Hunting for the Next Biopharma Stock to Surge 700%
Precigen has the same combination that made Xeris work: a fast-growing product and a pipeline the market isn’t pricing in.
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Stock picking is back on Monday morning as investors digest the recent AI and political drama. The VanEck Semiconductor ETF (SMH) and the Invesco QQQ Trust (QQQ) are leading the bounce, but the best news is that breadth is running at around 73% positive. My scan of stocks up 10% or more is lengthy, and there is some speculative energy.
I’m digging for some ideas and am ready to ramp up some positions, but I’m still staying selective and incremental.
The Next Xeris?
I have been writing about Xeris Biopharma (XERS) for over three years on TheStreet Pro. It was a frustrating stock for a long time, but I stuck with it and traded it actively because of its promising drug development. It recently made a big move and is now up around 700% since I started discussing it. I am still optimistic about the stock and will continue to hold it and trade it.
What I liked about Xeris is that it is a small biotechnology company that has both a fast-growing product and a pipeline with the potential for substantial revenue growth. Most small biotechnology stocks are at the development stage, and many will not have any revenue for years.
I believe that Precigen (PGEN) has similar potential. It is a small biotechnology name like Xeris that has a fast-growing product as well as a pipeline that looks promising. The recent approval of a competitive product hit the stock hard, but I believe this is an opportunity to buy a potentially great stock at a bargain price.
The Product
Precigen sells the only fully approved treatment for recurrent respiratory papillomatosis. A virus causes growths in the airway, usually around the vocal cords, and because the virus stays in the tissue after the growths are cut out, they come back. Patients go in for surgery again and again, sometimes for decades, and build their lives around it. Precigen’s drug, Papzimeos, was approved in August of last year and put about half the patients in its trial into complete response, meaning no further surgery at all.
The product half of the Xeris comparison is already there. Precigen did $74 million of revenue in the September quarter, with Papzimeos sales up 37% from the quarter before, and earned 8 cents a share. Operating cash flow turned positive a full quarter ahead of the company’s own target. Coverage now reaches more than 315 million Americans, which the company describes as nearly all insured lives in the country, and Medicare has had a permanent billing code in place since April.
Why it Is on Sale
On the Friday evening before Halloween, the FDA gave Inovio Pharmaceuticals (INO) accelerated approval for a competing product. Precigen fell about a quarter the following Monday while the biotech index was flat, so this was about the company rather than the group.
The FDA approved the competitor on an open-label study of 32 patients with no control group, and the efficacy number it reported was seven of 26 patients, or 27%, who needed no surgery in the year after treatment. Precigen reached that same result in roughly half of its patients, as the main endpoint of a registrational trial, and the agency accepted it as proof the drug works rather than as a sign that it might.
Accelerated approval comes with homework. Inovio has to run a study to confirm the benefit and does not expect to finalize the protocol until the middle of 2027, so nobody will be enrolled for a long time. Precigen owes the agency nothing.
Then there is getting paid. Inovio has no permanent billing code, so every claim goes in under a miscellaneous code, and somebody at the insurer reads the paperwork and decides one at a time. The hospital buys the drug first and finds out afterward. Precigen waited about eight months for its own code, and its revenue inflected once it arrived.
The two are not even the same to administer. Precigen’s is an injection under the skin of the arm or thigh that any community practice can handle. Inovio’s is an injection followed by electrical pulses from a device, and the staff has to be trained before anyone can use it. The price is about the same, with a list price of roughly $460,000 for a course of treatment, so no cheaper alternative is arriving either.
Part Nobody Is Counting
On the earnings call, Precigen said something that should have been the headline. There are an estimated 27,000 adults with this disease in the United States. Just over 500 of them have started treatment.
Every argument about losing market share assumes two companies chasing the same customers. That is not the situation when 98 out of every 100 patients have never received a drug for a disease that had no approved drug at all until last year. Inovio’s sales force will spend next year walking into ear, nose and throat practices explaining that this condition can be treated, and a good share of the patients they turn up will end up on Precigen’s drug anyway, for the reasons above.
Precigen does not need to win a share fight to grow. It needs the pool of diagnosed patients to keep getting bigger, and two sales forces do that faster than one.
It is already reaching past the sickest patients. The company’s own claims data shows treatment across the full range of severity, including people who had no surgery at all in the preceding year. The trial enrolled only patients who had three or more surgeries in the prior year. The label sets no minimum, and doctors are using it that way.
The Pipeline Half
This is where the Xeris comparison comes into play. A study is underway that is enrolling to re-treat the patients who improved but did not become surgery-free, which would turn a one-course therapy into something closer to two. A pediatric study is registered and due to start this quarter. The European application has been under review for a year, with a decision expected in the first half of 2027, and the company holds orphan status there, which carries 10 years of exclusivity. Management said on the call that it is evaluating inbound partnership proposals from outside the United States alongside the option to sell there itself.
Behind all of that sits a second drug for HPV-related head and neck and cervical cancers, with new data due at a research day near the end of this year, and an FDA platform designation on the underlying technology that lets the company reuse its manufacturing and safety work on everything that follows.
What it Costs
The two firms that cover both Precigen and Inovio raised their Precigen numbers after the quarter. Citizens took 2027 revenue from $303 million to $429 million. H.C. Wainwright carries $444 million and 65 cents of earnings for the same year. Neither pretended the competitor does not exist. They looked at it and decided it does not stop the ramp.
Against a market value near $1.8 billion, that is roughly four times next year’s revenue. And Wainwright’s $18 target is built on the American business plus a risk-adjusted European contribution. The redosing program, the pediatric program and the second drug are all excluded from it.
How I Am Playing it
I bought into the selling and have been adding since. I am not expecting it to bounce straight back. The group is still being sold, the company has chosen to give no guidance at all while a competitor decides where to aim, and a stock that can move a third of its value on light volume will go wherever it wants in the short run.
None of the things I listed as catalysts have a firm date. Nothing is scheduled, so nobody is positioning in front of any of it, which is why it is cheap. The first time one of those items lands on the calendar, I expect to see a positive reaction, but that could be months away.
That is the same trade I made in Xeris for three years. Own the business, trade around it, and wait for the market to catch up to a product that is already working.
At the time of publication, DePorre was long PGEN and XERS.
