Biotech investors: Get ready for an action-packed back-to-school season. All three of these stocks could pop, or flop before the end of the month after investigators announce the results the companies promised to share by the end of September.
None of these biotech stocks are tiny, but they're still small enough to produce the dramatic gains this industry is known for. Here's what you need to know about the catalysts heading their way.
|Company (Symbol)||Market Cap||Candidate||Trial|
|Amarin Corporation plc (NASDAQ:AMRN)||$966 million||Vascepa||Reduce-IT|
|Geron Corporation (NASDAQ:GERN)||$1.1 billion||Imetelstat||IMbark|
|Omeros Corporation (NASDAQ:OMER)||$1.3 billion||OMS721||IgA|
1. Amarin Corporation: Fish oil outcomes
Heart disease is still responsible for more than 800,000 deaths in the U.S. alone each year, and there's a chance that taking lots of concentrated fish oil, which Amarin markets under the Vascepa brand, can reduce this figure. This biotech has promised to present top-line results from an 8,000-patient outcome study it started in 2011, and positive results could send the stock screaming upwards.
Amarin Corporation earned FDA approval to market Vascepa as a triglyceride-lowering therapy in 2012, but sales so far haven't lived up to pre-launch expectations. Selling the Vascepa has been an uphill battle, and Amarin's operations have produced nothing but losses since it began marketing its only product.
The concentrated fish oil capsules have been shown to significantly lower triglyceride levels in adult patients, but there isn't any real proof that doing so actually reduces the risk of heart attack and related problems. If Reduce-IT provides the proof Amarin's sales force needs, they might finally be able to generate some impressive sales figures.
2. Geron Corporation: Imbark-ing up the right tree?
This biotech is waiting for a decision from Johnson & Johnson (NYSE:JNJ) that will send the stock screaming in one direction or another, and it expects to know by the end of the month. Earlier this year, Geron's big pharma partner began the primary analysis of IMbark, a mid-stage clinical trial with advanced-stage myelofibrosis patients. If Johnson & Johnson likes what it sees, Geron will have an important decision to make.
According to the terms of a complex collaboration agreement, Geron can allow J&J to fund imetelstat's development and commercialization going forward, which would leave the company eligible for a tiered royalty percentage that tops out in the mid-teens. Geron could also decide to chip in 20% of expenses going forward in return for a royalty percentage that tops out in the low 20s.
Currently, there's just one therapy for the treatment of myelofibrosis, called Jakafi. Incyte launched Jakafi in 2011, and sales of the drug are on pace to hit $1.3 billion this year. With backing from the world's largest healthcare company, there's a chance imetelstat can do even better.
3. Omeros Corporation: Comparison data on the way
This biotech has a rare-disease drug candidate that's generated some intriguing data in single-arm trials, but Omeros Corporation hasn't yet provided any comparison data in which to sink our teeth. Investigators finished dosing immunoglobulin A (IgA) nephropathy patients with OMS721 in the candidate's first placebo-controlled trial earlier this year, and preliminary results are expected by the end of September.
IgA nephropathy affects around 130,000 people annually in the U.S. and is generally treatable with steroids. Around a fifth of these patients develop chronic kidney disease within 20 years of their first diagnosis, though, and this group is badly in need of a new treatment option. If early phase 2 results show that OMS721 beat a placebo, as expected, investors will feel much better about a large pivotal trial that started enrolling patients earlier this year.
A good time to be a spectator
Right now, starting a position in any of these stocks could be disastrous if their experimental drugs fail to impress this month. Hints that J&J would pick up Geron's candidate sparked a recent rally, and investors stand to get whiplash if the rumors aren't true. Smaller companies that try to launch new cancer therapies on their own tend to fall flat on their faces.
Amarin might be even riskier than Geron because a positive result for the Reduce-IT trial doesn't guarantee sales growth. Amarin can't make ends meet at the moment, and there's no guarantee that positive outcome data will finally allow the company to market the drug at a profit.
Omeros has a product for sale, but those sales depend on a controversial billing status that investors can't expect to last indefinitely. That means there's a ton of pressure on OMS721, the only candidate the company has in late-stage development. If it turns out we've been misled by single-arm data, losses will be swift and heavy.
Cory Renauer owns shares of Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson and has the following options: short October 2018 $135 calls on Johnson & Johnson. The Motley Fool has a disclosure policy.