Shares of the small-cap cancer companies Adaptimmune Therapeutics (ADAP 0.38%), Agenus (AGEN 10.92%), and Sorrento Therapeutics (SRNE.Q -4.46%) all rose by more than 5% during Tuesday's trading session. Adaptimmune, Agenus, and Sorrento appear to be getting a much-needed boost from Regeneron's (REGN 1.88%) premium-rich buyout of the clinical-stage cancer company Checkpoint Pharmaceuticals (CMPI) announced earlier today.
Unfortunately, these clinical-stage cancer companies haven't been able to completely hold on to these early gains as Tuesday's trading session has progressed. As of 2:36 p.m. ET Tuesday, Adaptimmune's shares are up by 4.3%; Agenus' stock is in the green by a modest 1.35%; and Sorrento's equity is clinging on to a 3.9% gain for the day.
Valuations among small- to mid-cap drugmakers have been getting absolutely crushed this year, thanks to a suite of headwinds such as inflation, rising interest rates, and geopolitical risks. Investors, in short, have completely lost their appetite for risky biopharmaceutical stocks since the start of the new year.
Investors, however, may want to think twice about avoiding this high-growth space altogether in 2022. After all, the titans of the industry reportedly have an astronomical $1.7 trillion to spend on business development. What's more, most of these large- to mega-cap companies desperately need new products and pipeline candidates as the result of an upcoming wave of patent expirations. Thus, Regeneron's premium-laden buyout of Checkpoint Pharmaceuticals may be a harbinger of things to come.
Keeping with this theme, Adaptimmune, Agenus, and Sorrento are all intriguing buyout candidates at this point in their respective life cycles. Adaptimmune, for instance, is close to filing a regulatory application for its lead anti-cancer candidate known as afamitresgene as a treatment for a form of rare soft tissue cancer. Agenus sports a wealth of high-value checkpoint inhibitor antibodies in early- to mid-stage development. And Sorrento has been making steady progress in the clinic with its lead cancer asset abivertinib.
Should investors start nibbling on clinical-stage biotech stocks in the wake of today's news? While buyouts are impossible to predict, the fact of the matter is that biotech stocks will eventually rebound. The innovation boom in the industry hasn't suddenly stopped or even slowed down. Investors have simply moved to the sidelines due to unfavorable market conditions.
Bear markets, however, don't last forever. So, in short, it might be a good idea to start picking up some of these beaten-down names right now.