Three Biotechs With the Right Formula
These names are on the move, though some require a bit of patience and experimentation.
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Doug Kass did a commendable job yesterday on his Daily Dairy highlighting the huge sector rotation happening in the markets. This may not be apparent looking just at the major indexes, which are near all-time highs. Investors are moving heavily out of riskier sectors and assets like technology, financials and Bitcoin. That money is coming into healthcare, energy and consumer staples with those sectors significantly outperforming the overall market after three plus years of a rally led primarily by the Magnificent Seven.
That has been good news for my portfolio, given it is heavily weighted in covered-call holdings in the healthcare and energy sectors. In today’s column, I am going to circle back on some biotech/biopharma names that have been positively profiled on these pages and that have reported positive news this week.
Let’s start with a name making a monster move recently. That is ImmunityBio, Inc. (IBRX) , which I noted I was adding to my stake within in a column in mid-January. The stock has roughly tripled over the last six weeks. At the time of that piece, the company had just reported that enrollment in its registrational Quilt-2.005 trial targeting a type of invasive bladder cancer was ahead of schedule. Management expects enrollment to be complete sometime next quarter. If all goes well, a Biologic License Application should be submitted by year-end.
ImmunityBio’s bladder cancer therapy, Anktiva, was approved in Europe last week. This week, the company posted fourth-quarter results that showed Anktiva revenues were up 20% sequentially from the prior quarter. In summary, a plethora of good news has triggered a huge rise in the equity. The shares were also heavily shorted, so some of the action is due to a short squeeze in all likelihood. Therefore, I would not chase the rally and would look to trim the position some in front of likely consolidation.
Moving on to Vir Biotechnology (VIR) , which I last touched on it in late August. My long-term patience in this name is finally starting to pay off. The shares moved more than 25% higher yesterday after the company announced a large strategic collaboration agreement with Astellas for the global development and commercialization of VIR-5500, Vir’s most advanced oncology asset. The deal netted Vir a $240 million upfront payment and a $75 million equity investment from Astellas as well.
The company can also garnered significant milestone payments, a 50/50 split of any subsequent profits in the U.S. and tiered royalties on global sales. Vir followed this deal by disclosing it was raising roughly $200 million via a secondary offering. The two events took care of Vir’s funding needs for the foreseeable future, which will allow it to continue to advance its pipeline. Not surprisingly, several analyst firms took their price targets on the stock up substantially on news of the collaboration arrangement.
I will end on another name that has required a great deal of patience to own. This is Iovance Biotherapeutics (IOVA) , a small-cap name I last profiled in November. The stock rose 30% Thursday after the Iovance posted quarterly results that showed better revenue growth than expected. In addition, management disclosed encouraging results from a trial of its one-time therapy Amtagvi treating soft tissue sarcomas. Amtagvi also received Fast Track designation for non-small cell lung cancer.
Iovance also keep expenses flat during the quarter even as sales grew solidly and the company’s balance sheet remains in good shape. The company is projected to deliver over 40% sales growth annually over the next couple of years and achieve profitability in fiscal 2028. The results triggered a rash of analyst firm buy reiterations and Iovance seems on the right track.
At the time of publication, Jensen was long IBRX, IOVA and VIR.
