a more efficient billing process, which will ultimately help facilitate patient access to COSELA.”
Even in light of this news, GTHX has had a rough past week of trading action, with shares sinking something like -10% in that time. That said, chart support is nearby, and we may be in the process of constructing a nice setup for some movement back the other way. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -12%.
G1 Therapeutics Inc (NASDAQ:GTHX) managed to rope in revenues totaling $6.6M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 208.6%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($244.1M against $25.6M).
Adhera Therapeutics Inc (OTC US:ATRX) is an interesting clinical stage biopharmaceutical company. In fact, this could be one of the hottest small-cap biotechs in the space right now, with shares charging about 160% higher in a steady trend on growing volume over the past month.
The story here is about early-stage promise with licensed top-tier R&D hitting big markets – including both the $6 billion Parkinson’s underserved market and the booming $100-plus billion diabetes market.
Adhera Therapeutics Inc (OTC US:ATRX) advanced that story this week with its latest announcement reporting that a new European patent has been issued for MLR-1019 (armesocarb), a drug licensed by the Company from Melior Pharmaceuticals.
According to its release, Melior has received notice from the European Patent Office that the patent – which is titled, “Methods of Treating Dyskinesia and Related Disorders” – passed the required period without any opposition being filed, triggering the issuance of the patent.
The new patent adds to a growing patent estate protecting MLR-1019 now comprised of 11 issued patents (3 in U.S., Europe Union, Australia, Chinese, Eurasia, Israel, Mexico, South Africa, and Hong Kong) and 8 pending patents (U.S., Japan, Brazil, Canada, 2 in South Korea, New Zealand, and Singapore).
Adhera Therapeutics Inc (OTC US:ATRX) CEO, Andrew Kucharchuk, noted that, “Given that our development plans for MLR-1019 begin in Eastern Europe, the new patent is particularly timely as part of a robust patent portfolio protecting the intellectual property. Dyskinesias have a negative impact both functionally and socially on most Parkinson’s patients, causing embarrassment while inhibiting their ability for daily tasks, including writing, dressing, and eating. We certainly hope that MLR-1019 can one day provide some relief to this debilitating disease.”
MacroGenics Inc (NASDAQ:MGNX) bills itself as a clinical-stage biopharmaceutical company that engages in discovering and developing antibody-based therapeutics designed to modulate the human immune response for the treatment of cancer.
The MGNX product pipeline includes Margetuximab, Flotetuzumab, Retifanlimab, Enoblituzumab, Tebotelimab, MGC018, MGD019, IMGC936, and MGD014 for infectious diseases.
MacroGenics Inc (NASDAQ:MGNX) recently announced results from Cohort A Part 1 of the Phase 2/3 MAHOGANY clinical trial of margetuximab. MARGENZA® (margetuximab-cmkb) is approved in HER2+ metastatic breast cancer and is being investigated as a potential first-line treatment for patients with HER2+ gastric cancer (GC) or gastroesophageal junction (GEJ) cancer in combination with a checkpoint inhibitor, with or without chemotherapy.
“We are excited to share our results from the interim analysis of Part 1 of the MAHOGANY Cohort A study at ESMO,” said Scott Koenig, M.D., Ph.D., President and CEO of MacroGenics. “This study is designed to support potential registration of margetuximab in combination with other agents for patients with gastric or gastroesophageal junction cancer as part of our strategy to advance margetuximab in HER2+ cancer. The findings suggest the combination of margetuximab and retifanlimab may potentially provide a chemotherapy-free option as a first-line treatment for patients whose tumors are positive for both HER2 and PD-L1. We are pleased these data support the protocol’s prespecified advancement into Part 2 of MAHOGANY Cohort A. We plan to discuss these results and future development of the combination in an upcoming scheduled meeting with the FDA.”
And the stock has been acting well over recent days, up something like 9% in that time. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -8%.
MacroGenics Inc (NASDAQ:MGNX) managed to rope in revenues totaling $30.8M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 51.8%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($297.3M against $69.9M).
Other stocks central to the smaller cap biotech opportunity right now include Sarepta Therapeutics Inc (NASDAQ:SRPT), Catalyst Pharmaceuticals Inc (NASDAQ:CPRX), Celldex Therapeutics, Inc. (NASDAQ:CLDX), BioDelivery Sciences International, Inc. (NASDAQ:BDSI), and Cassava Sciences Inc (NASDAQ:SAVA).
