UNDERSTANDING INVESTING IN BIOTECH VERUS PHARMACEUTCIAL COMPANIES
7/20/17 – Investing in either biotech or pharmaceutical stock can be highly perplexing unless you have a general understanding of the products the company has to offer and a basic knowledge of company operations. Obviously, watching how a company fairs trade on the market is a given, but how can one identify the less risky investment? The first step is understanding the basic definitions of biotech versus pharmaceutical companies. The second is to analyze a variety of companies, their products, research and development (R&D) activities, and stock performance. Some companies consider themselves biotech, pharmaceutical, or biopharmaceutical depending on how their company operates. This article will compare the following five companies: Propanc Biopharma Inc. (PPCB), OncoMed Pharmaceuticals, Inc. (OMED), Verastem, Inc. (VSTM), Stemline Therapeutics, Inc. (STML), and Moleculin Biotech, Inc. (MBRX).
Biotech companies are usually small business enterprises that exclusively focus on the R&D of medicines. They use biotechnology to reconstruct the function of cells and enzymes and microorganisms to invent large molecule drugs used to target a specific disease or ailment. The R&D process usually lasts around a decade as the companies mimic cellular processes. Propanc Biopharma Inc. (PPCB) is a biotech company with its lead product blazing through successful non clinical safety studies on its way to patient trials. It’s important to understand the effects of the lead product or drug a biotech company is producing when investing because certain drugs will make a larger impact globally than others. PPCB’s lead product, PRP, is engineered to fight pancreatic cancer. Pancreatic cancer is one of the deadliest, if not the deadliest, cancer. This diagnosis gives patients a median survival rate of 6 months and less than 5% of patients live up to 5 more years.
Pharmaceutical companies can range from large to small and engage in a more diverse set of activities than biotech. They usually conduct R&D and then manufacture and market medicines. Since pharmaceutical companies usually manufacture small molecule drugs, unlike large molecule drugs in biotech, they move through the R&D process sometimes more quickly. Moleculin Biotech, Inc. (MBRX) is a pharmaceutical company that producing an anti-cancer drug. They have produced two active pre-clinical small molecule portfolios making them a good pharma company to keep up on.
WHAT TYPE OF INVESTOR ARE YOU?
Patient and a Risk Taker: Investing in biotech companies is the right choice for you if you are a risk taker and patient enough to wait it out during the drug development stage. Biotech stocks trade based on drug development data, which is why monitoring the clinical trials of the lead product(s) of a biotech company is vital to indicating stock success. If the drug data does not prove to be successful, a biotech’s stock could potentially lose most of its in one day. On the contrary, if a drug meets its expected endpoint, a stock can soar by double and/or triple digits in one day.
Less Risk Tolerant: A pharmaceutical investment may be the best choice for you if you are not apt to taking larger risks. These stocks tend to be a bit more stable as the R&D drivers can me more predictable. You have to be ready for short-term issues like government changes in pricing, or long-term issues from adverse effects in patients causing death or lawsuits. The payoff for pharmaceutical stock often does not reach the high potential of biotech stock investments.
A CLOSER LOOK AT BIOTECH, PHARMA, AND THE COMBINATION OF BIOPHARMA…
It is important to take a look at the current leading biotech and pharmaceutical companies and those companies that have combined under the designation of “biopharmaceutical” companies.
It’s important to look at the leading biotech companies out there as they have the largest return for you investment. Propanc Biopharma Inc. (PPCB) Market Cap: 2.14M, current share price: .57, is a leading biotech company focused on the development of new and proprietary treatments for cancer patients suffering from solid tumors such as pancreatic, ovarian and colorectal cancers. PPCB’s lead product, PRP, is making headway through the cancer research world as a solution for once daily intravenous administration of a combination of two pancreatic proenzymes trypsinogen and chymotrypsinogen, for the treatment of pancreatic cancer.
