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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

A Small-Cap Biotech Stock With Promise: MSTX

 DELAFIELD, Wis. (Stockpickr) -- Unless you've been living under a rock the last few weeks, then you most certainly know about the devastating selloff in the biotech sector on Wall Street.

>>5 Stocks With Big Insider Buying

Just take a look at the iShares Nasdaq Biotechnology Index (IBB), an exchange-traded fund that generally tracks the price and yield performance of the Nasdaq Biotechnology Index. Some of the biggest players in biotech are held in this fund, such as Regeneron Pharmaceuticals (REGN) and Amgen (AMGN). This biotech ETF has been hit hard by the bears, with shares dropping sharply from a high of $275.40 to a low of $232.84 a share with heavy downside volume flows.

One hot biotech stock that's been absolutely destroyed by the bears recently is Arrowhead Research (ARWR), which develops targeted RNAi therapeutics in the U.S. The sellers were able to drive shares of ARWR down from its recent high of $27.63 to its low of $15.97 a share with above-average volume flows.

Another biotech stock that will help to put into perspective how bad the selling has been is IBB component Gilead Sciences, which discovers, develops and commercializes medicines for the treatment of life threatening diseases. The bears were able to deliver a beating on shares of GILD, with the stock dropping sharply from its high of $84.88 to its low of $68.81 a share. Shares of GILD are now starting to show some signs of relief for the bulls, since the stock has managed to bounce once it traded near its 200-day moving average of $67.84 to its current price of just over $73 a share.

>>3 Biotech Stocks Under $10 to Trade for Breakouts

The small-cap biotech space has also taken a big beating, with many of the trading community's favorite plays selling off hard. This selloff should be welcomed by traders; it was long overdue and will now create new opportunities for long ideas. Those opportunities are going get very intriguing here for specific names that have catalysts or promising drugs in their pipelines. The sellers might have given traders a gift, so it's time to start scanning the sector for ideas.

One small-cap biotech player that could be setting up for a great buying opportunity here following the massive selloff in the space is Mast Therapeutics (MSTX), a biopharmaceutical company that's focused on developing therapies for serious or life-threatening diseases. Shares of MSTX have sold off recently, with the stock dropping from its high of $1.10 to right around 70 cents per share.

Mast Therapeutics reported earnings this morning. The company said its net loss for the fourth quarter of 2013 was $5.7 million, or 6 cents per share, compared with a net loss of $4 million, or 8 cents per share, for the same period in 2012. The company's net loss for the year ended Dec. 31, 2013, was $21.5 million, or 28 cents per share, compared with a net loss of $15.6 million, or 33 cents per share, for the same period in 2012.

>>3 Hot Stocks to Trade (or Not)

The earnings, or lack thereof, isn't our focus right now for Mast Therapeutics. This is a small-cap biotech stock that has some promising drugs under development that could provide a major catalyst that boosts its share price. Mast Therapeutics' lead drug, MST-188, is currently in a pivotal phase III study for sickle cell disease. MST-188 also has potential applications for acute limb ischemia, stroke and heart disease. The company has already opened 40 clinical sites in the U.S. for its phase III study and has initiated its phase II study of MST-188 in combination with recombinant tissue plasminogen activator in patients with acute limb ischemia.

Another catalyst that the market seems to be ignoring is Mast Therapeutics' recent acquisition of Aires Pharmaceuticals. That purchase has provided the company with another clinical-stage asset in AIR001, an intermittently nebulized formulation of nitrite that has orphan drug designation in the U.S. and E.U. for the treatment of pulmonary arterial hypertension. This drug is in phase II studies, and Mast Therapeutics thinks it could be an ideal complement to its MST-188. AIR001 also has potential applications in cystic fibrosis, pneumonia and other respiratory infections, transplantation, heart failure and other cardiovascular indications.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,880.36 -31.75 -0.19%
S&P 500 1,970.07 +0.12 0.01%
NASDAQ 4,462.9020 +20.2040 0.45%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs