3 Biotech Winners on Wednesday: Arrowhead, Osiris, Tekmira
Investors have seen the biotechnology momentum continue during Wednesday’s trading session, with several biotechnology stocks producing significant gains. Three of the biggest winners in today’s trading session are Arrowhead Research (NASDAQ:ARWR), Osiris Therapeutics (NASDAQ:OSIR), and Tekmira Pharmaceuticals (NASDAQ:TKMR).
Arrowhead Research Corp. is a biopharmaceutical company focused on developing targeted RNAi therapeutics. The company’s flagship product is ARC-520. ARC-520 is an RNAi-based drug candidate that seeks to provide a functional cure for chronic HBV infection.
Arrowhead has been one of the most impressive stories in the biotechnology space. Since July, shares of Arrowhead Research have climbed by more than 1,200 percent as investors, analysts, and investment managers continue to praise the company’s pipeline. The momentum continued in Wednesday’s trading session, with shares of Arrowhead rallying approximately 25 percent.
There were several positive developments since Tuesday’s close that caused the spike in Arrowhead’s share price:
- Michael Yee of RBC Capital Markets initiated coverage of Arrowhead with a $35 price target.
- Alethia Young of Deutsche Bank initiated coverage of Arrowhead with a $45 price target.
Both of these price targets came a day after Arrowhead announced that it received Food and Drug Administration permission to begin a Phase 2a trial of ARC-520 for the treatment of hepatitis B. Alethia Young of Deutsche Bank estimates that peak sales for ARC-520 could total $5.2 billion. If that indeed does occur, the current valuation of Arrowhead (approximately $1 billion) will be a distant memory.
Another big biotech winner in today’s trading session is Osiris Therapeutics. Osiris Therapeutics is a stem cell therapeutic company that is focused on developing and marketing products to treat medical conditions in the inflammatory, cardiovascular, orthopedic, and wound-healing markets.
On Wednesday morning, Osiris Therapeutics announced its fourth-quarter and full-year financial reports. The highlights of the earnings report included:
- Product revenues for the fourth quarter came in at $8.1 million, a year-over-year increase of 175 percent.
- Fourth-quarter net income was $49.8 million (mostly due to a sale of Prochymal assets), a massive increase compared to the $2.6 million net loss suffered during the same period a year ago.
- The company finished the year with current assets of $84.1 million and current liabilities of $10.7 million.
The last point might not seem overly important, but it is, especially for a small-cap biotechnology company. It’s always encouraging to see a company efficiently managing its balance sheet in order to stay in an acceptable range. Shares of Osiris Therapeutics are rallying by about 10 percent on the positive news.
A third winner during Wednesday’s trading session is Tekmira Pharmaceuticals. Tekmira Pharmaceuticals is a leader in the development of therapeutic agents based upon Nobel Prize-winning breakthroughs in the field of gene silencing, known as RNA interference (RNAi). The company’s pipeline is targeting cancer, Ebola infection, and other indications.
Shares of Tekmira are rallying by more than 23 percent in Wednesday’s trading session. The company is likely rallying in sympathy with Arrowhead Research as analysts, investors, and investment firms begin to understand the potential impact of RNAi-based drug candidates. One of the interesting things to note is that Tekmira carries a market capitalization much lower than that of Arrowhead. If RNA therapeutics are indeed the future, Tekmira could be in store for a big run.
Tekmira Pharmaceuticals has already appreciated by about 200 percent since the beginning of the year. But as Arrowhead has proven, once momentum traders begin to pile in, there is no telling how high a favorable biotechnology stock can go.
Follow Tom on Twitter @TommyMeyer82