Should Penny Stocks Be On Your List In 2021?
Cancer stocks are some of the most popular among investors. Yes, we’re talking about companies in an industry working to tackle the second largest cause of death worldwide after cardiovascular disease. But we’re also talking about organizations developing truly novel treatments for humankind. In many cases, these can start out as penny stocks and quickly evolve into industry stand-outs.
In Deloitte’s 2021 Global Life Sciences Outlook*, the data is even more compelling in favor of oncology companies. The firm states that “Beyond vaccines, oncology is expected to continue to be a major driver of the sector’s topline growth in 2021. Oncology accounts for six out of the 10 biggest new sales generators and four of the top 10 bestselling products. According to Evaluate, sales of COVID-19 vaccines though are expected to reach US$10 billion to US$15 billion in 2021, with the Pfizer/BioNTech vaccine forecast to be the top seller. Evaluate predicts that Moderna’s COVID-19 vaccine will be the market leader by 2026.”
Deloitte’s data clearly demonstrates the size and scope of cancer treatments. Merk’s (NYSE: MRK) Keytruda – a cancer drug – is expected to be a $2.7 Billion drug in 2021 as far as new sales are concerned. It’s further supported by expectations of more than $16 billion in 2021 sales, overall. Bristol Myers Squibb’s (NYSE: BMY) Revlimid and Opdivo are expected to do a combined $21.5 Billion this year. You’ve also got Johnson & Johnson (NYSE: JNJ) & Abbvie’s (NYSE: ABBV) Imbruvica, which EvaluatePharma expects 2021 sales to come in at $7.6 Billion.
Are Small-Cap Stocks Worth The Risk?
One of the novelties of this world of cancer stocks is the multiple instances of “overnight success.” While we know that nothing happens overnight, key developments made by some of the smaller companies in the industry can blossom into huge windfalls. These are times where you hear traders say, “why didn’t I hear about that company before?” For instance, a little more than 1 year ago, Fate Therapeutics (NASDAQ: FATE) traded around $16 a share.
This year, FATE stock reached highs of over $120 and currently trades around $87. The company focuses on immunotherapies for cancer. In particular, the company is advancing a pipeline of solid-tumor treatment candidates for multiple indications. Its suite of Natural Killer (NK) cell treatments has brought attention to the company, including its progress with its FT538 for improving outcomes in patients with multiple myeloma.
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While Fate’s progress has taken it far beyond the range of a small-cap company, others, including GT Biopharma Inc. (NASDAQ: GTBP), have begun turning heads. The company has become known for its tri-specific killer engager treatment technology or TriKE. Compared to others like CAR-T, the advantage of this type of treatment is that TriKE is an immune-oncology protein therapeutic – not a cell therapy. Individualized cell therapies can require an expensive, time-consuming approach and can be difficult to apply on a large scale. Aiming for a true, off-the-shelf treatment, the TriKE platform has achieved key breakthroughs even during its early stages in clinical trials, such as being less expensive, no additional outside treatment like chemotherapy needed, which is much easier on the patient.
Targeted Oncology Treatment Is The New Kid On The Block
“Targeted treatment” has become a buzzphrase among biotech firms. In GT Biopharma’s case, its recent achievements with treatments like its lead GTB-3550 have demonstrated the potential applications of TriKE technology in indications for acute myeloid leukemia and higher-risk myelodysplastic syndrome. In fact, according to CEO Anthony Cataldo, the company has seen “significant reductions in CD33+ cancer cells in four of the last seven patients (57%) treated with doses of GTB-3550 ranging from 25mcg/kg/day to 150mcg/kg/day,” and that “This early sign of CD33+ target-specific cancer cell killing is very encouraging as we begin to focus on transitioning to the expanded efficacy part of the current GTB-3550 clinical trial.”
Along with GTB-3550, the company has several other treatment candidates in its pipeline to target breast, lung, gastric, colorectal, and ovarian cancer indications. These indications include ones that express HER2 (GTB-6550), PD-L1 (GTB-4550), and B7H3 (GTB-5550). It’s the third on this list targeting B7H3 that could connect some dots. Analysts at B. Riley, for instance, discussed how NK cell therapy combined with GT’s TriKE showed “synergy” in preclinical prostate cancer. Below, the image shows GT Biopharma’s GTB-5550 TriKE combined with a familiar treatment, Fate Therapeutics’ FT538 iNK cells discussed above:
As you’ll see, the combination showed significant results compared to 3 other models on a 72-hour timeline.
New Sponsored Research
This week, GT Biopharma announced a sponsored research agreement with its Consulting Chief Scientific Officer & the Director of the University of Minnesota’s Masonic Cancer Center, Jeffrey S. Miller, M.D. The agreement will focus on supporting the continued clinical development of the company’s TriKE candidates. This includes the recent progress involving Fate’s FT538 in eradicating prostate cancer cells discussed previously. In addition, the agreement will continue supporting the progress in the clinical development of lead treatment GTB-3550.
Anthony Cataldo, Chairman and Chief Executive Officer of GT Biopharma commented, “We have now completed treatment of eleven patients. In addition to strong safety results, we have seen significant reductions in CD33+ cancer cells…We are pleased to sponsor additional TriKE™ research in Dr. Miller’s laboratory in support of our TriKE™ clinical development programs,” Mr. Cataldo further stated.”
An interesting part is that aside from the potential demonstrated by the treatment is that GTBP stock currently sits at a level that FATE was at last year. We’ll also discuss a few other companies that were trading under $20 last year and have seen big progress within the last 8-12 months. In addition to this, GTBP stock was also recently added to the Russell 2000 Index at the end of June. That brings it into a whole different arena than it had been in previously.
