The Covid story is starting to change. And you can hear the popping sound in the vaccine space. The needle is “therapeutics”.
The therapeutic route was thought to be tricky for this virus on the near-term time horizon, which fueled a massive tsunami into the vaccine stocks as large money managers thought they would be the only real option for a long period.
But then along came twin recent breakthroughs in the therapeutics space by Merck & Co., Inc. (NYSE:MRK) and AstraZeneca plc (NASDAQ:AZN), demonstrating clear efficacy in treating Covid after infection in a manner that seems destined to sharply reduce the global rate of new vaccinations ahead – some people just don’t like the idea of getting vaccinated, but they might have bitten the bullet and done it if there was no other option. But suddenly, there are treatments that seemingly remove a big chunk of the worst-case-scenario fear that may have otherwise motivated that difficult decision.
That has caused hemorrhaging outflows from big vaccine players. For biotech investors, the key upshot is a lot of money suddenly roaming around looking for a new home in the biotechnology space.
One area that could benefit is small-cap biotech. As such, we take a look at some of the more interesting names with major growth potential and size them up in light of recent catalysts.
Dynavax Technologies Corporation (NASDAQ:DVAX) operates as a biotech player working to find and produce novel vaccines and immuno-oncology therapeutics.
The company’s products include HEPLISAV-B, which prevents infection caused by all known subtypes of hepatitis B virus in adults 18 years of age and older.
Dynavax Technologies Corporation (NASDAQ:DVAX) recently announced Dynavax has executed an agreement for approximately $22 million over two and a half years to develop a recombinant plague vaccine adjuvanted with CpG 1018®. Under the agreement, Dynavax will conduct a Phase 2 clinical trial combining its CpG 1018 adjuvant with the DOD’s rF1V vaccine. The Company anticipates the Phase 2 trial will commence in 2022.
Ryan Spencer, Dynavax’s Chief Executive Officer commented, “We are honored to receive this award and to support the U.S. government in developing a plague vaccine to protect the U.S. military members who put their lives at risk every day in service to the country. The development of a CpG 1018 adjuvanted plague vaccine is an important example of the broad utility of our adjuvant which we are leveraging to build our pipeline of new and improved vaccines. Our confidence in CpG 1018 is built on the successful development of our FDA-licensed 2-dose adult hepatitis B vaccine and the multiple late-stage COVID-19 vaccine candidates utilizing CpG 1018.”
Even in light of this news, DVAX hasn’t really done much of anything over the past week, with shares logging no net movement over that period.
Dynavax Technologies Corporation (NASDAQ:DVAX) managed to rope in revenues totaling $52.8M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 1877.8%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($345.8M against $204.6M).
Adhera Therapeutics Inc (OTC US:ATRX) may not be a name you have heard of, but that could also be just a matter of time at this point given the strides the company is making in both the Parkinson’s and Diabetes markets. Shares of the stock have been on a tear, up as much as 200% over the past month, but not in a spike or a sudden reactive move. It has been a steady grinding rally.
The gist of the story is that ATRX has licensed two promising compounds, MLR-1019 (armesocarb) and MLR-1023 (tolimidone), from Melior Pharmaceuticals for development, using its own expertise, in the $6 billion underserved Parkinson’s market and the $100-plus billion diabetes market. And the company is seeing progress in its venture as the value of this IP increases.
Adhera Therapeutics Inc (OTC US:ATRX) saw this narrative push a step further recently, announcing 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).
The company’s 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.”
Adhera Therapeutics Inc (OTC US:ATRX) continue to outperform the space. As momentum and crowd awareness build here, the potential for more significant upside is also likely growing given the tiny share float in play for ATRX, with just 13 million shares rattling around on the market.
Intercept Pharmaceuticals Inc (NASDAQ:ICPT) operates as a biopharmaceutical company that engages in the research, development and commercialization of novel therapeutics in treating chronic liver diseases.
The company’s product pipeline includes OCALIVA which is used for the treatment of biliary cholangitis, nonalcoholic steatohepatitis, sclerosing cholangitis and biliary atresia.
Intercept Pharmaceuticals Inc (NASDAQ:ICPT) recently announced that it has entered into privately negotiated agreements with certain of the holders of its existing 3.25% Convertible Senior Notes due 2023 (the “2023 Notes”) to repurchase an aggregate of $39.9 million principal amount of 2023 Notes for $38.1 million in cash. The repurchase is expected to close promptly, subject to and following customary closing conditions.
Net of this repurchase and the previously announced convertible notes exchange, Intercept’s 2023 Notes have been reduced from $460.0 million principal balance to $113.7 million principal balance. Jerry Durso, President and Chief Executive Officer, said, “With this repurchase, and our previously announced convertible notes transactions, Intercept has retired over 75% of our 2023 debt maturity obligation. We retain a strong position of cash, cash equivalents, restricted cash and investment debt securities available for sale, and the recent actions to manage our debt obligations will allow us to focus on executing our business plan.”
If you’re long this stock, then you’re liking how the stock has responded to the announcement. ICPT shares have been moving higher over the past week overall, pushing about 21% to the upside on above average trading volume.
Intercept Pharmaceuticals Inc (NASDAQ:ICPT) managed to rope in revenues totaling $96.6M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 25%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($422.5M against $145.3M).
Other key small-cap biotech plays include iShares Biotechnology ETF (NASDAQ:IBB), Cassava Sciences Inc (NASDAQ:SAVA), INmune Bio Inc (NASDAQ:INMB), and ImmunoGen, Inc. (NASDAQ:IMGN).