These Gene-Drug Stocks Are Getting Hot - TheStreet

These Gene-Drug Stocks Are Getting Hot

A Nobel Prize has stoked the fire in a hot biotech sector.
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The burgeoning field of so-called RNA interference, or RNAi, therapeutics got a bump last year when a Nobel Prize was awarded to its academic discoverers.

Since then, RNAi has been a hot investment buzzword on Wall Street, especially with all the recent dealmaking between Big Pharma and smaller RNAi-focused biotech start-ups.

RNAi is a natural process of gene silencing in cells -- think of it as a genetic switch that when turned off, tells the body to stop making a certain protein.

RNAi therapeutics are drugs that mimic this natural process. They potentially work by silencing specific messenger RNAs that are responsible for making disease-causing proteins. If you can prevent the disease-causing protein from being made, you can potentially stop or cure the disease.

RNAi drugs are still in the early stages of clinical development, but that hasn't stopped investors from already profiting from hot stocks tied to the field.

To help readers track RNAi companies, I used

Capital IQ

to set up a stock screen for publicly traded healthcare companies that mention the word "RNAi" in their annual reports filed with the

Securities and Exchange Commission

. If a company is involved enough in the field to mention it in an SEC filing, I assumed it was somewhat important to their operations.

The screen came back with 14 companies, but a word of caution: A quick look at this list should make it clear that not all these companies are what I'd call strictly RNAi-focused.

Use the list, then, as the basis for further research -- and not a definitive source of RNAi stocks.

Biogen Idec

(BIIB) - Get Report

, for instance, is more well known for autoimmune disease and cancer research. It's included on this list, however, because it has a partnership with another company on the list,

Alnylam

(ALNY) - Get Report

, to develop an RNAi drug.

Alnylam is the best-known RNAi company on the list, especially after the announcement Monday of a lucrative partnership with Swiss drugmaker

Roche

. The stock is up 60% since the deal was made public.

Isis Pharmaceuticals

(ISIS)

is up 14% off the Alnylam-Roche deal, while

Cytrx

(CYTR)

is up 7%.

The Alnylam-Roche hookup was announced right on the heels of a similar deal between

AstraZeneca

(AZN) - Get Report

and

Silence Therapeutics

. Last year,

Merck

(MRK) - Get Report

purchased

Sirna Therapeutics

for $1.1 billion.

Adam Feuerstein writes regularly for RealMoney.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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