Two Risky Biotechs I'm Watching as We Await Rate-Cut News
Here's why I'm optimistic on these two biopharma gambles.
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Investors will finally get their long-awaited cut to the Fed Funds rate later today at the conclusion of this month’s Federal Open Market Committee meeting. The only question is whether it will be a quarter or half percentage point and what commentary will follow from Chairman Jerome Powell. Unfortunately, despite the clearly deteriorating jobs market, I don’t believe we will see a consistent series of additional rate cuts in the quarters ahead. Inflation remains too sticky, and the full impact of tariffs have yet to be felt.
Also, I still believe marginal reductions to the Fed Funds rate will do little to help the struggling commercial and residential real estate markets.
But given the central bank is finally acting to reduce rates today, I am a bit more optimistic. So, I want to highlight two of the higher risk/reward biotech plays in my portfolio. Both have seen some positive news flow recently.
I will start with Greenwich LifeSciences, Inc. (GLSI), a clinical-stage biopharmaceutical company that is probably one of my top three riskiest names in my portfolio and only merits a small position. Greenwich is engaged in the advancement of its sole immunotherapeutic agent against oncological targets with an initial focus on breast cancer.
A pivotal phase three trial has taken years to get up and running, but the company has brought additional clinical sites online in Europe here in 2025. Greenwich passed another trial milestone late in the first quarter around its vaccine designed to prevent the recurrence of breast cancer. Finally, this month the company received fast track status for this candidate for a subset of breast cancer patients. This should help with the Biologic License Application or BLA going forward. GLSI is probably the closest thing I have in portfolio to a lottery ticket and only has a $160 million market cap. The news flow, however, has been positive.
Up next is Arcutis Biotherapeutics, Inc. (ARQT). This is a more traditional biopharma name with about a $2 billion market cap. The company’s primary asset is its Zoryve franchise, which was first approved in 2022. This compound comes in both foam and gel form and is now approved to treat several skin conditions including treat atopic dermatitis, plaque psoriasis and seborrheic dermatitis.
Revenues in the second quarter were up better than 160% on a year-over-year basis. This beat expectations as did bottom-line results. Zoryve should be approved to treat children with atopic dermatitis next month and it is in mid-stage studies evaluating it for a couple of additional indications. Revenue growth in 2025 should be around 70% above that of 2024 with sales growth with just over a 30% compound annual growth rate for 2026-2028. Arcutis has a solid balance sheet and should become profitable in fiscal 2026. By fiscal 2028, analysts expect more than two bucks a share in unadjusted profits. The stock trades less than $17 a share and rightfully has been on the rise in recent weeks.
At the time of publication, Jensen was long ARQT and GLSI.
