These 3 Biotech Picks Can Combat Sarepta Losses After Unexpected Death
I've exited my position after some brutal news, while a handful of other holdings look for gains.
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First-quarter earnings reports have flooded the wires this week on numerous small- and mid-cap biotech/biopharma concerns.
In this column, I will highlight one pan from my previous picks that I have had to dispose of from my portfolio as well as three names that have delivered the goods and that I am still quite optimistic around.
Let’s start with a clunker in my portfolio that I jettisoned this week. While I was able to roll the options on my covered-call positions forward several times to reduce my losses, it was still a costly investment decision. I am talking about Sarepta Therapeutics SRPT.
The trouble began for the company in March when a patient on the firm’s flagship drug died unexpectedly. This triggered a hold on some trials in Europe pending further investigation. Management did a fairly inept job of getting ahead of this event and was lacking in clearly communicating the impacts to the analyst community in my opinion. This became more apparent when leadership slashed guidance following Q1 results this week. Management has been equally lax in controlling expenses. Therefore, the company is in the "penalty box" pending significant improvement and the stock is out of my portfolio as well.
Fortunately, some of my holdings have had much better news to report this week. Mid-cap biopharma ACADIA Pharmaceuticals ACAD rose 14% in trading on Thursday after reporting Q1 numbers that beat both top- and bottom-line expectations. Management followed with positive commentary on how the business was shaping up early in 2025 and even moved up the expected data release date from a key trial, an unusual occurrence in this industry. Even after Thursday’s rally, I feel there is some nice potential upside in this name that I have profiled several times in recent quarters.
CorMedix Inc. CRMD is another healthcare name that I have mentioned a few times in 2025. The stock is up some 30% in recent trading sessions as the company’s recently-launched antimicrobial catheter lock solution DefenCath is off to a robust debut. The product seems destined to become the "best of breed" product in its niche.
Q1 numbers on Tuesday attested to the marketing rollout’s success as CorMedix easily beat the consensus for both earnings and revenues. Cash flow is increasing at a solid pace, leadership gave encouraging guidance, and DefenCath is making nice inroads in the inpatient market. Results also triggered several modest upward price target revisions from analyst firms like Needham and RBC Capital.
Speaking of analyst firm upward price target revisions, Mirum Pharmaceuticals MIRM has seen a few of its own this week. And justifiably so after it posted robust Q1 numbers on Wednesday. Its franchise drug is an inhibitor of ileal bile acid transporter called Livmarli. It treats cholestatic pruritus in a couple of indications including Alagille syndrome or AGLS and hit the market in 2022. Net product revenues increased just over 60% year over year in the first quarter. Livmarli was also recently approved in Japan. Management boosted full-year sales guidance, reiterated that the company should be cash flow positive for the year for the first time in its history, and also gave a positive pipeline update.
At the time of publication, Jensen was long ACAD, CRMD and MIRM.