Other Cancer Stocks Pack A Punch But Are They Overvalued?
You can draw your own conclusions as far as the stock market is concerned. However, it’s important to look at the current playing field. Obviously, the progress made by Keytruda and Opdivo are undeniable. But that doesn’t mean new developments like TriKE and other platforms aren’t worth looking into. In fact, some of the biggest M&A deals in the biotech arena have happened because larger companies scooped up smaller firms before they could explode in the market.
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For instance, Merck bought cancer drug research company VelosBio Inc. from Pappas Capital and other investors for $2.75 billion. Gilead Sciences (NASDAQ: GILD) picked up Immunomedics for $21 billion to gain access to its Trodelvy breast cancer treatment. There are plenty more examples to point at as well. The fact remains that with cancer not going anywhere right now, the opportunities for companies to capitalize are evident.
Look at Ligand Pharmaceuticals (NASDAQ: LGND), another company targeting different cancer indications. It has a host of treatments in all stages of development as well as commercialization. Its carfilzomib was ultimately licensed to Amgen. Thanks to its continued development of drug candidates over the last several decades, it has established alliances with the world’s leading pharmaceutical companies. GlaxoSmithKline, Amgen Inc., Merck, and Pfizer are just a few. Sitting at over $120 a share now, LGND stock clearly exemplifies the potential of smaller companies as it reached new milestones.
Small Cap Cancer Stocks Continue Outperforming
Beam Therapeutics (NASDAQ: BEAM) is another clear example of what happens when cancer stocks succeed. In May of last year, shares of BEAM stock were trading around $15 a share. This month, they’ve reached highs of over $138. The company’s progress in designing precision genetic medicines has helped turn it from a small-cap stock into one with a $7.25 billion market cap in about a year. Among its numerous drug candidates, its BEAM-201 is being designed to target T-cell acute lymphoblastic leukemia.
Others that’ve made the move to multi-billion dollar valuations include Genmab (NASDAQ: GMAB) and MacroGenics (NASDAQ: MGNX). Both companies specialize in different immunotherapy treatments. In Genmab’s case, it just recently announced an oncology research & development collaboration with Bolt Biotherapeutics, Inc. (NASDAQ: BOLT). Together, the companies will evaluate Genmab antibodies and bispecific antibody engineering technologies in combination with Bolt’s proprietary Boltbody™ immune-stimulating antibody conjugate (ISAC) technology platform. The research collaboration will evaluate multiple bispecific ISAC concepts to identify up to three clinical candidates for development.
MacroGenetics also recently entered into a collaboration and license agreement. This was with Zai Lab Limited (NASDAQ: ZLAB) involving up to four immuno-oncology molecules. The first program covers a lead research molecule that incorporates MacroGenics’ DART platform in solid tumors.
Are Small-Cap Biotech Stocks On Your List Right Now?
Many of the names on this list no longer meet the “small-cap” definition. They have shown a very clear reason why it’s important to pay attention. In several cases including with Fate and Beam, both companies went from trading in the teens to soaring over $100 a share in roughly 1 year. These types of moves have become frequent in biotech. They aren’t without plenty of risks. But it’s important to study similarities, observe clinical progress, and monitor market sentiment to find “the next” small-cap biotech stock to add to your list. In this article, we discussed a few, and below is a breakdown of each, by market cap with only 2 still fitting the formal definition of “small-cap” stocks:
| Company | Current Price | Market Cap |
|---|---|---|
| GT Biopharma (NASDAQ: GTBP) | $14.90 | $316.03 M |
| MacroGenics, Inc. (NASDAQ: MGNX) | $28.48 | $1.68 B |
| Ligand Pharmaceuticals (NASDAQ: LGND) | $128.85 | $2.19 B |
| Beam Therapeutics Inc. (NASDAQ: BEAM) | $112.97 | $7.25 B |
| Fate Therapeutics Inc. (NASDAQ: FATE) | $87.39 | $8.35 B |
| Genmab (NASDAQ: GMAB) | $41.97 | $27.42 B |
| Bristol-Myers Squibb (NYSE: BMY) | $66.65 | $147.95 B |
| Merck & Company Inc. (NYSE: MRK) | $78.11 | $196.24 B |
| AbbVie Inc. (NYSE: ABBV) | $115.73 | $202.79 B |
Pursuant to an agreement between Midam Ventures LLC and GT Biopharma (GTBP) Midam has been paid $150,000 for a period from March 1, 2021, to April 1, 2021. This compensation is payment 1 of 12 as part of a 12-month agreement between Midam Ventures LLC & GT Biopharma (GTBP), for a period from March 1, 2021, to February 28, 2022. Midam Ventures LLC expects to be paid $150,000 per month for a total of 12 months by GT Biopharma (GTBP). Midam has been paid an additional $150,000 for a period from April 2, 2021, to May 1, 2021. This compensation is payment 2 of 12 as part of the Agreement. Midam has been paid an additional $150,000 for a period from May 2, 2021, to June 1, 2021. This compensation is payment 3 of 12 as part of the Agreement. Midam has been paid an additional $150,000 for a period from June 2, 2021, to July 1, 2021. This compensation is payment 4 of 12 as part of the Agreement. Midam has been paid an additional $200,000 for a period from July 2, 2021, to August 2, 2021. This compensation is payment 5 of 12 as part of the Agreement. We may buy or sell additional shares of GT Biopharma (GTBP) in the open market at any time, including before, during, or after the Website and Information, to provide public dissemination of favorable Information about GT Biopharma (GTBP). Click Here For Full Disclaimer.
- Deloitte Life Sciences Outlook: https://www2.deloitte. com/global/en/pages/life-sciences-and-healthcare/articles/global-life-sciences-sector-outlook.html
