I follow quite a lot of companies, so the usefulness of a watchlist to me cannot be overstated. Without my watchlist, I'd be unable to keep up on my favorite sectors and see what's really moving the market. Even worse, I'd be lost when the time came to choose which stock I'm buying or shorting next.
Today is Watchlist Wednesday, so I'm discussing three companies that have crossed my radar in the past week -- and at what point I may consider taking action on these calls with my own money. Keep in mind, these aren't concrete buy or sell recommendations, nor do I guarantee I'll take action on the companies being discussed weekly. What I can promise is that you can follow my real-life transactions through my profile, and that I, like everyone else here at The Motley Fool, will continue to hold the integrity of our disclosure policy in the highest regard.
This week, let's have some fun with the biotech sector.
Sarepta Therapeutics (NASDAQ:SRPT)
Thank you sir, may I have another? You're probably thinking to yourself, "Wait, why would I add Sarepta to my buy list now after it tripled last week?" The answer to that question is that there's likely still a big move written in the cards for Sarepta one way or another.
Sarepta's share price tripled last week after mid-stage data on its Duchenne muscular dystrophy drug, eteplirsen, revealed not only a degradation of the disease, but actual walking improvement over a six-minute test totaling 89 meters over placebo. As Foolish biotechnology guru Brian Orelli noted, that's far and away better than any other biotech companies that are also targeting Duchenne muscular dystrophy, including Sanofi and BioMarin Pharmaceuticals' Aldurazyme, which increased walking distance versus placebo by about a third of what eteplirsen's results indicated.
Before you get too excited, let's keep in mind that these are still just phase 2 results and between setting up a manufacturing facility and enrolling and testing patients in a wider-swath late-stage trial, it could be a year or more before we have additional data. As Brian also pointed out, the data group in mid-stage trials was actually very small, meaning eteplirsen may wind up working fantastically, but there could be a reduction in mean improvement when a larger test audience is introduced. Either way, the results were exciting and Sarepta is a biotech name that should be closely watched moving forward.
While the cures that most biotechnology stocks promise offer excitement, investors' joy over some recent developments at stem-cell technology company Neuralstem is a downright head-scratcher.
Neuralstem, whose technology enables the ability to produce neural stem cells of the brain and spinal cord, recently released its findings on its early stage safety clinical trial for amyotrophic lateral sclerosis. The results showed the treatment was well-tolerated, but this initial test had more or less nothing to do with efficacy. Yet, the stock, has nearly tripled from its lows set in August, which included a $7 million dilutive secondary offering in September.
Realistically, given Neuralstem's annual loss rate, and including its recent secondary offering, it likely has enough cash for just 12 more months. Just yesterday I highlighted the make-or-break stem-cell company Aastrom Biosciences (NASDAQ:ASTM) as my speculative choice within the sector. Aastrom reported positive phase 2 results on its critical limb ischemia drug, ixmyelocel-T, in November, and looks significantly more promising from a pipeline and balance sheet perspective than Neuralstem. Make no mistake, government regulation make the entire sector a gamble, but Neuralstem sure looks like a suckers bet to me.
Keryx Biopharmaceuticals (NASDAQ:KERX)
A lot of biotech junkies will recall earlier in the year when perifosine, a drug developed by Keryx and Aeterna Zentaris (NASDAQ:AEZS) for the treatment of late-stage colon cancer, failed in late-stage trials and both companies were walloped. The difference here is that while Aeterna Zentaris still has multiple drug hopefuls left in its pipeline, Keryx has one! That's right, just one drug and a slew of crossed fingers.
That remaining product candidate, known as Zerenex, is aimed at treating hyperphosphatemia in patients with end-stage renal disease. Data released in April noted that the drug met its primary endpoint in Japan, and was generally well tolerated, but, as we all know, that does not guarantee approval. In addition, Keryx is likely six to 12 months away from receiving an approval and/or bringing the drug to market, which means further cash burn. If Zerenex fails, Keryx is an upside-down turtle with nothing left in its pipeline. Some speculators would view a late-stage drug as an opportunity, but I see Keryx's nearly $200 million market value incredibly overvalued given the possibility of failure.
Is my bullishness or bearishness misplaced? Share your thoughts in the comments section below, and consider following my cue by using these links to add these companies to your free personalized Watchlist to keep up on the latest news with each company:
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He's a total nerd when it comes to making lists. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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