Last Updated on May 9, 2019 by Sultan Beardsley
The past two weeks have been tumultuous for the markets and biotech was not insulated. With the sell-off comes opportunities to buy cheap and sell into the recovery which I believe began last week. There are two stocks we are eyeing for entry next week that could gain 20% easy near-term.
- Verastem Oncology (Nasdaq: VSTM)
VSTM closed on Friday at $2.97 down ~19% from its high this past month of $3.65. The share price has been pummeled since approval of their lead drug Copiktra in September 2018, which came with a black boxed warning. The primary drivers were short selling and skepticism of Copiktra’s ability to gain traction as a third-line treatment for relapsed/refractory SLL/CLL and FL.
VSTM hit its 52-week low around March 7th prior to their 4Q 2018 earning call and then ran up 30% to ~$3.40 into earnings on March 12th. The number one figure investors were paying attention to was sales numbers for Copiktra. Although expectations were high net product revenue fell in line with SYMPHONY expectations. Despite selling off after hours to the $2.70 range the share price closed green the next day to pre-earnings levels and continued to run up to $2.65. This signals to me that investors are gaining confidence in Copiktra’s potential to be established as a third-line SLL/CLL and FL treatment as well as expand into additional indications. As of Q1 2019, VSTM can start marketing Copiktra for Fl more aggressively too.
Statements from management at the International Congress on Hematologic Malignancies and on the Q4 conference call affirm VSTM has a viable strategy in place. They are taking a proactive approach to ensure Copiktra does not share the fate of Gilead’s third-line drug Zydalig. Furthermore, preliminary clinical trial data in peripheral T-cell lymphoma (PTCL) Copiktra yielded a 59% objective response rate (ORR).
The bottom-line is there is a lot for investors to be excited about in 2019. Sales should continue to rise as Copiktra gains exposure and acceptance in the marketplace. Its been reported doctors are even using it as a second-line treatment in some cases. Additional data from clinical trials in PTCL can be expected later this year. We are looking for entry this week in the $2.80-$3.10 range and for the stock price to recover as it trends up from recent lows.
2. Endra Life Sciences (Nasdaq: NDRA)
Endra is a company I am looking at very closely. They are a potentially very lucrative money move in the medical device and NASH space.
NDRA sold off over 40% on Friday closing at $1.66. The driver was initial clinical trial data from their first human TAEUS feasibility study of liver fat. After considering the data available in the press release and listening to the conference call I believe the sell-off was an overreaction.
Liver fat content data from their TAEUS device was compared with the industry accepted method of MRI (highest accuracy next to biopsy). The R^2 value (i.e. the proportion of variance) came out to .61. I believe more than investors perceiving this as a failure was a lack of understanding prompting selling. It did not help the press release was not written very clearly.
In reality, this is not bad at all. The device used here was a reference device. In the conference call, I learned two more studies are going to be revealed in Q2 2019. The data from these studies will be used to train the device so that TAEUS gives readings better aligned with MRI.
There is a lot of other positives going for NDRA including a controlled launch of TAEUS in Europe during the second half of 2019. I foresee a substantial recovery in the coming weeks and months and am looking for entry in the $1.20-1.50 range.
You can expect more in-depth coverage on NDRA this week. I aim to speak with NDRA Chief Financial Officer Davis Wells ASAP to gain further insight into their data and product development/commercialization strategy. I am compiling all my research and will report it to y’all soon.
When we enter into either stock a notification will be sent to our subscribers.
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