This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

3 Drug Stocks Poised To Move As Bears Attack

Chris Lau, Kapitall: The ongoing decline in the S&P 500 index from its recent peak in May 2013 could be the fuel bears need to mount an even bigger bearish bet — and the pharmaceutical and biotechnology sector could provide a good hunting ground for those bears. (Similar lists: Insider Trends: 5 High Growth Healthcare Stocks With Heavy Insider Buying)

The share price of companies could be bid up because investors foresee good times ahead. To find pharmaceutical companies with bearish bets against them, look at the short float.

Screen shot 2013-06-19 at 12.04.48 PMChart source: Yahoo! Finance

Given the following small-cap companies' double-digit short float, bears clearly expect them to decline. With characteristics like strong prescription growth, royalty income, or drugs to cure infection, can these companies overcome the bear attack? 

The companies have a market capitalization of between $635 million and $1.2 billion:

13.8% Prescription growth

Amarin ( AMRN) is a biopharmaceutical company focused on improving cardiovascular health in patients. The short float is 16.63%. Amarin launched Vascepa on Jan. 28, 2013. The company recognized $2.34 million in sales during the first quarter ended March 31, 2013.

More recently,  Bloomberg Industries  reported that prescriptions rose by 4% on the week ended May 24, and prescriptions are up an impressive 13.8% in the 4 weeks ended May 24.

The company also  reported positive results in patient studies taking Vascepa with a statin. Triglyceride levels declined by 21.5%, while LDL-C (low-density lipoprotein cholesterol), declined 6.2%. LDL-C is considered the “bad” cholesterol, so its reduction is a good indication for Vascepa. Despite the good news, it did not help Arena’s share price. Shares still continued to languish, trading in a range of between around $6.50 and $7.

Competitive Worries

AstraZeneca ( AZN) could be a threat to Amarin’s Vascepa. The company bought Omthera, a company that makes Epanova, which reduces triglyceride levels. Epanova does not have FDA approval, and has  side effects. If Amarin’s Vascepa is viewed as superior, Amarin could get a positive review from the FDA.

Infectious Diseases

Shares in  Idenix Pharmaaceuticals ( IDIX) drifted since the start of 2013, but is rising steadily again. The short float is 13.34%.The company focuses on infectious diseases, and is developing an antiviral, specifically the treatment of the hepatitis C virus. This 14 year old company has a market cap of just $693 million, despite having successfully brought drug for Hepatitus B virus to market with its partner,  Novartis.

The company spent a lot of time trying to understand the nucleotides involved in the virus. The intense research efforts led to the start of a trial announced on May 30, 2013. Idenix is  starting a phase II clinical trial that will evaluate an all-oral direct-acting antiviral combination therapy. The study is being done in partnership (and non-exclusively) with Janssen.

Income from Royalties

PDL BioPharma ( PDLI) generates substantial revenue from royalties. The short float is 18.64%.In the first quarter of 2013, the company grew its royalty revenues by 19% compared to the previous year. PDL generated $91.8 million in revenues in the first quarter. The company has $187.2 million in cash and equivalents, as at March 31, 2013.

Royalty revenues grew fastest from Avastin, a drug used to  treat metastatic colorectal cancer, metastatic kidney cancer, Glioblastoma, and lung cancer.

The company has a strong history of looking out for shareholder returns. Dividend payments this year will be $0.60 per share, which yields 7.6% annually.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.64 0.00%
FB $118.57 0.00%
GOOG $698.21 0.00%
TSLA $241.80 0.00%
YHOO $36.53 0.00%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs