Three Small-Cap Biotechs Poised for a Rally
Let's check on the prospects for these names in biotech/biopharma space.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
I am happy to see the first major port strike in decades is on its way to getting resolved. All it took was a 62% pay raise over six years to seal an agreement that practically screams "wage/price spiral."
The agreement supports my view that stagflation or "slugflation," as Doug Kass would call it, will be a major economic theme in the years ahead. Regardless, it is good investors have one less thing to worry about, it appears.
In my column on Wednesday, I noted that there is a good possibility that small caps outperform in the final quarter of 2024. This would repeat the trading action in the fourth quarter of 2023. And through three quarters of this year, the Russell 2000 had delivered approximately one half of the returns of its large brethren in the S&P 500. With that in mind, here are several small-cap names in biotech/biopharma space I own that hopefully will close out the year on a high note:
Viridian Therapeutics VRDN has continued to climb since I last mentioned this biopharma in a column early in September. The company is benefiting from promising late-stage study results that came out last month around it lead asset that is targeting active thyroid eye disease. Management took advantage of the rally in the shares to address its near- and medium-term funding needs via a secondary offering on Sept. 12. The stock has continued to gain strength. Several analyst firms have recently boosted price targets on the equity into the low- and middle-$40s last month and the stock just feels like it wants to get to the $30 level by year end.
BridgeBio Pharma, Inc. BBIO is a similar play. BBIO currently trades in the mid-$20s. Its lead asset, acoramidis, should be approved by late November to treat a heart condition known as transthyretin amyloid cardiomyopathy, where it will compete with Pfizer PFE and potentially Alnylam Pharmaceuticals ALNY. Another pipeline asset infigratinib garnered "Breakthrough Therapy" status from the Food and Drug Administration for achondroplasia, a bone growth disorder that causes dwarfism, in September after successful Phase 2 clinical trial data. The company is currently enrolling patients for a pivotal Phase 3 study. Finally, another gene therapy pipeline candidate received FDA Regenerative Medicine Advanced Therapy, or RMAT, designation last month for a rare and fatal neurological disorder called Canavan disease. The candidate already had Orphan Drug and Fast Track designations.
Rocket Pharmaceuticals RCKT, a stock that has required "Waiting for Godot"-like patience. But it should soon resubmit its marketing application for RP-L201 (also known as Kresladi). Resubmission will occur after addressing FDA questions around manufacturing issues, which delayed the marketing application for a second time, by the end of this year. This candidate should then be approved as a treatment of LAD-1, an ultra-rare genetic disorder. More importantly to the company’s long-term prospects is that a pivotal single-arm mid-stage clinical study for its gene therapy RP-A501 for the treatment of male patients with Danon disease recently completed enrollment. Out of the five gene therapies in the company’s pipeline, this has the most near-term blockbuster potential. Recent analyst price targets have a median estimate in the mid-$40s while the stock is stuck in the high teens. I am hoping the resubmission of the marketing application around Kresladi kicks off a year-end rally.
At the time of publication, Jensen was long BBIO, RCKT, PFE and VRDN.