Top reason to invest in PPCB is the PRP is moving toward its First-In-Man Studies, the goal is for the solution to prevent tumor recurrence and metastasis from solid tumors. Just today, PPCB announced that it received notification of acceptance for its lead patent application from the Chinese Patent Office. The patent application provides broad coverage of a pharmaceutical composition of trypsinogen and chymotrypsinogen to treat certain cancers.
Why invest in PPCB…?
- Preparation has begun for their First-In-Man studies.
- They filed a Patent Cooperation Treaty application in April of 2017.
- Received a Written Opinion from an International Search Authority regarding the novelty, inventive step, and industrial applicability of PRP, this can guide national patent offices with their patent granting decisions.
- Changed their ticker symbol to from PPCH to PPCB signifying their name change.
- PRP entered the Investigational Medical Product Manufacture (IMP) Stage.
- Merck Oncology’s fast track cancer treatment drug sets the stage for PRP to saturate the global cancer treatment market.
• Prepared and submitted four new patents relating to the dosing, anti-cancer effects and mechanisms of the two proenzymes against various cancers in Australia and Spain.
• Completed 14-day, dose range toxicity study in rats determining maximum toleration for further studies.
• Developed an enzyme linked immunosorbent assay (ELISA) method.
• Developed and validated a new IR (infrared) dye-labelled detection method for typsinogen and chymotrypsinogen.
OncoMed Pharmaceuticals, Inc. (OMED), Market Cap: 136.573M, current share price: 3.63, OMED is a clinical development-stage biotechnology company engaging in the provision of discovering and developing protein therapeutics targeting cancer stem cells. It is another biotech company to keep an eye on aside from PPCB, but not for the same reason as PPCB. While PPCB moves closer to its First-In-Man studies for their lead product, OMED is experiencing unfavorable financial results. They announced their Q1 financial results last month, the results showed revenues of $6.21 million with net earnings of -$22.61 million. Year-on-year change in operating cash flow of -180.75% is about the same as the change in earnings.
Moleculin Biotech, Inc. (MBRX) Market Cap: 35.07, current share price: 1.89, is a preclinical and clinical-stage pharmaceutical company focused on the development of game-changing anti-cancer drug candidates. Their lead drug candidate, Annamycin, is an anthracycline intended for the treatment of relapsed or refractory AML. The therapy is a combination of two chemotherapeutic drugs. On Monday, they announced they have signed a new technology license agreement with MD Anderson Cancer Center. This application intends to file a new patent for the treatment of relapsed or refractory acute myeloid leukemia.
The Combination, BioPharma:
Stemline Therapeutics, Inc. (STML) Market Cap: 253.667M, current share price: 10.10, is a clinical stage biopharmaceutical company developing novel oncology therapeutics. Stemline is developing three clinical stage product candidates, SL-401, SL-801, and SL-701. STML reported updated clinical data last month regarding Stages 1 and 2 of the ongoing SL-401 Phase 2 clinical trial in blastic plasmacytoid dendritic cell neoplasm (BPDCN). The overall response rate (ORR) for Stage 1 and 2 BPDCN patients (n=32) was 84%, with a complete response (CR) rate of 59%, by investigator-assessment.
Verastem, Inc. (VSTM), Market Cap: 129.843M, current share price: 3.51, is a clinical stage biopharmaceutical company focused on discovering and developing drugs to improve outcomes for patients with cancer. Last week, they announced their new Chief Financial Officer, Julie B. Feder. In connection with the hiring of Ms. Feder, effective July 10, 2017, Verastem approved a grant to Ms. Feder of a stock option to purchase 370,000 shares of Verastem’s common stock. On Wednesday, shares in Verastem Inc. recorded a trading volume of 5,394,691 shares, which was above the three months average volume of 423,705 shares. The stock ended the day 2.00% higher at 4.09. The share price has gained 289.52% from its 52 week low with a 52 week trading range of 1.05 – 4.67.The company’s shares are currently trading above their 200-day moving average.
As these company highlights show, companies can be in diverse situations based on their lead products, company structure, and evolution of their R&D. Biotech, pharmaceutical, and biopharma face a costly process that can produce extremely profitable products. Know your investment style and track companies ongoing.
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