GlycoMimetics (GLYC -2.77%)Five Prime Therapeutics (FPRX), and Neurocrine Biosciences (NBIX -0.59%) may not be household names, but they could be smart additions to biotech portfolios now. Read on to find out how upcoming news could spark interest in GlycoMimetics as soon as next week, a gastric cancer drug could move the needle at Five Prime Therapeutics, and two approved drugs could pave the way to profit at Neurocrine Biosciences.

A high-risk clinical-stage company with news approaching

Todd Campbell (GlycoMimetics): GlycoMimetics has a phase 3 trial underway for uproleselan (formerly GM-1271) in patients with acute myeloid leukemia, and next week, the company will provide additional insight into its phase 2 results at the high-profile American Society of Hematology conference (ASH).

A buy button on a keyboard.


Last year, data for uproleselan in relapsed/refractory AML at ASH sent shares significantly higher on hope for a speedy registrational trial and FDA consideration. Those hopes were dashed earlier this year, though, when management decided a surrogate endpoint that could allow an accelerated OK wasn't the best long-term strategy. Instead, it's focusing on overall survival -- the gold standard -- as its primary endpoint, a decision that pushes back uproleselan's phase 3 data into 2020.

If overall survival data from its phase 2 study shines at ASH next week, then investors' interest may be rekindled, especially if the takeaway is that uprolesalan may eventually secure a broad label in AML.

GlycoMimetics shares could also increase in early 2019 ahead of phase 3 trial results for rivipansel, a sickle cell disease drug it licensed to Pfizer Inc. (PFE -0.43%) that could shorten duration and reduce pain in patients suffering vaso-occlusive crisis, a debilitating condition requiring hospitalization. If rivipansel's phase 3 trial succeeds, GlycoMimetics could pocket up to $285 million in potential milestones, plus double-digit royalties on any eventual sales.

This company isn't for the faint of heart, though. Uproleselan's phase 2 trial data looked good, but that assessment is based on historical controls, rather than its results versus a placebo arm. Also, rivipansel's trial could flop.

Nevertheless, I think there's enough potential reward here to justify some risk, especially given GlycoMimetics' small $517 million market cap. 

A novel therapy targeting a significant cancer

Chuck Saletta (Five Prime Therapeutics): While breast, prostate, and skin cancers tend to get much of the media attention, gastric cancers are among the most common worldwide. Gastric cancer is the third leading cause of cancer death worldwide. Even in the U.S., the five-year survival rate of those diagnosed is only around 31%. Both the fact that it occurs commonly and the fact that so few survive long term make it a critical type of cancer for which to improve treatments.

Five Prime Therapeutics has a compound in phase three clinical trials, bemarituzumab, that targets certain types of advanced gastric or gastroesophageal junction cancers. It is designed to both directly retard the cancer's growth and operate as an immune therapy agent -- enabling the body's own immune system to help fight off the cancer. 

If it works and improves the cure and/or survival rate for those cancers, Five Prime Therapeutics has a potential global blockbuster on its hands. If it doesn't work, the company does have other products in development, including a compound in phase two trials to address pancreatic cancer

Note that while Five Prime Therapeutics has a decent pipeline, its current revenue comes nowhere near covering its cost of operations. It currently expects to end 2018 with around $265 million in cash and is burning cash at a rate of around $135 million this year. While it should last through 2019 and most of 2020 at that burn rate, it needs at least one successful compound to enable it to cover its ongoing costs.

Because it's early in phase three trials, we don't know whether bemarituzumab will be successful, and that's a key reason why its shares are near their lows for the year. Investors considering buying its shares today should recognize that while the opportunity is there for an incredible return from this point if all goes well, there's a potential to lose it all if it doesn't.

Profits are on the way

Brian Feroldi (Neurocrine Biosciences): My view is that mid-cap biotechs like Neurocrine Biosciences are in the sweet spot for investors. These businesses tend to have already won approval for a drug or two and, in many cases, are inching toward profitability. At the same time, they are still small enough to offer investors substantial upside if their drugs turn into blockbusters.

Neurocrine has already succeeded in winning regulatory approval for two drugs. The first is called is Ingrezza and is a treatment for tardive dyskinesia, which is a neurological disorder. Ingrezza has been growing rapidly since it won approval last year -- sales more than doubled in the most recent quarter to $111 million -- and it still holds substantial upside potential.

Neurocrine's second drug is a treatment for endometriosis called Orilissa. This drug just recently won the thumbs up from the FDA in the third quarter of 2018 and holds blockbuster potential. Neurocrine has partnered with pharma giant AbbVie to commercialize the drug, and it pulls in a 20% royalty payment on sales (plus milestones). While it is still early days for the drug, the odds look favorable that it will be a success.

Between Ingrezza and Orilissa, Neurocrine is projected to post ultra-fast revenue growth over the next couple of years. That's wonderful news for shareholders because the growth should be strong enough to enable the company to be sustainably profitable from here, even as it continues to invest in R&D and build out its pipeline. That's an attractive proposition for biotech investors.