Battered Market Yields Biotech Bargains
The financial market swoon of 2008 and 2009 has produced many undervalued stocks for aggressive investors to take positions in. Some fo the more attractive opportunities exist in the price-depressed stocks of biotech companies with promising technologies and good clinical prospects.
In selecting potential biotech investments among companies that are not yet profitable and whose stock prices are low, an important consideration is to avoid single product risk. In other words, stay away from companies whose future is dependent upon the success of a single product that is still in clinical trials. While breakthroughs do happen from time to time, there are also many product disappointments along the way, and in these tough economic times, there will be little sympathy given by the financial world to product failures. Rather than depending on a single product for a home run, it is better to choose companies with strong technologies that can be applied to many different commercial opportunities.
An interesting company that appears to be dramatically undervalued is iBioPharma, Inc. Spun off from an older parent company with no desire to pursue biotech research, this company came into existence at the beginning of the current global financial meltdown. Its relative obscurity coupled with virtually all stock prices dropping has created an interesting value proposition for investors. Trading under the symbol IBPM, the company has proprietary technology for vaccine production which can be applied to a number of different diseases. The possibilities include HPV, anthrax and pandemic influenza vaccines. Significant researching funds have been provided by the U.S. government and by the Bill & Melinda Gates Foundation.
Another company to consider is GenVec, Inc. This company has developed technology for gene-based therapeutic drugs applicable to a number of diseases including cancer, age-related macular degeneration, and certain infectious diseases. The company’s stock trades under the symbol GNVC, and it’s most advanced product is in a pivotal clinical trial for the treatment of advanced pancreatic cancer. Despite significant technical progress, general market forces have driven the company’s stock price down substantially over the past nine months.
For bold investors looking for rare bargains, this could be just the right time. With sound research and good timing, an investor could get valuable protection from the lousy economy from investments in carefully chosen small biotechnology companies. Note that the writer of this article does not hold a position in the stocks mentioned. This information is for educational purposes only and is not a recommendation to buy or sell any specific securities.
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