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5 Bargain Biotech Stocks

Stocks in this article: CERS CRIS CGEN

No. 3: Compugen

Compugen (CGEN) is the world's leading molecular intellectual property company. Based in Israel, the company has revolutionized the early phases of drug development through a highly automated process of exploring and selecting molecules with the greatest promise to serve as the basis for a particular treatment.

The company licenses its peptides and proteins for a fee to the who's who of the drug industry, and also receives a back-end cut of any drug that makes it to market using its discoveries.

Compugen just announced that it entered into an agreement with Baize Investments under which it will receive $5 million in R&D funding. My target for CGEN is $20 in three to five years.

  • Related Article: 5 Dividend Stocks That Will Trump the Dow
  • No. 4: Spectrum Pharmaceuticals

    Spectrum Pharmaceuticals (SPPI) is a commercial-stage biotechnology company with a primary focus in oncology and hematology The company specializes in rescuing treatments abandoned, in development stages, by other companies.

    It has had a tremendous run based on market introductions and partnerships in the past two years, but now has even greater potential for a blockbuster with a drug called Zevalin for non-Hodgkin's lymphoma. This drug is currently approved as a salvage and adjunct therapy, and the company is in mid-stage trials for the use of Zevalin as a front-line treatment, which would be a much larger market.

    The risk in this stock is high. It could be cut in half or worse on bad news from one of several clinical trials. However, successful trial results could take this stock from less than $7 to $32 in one to three years. SPPI could also become a takeover target.

    No. 5: Impax Laboratories

    The not-so-small generic drug maker Impax Laboratories (IPXL) has arguably the best manufacturing technology for time-released drugs in the entire generic industry.

    Pfizer's (PFE) patent for its $11 billion cholesterol drug, Lipitor, expires this year. Due to legal actions, it is already known that IPXL has figured out how to make a generic version of a statin drug that could appeal to patients who currently take Lipitor as a maintenance drug for high cholesterol. I expect Impax to market this generic through a partner either in November of this year or six months later in May 2012 due to FDA regulations.

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