The biotech industry often gets clobbered during bear markets, with this past month being no exception. Analysts are saying that the recent sell-off has provided great buying opportunities, with many biotech names now trading at attractive discounts.
According to Dow Jones, the NYSE Arca Biotechnology Index (BTK) was down 17% for the month (as of August 12), while the S&P 500 was only down 8.6%.
Many biotech firms have taken deep cuts to their share prices: from August 1-12, InterMune had fallen 32%, Dendreon was 72% lower, and Savient Pharmaceuticals fell almost 40% over the same time period.
"Biotech gets disproportionately punished when these things happen because of its high-risk profile," Canaccord Genuity analyst George Farmer told Dow Jones.
"I think it's a buying opportunity, especially for companies with strong balance sheets," said Farmer. "The fundamentals for a lot of these smaller-cap companies are still intact. They're still moving ahead with their clinical trials."
Mark Monane from Needham & Co. is recommending investors focus on oncology drug companies, saying, "cancer doesn't know a debt ceiling."
We compiled a list of biotech companies that have underperformed the S&P 500 over the last month but maintain a solid list of fundamentals: high liquidity growth (comparing the five-year compound annual growth rate of current assets to current liabilities), high cash, and low debt (with most recent quarter cash greater than total debt).
Do you think these stocks are trading at steep discounts? Use this list as a starting-off point for your own analysis. (Click here to access free, interactive tools to analyze these ideas.)
1. Sucampo Pharmaceuticals (Nasdaq: SCMP): Drug Manufacturers Industry. Market cap of $144.49M. The stock has fallen 16.46% over the past month. Five-year current assets CAGR at 23.27% vs. five-year current liabilities CAGR at 0.90%. MRQ cash and cash equivalents at $96.84M vs. MRQ total debt at $64.53M. The stock is a short squeeze candidate, with a short float at 5.05% (equivalent to 14.59 days of average volume). It's been a rough couple of days for the stock, losing 7.26% over the last week.
2. Theravance (Nasdaq: THRX): Biotechnology Industry. Market cap of $1.70B. The stock has fallen 17.04% over the past month. Five-year current assets CAGR at 13.65% vs. five-year current liabilities CAGR at -3.62%. MRQ cash and cash equivalents at $283.89M vs. MRQ total debt at $172.66M. The stock is a short squeeze candidate, with a short float at 9.56% (equivalent to 15.4 days of average volume). The stock has had a couple of great days, gaining 15.02% over the last week. The stock has performed poorly over the last month, losing 17.04%.
3. SuperGen (Nasdaq: SUPG): Drug Manufacturers Industry. Market cap of $145.35M. The stock has fallen 19.93% over the past month. Five-year current assets CAGR at 15.54% vs. five-year current liabilities CAGR at -5.54%. MRQ cash and cash equivalents at $125.16M vs. MRQ total debt at $0M. The stock has performed poorly over the last month, losing 19.93%.
4. Enzon Pharmaceuticals (Nasdaq: ENZN): Biotechnology Industry. Market cap of $393.42M. The stock has fallen 21.25% over the past month. Five-year current assets CAGR at 15.97% vs. five-year current liabilities CAGR at -10.00%. MRQ cash and cash equivalents at $358.95M vs. MRQ total debt at $134.50M. The stock is a short squeeze candidate, with a short float at 13.05% (equivalent to 14.71 days of average volume). The stock has performed poorly over the last month, losing 21.25%.
5. BioSpecifics Technologies (Nasdaq: BSTC): Biotechnology Industry. Market cap of $114.28M. The stock has fallen 26.14% over the past month. Five-year current assets CAGR at 22.03% vs. five-year current liabilities CAGR at -3.93%. MRQ cash and cash equivalents at $10.38M vs. MRQ total debt at $0M. The stock is a short squeeze candidate, with a short float at 7.1% (equivalent to 10.75 days of average volume). The stock has had a couple of great days, gaining 13.9% over the last week. The stock has performed poorly over the last month, losing 26.14%.
6. Pernix Therapeutics Holdings (NYSE: PTX): Drug Manufacturers Industry. Market cap of $148.23M. The stock has fallen 28.34% over the past month. Five-year current assets CAGR at 30.04% vs. five-year current liabilities CAGR at 0.27%. MRQ cash and cash equivalents at $12.95M vs. MRQ total debt at $6.00M. The stock has performed poorly over the last month, losing 28.34%.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Alexander Crawford does not own any of the shares mentioned above. Current assets and liabilities CAGR, cash and debt data sourced from Screener.co, all other data sourced from Finviz.
