5 Best-Positioned Biotech Stocks on Brexit Volatility

Biotech stocks will likely remain pressured from Brexit volatility, despite stocks rising on Tuesday. That makes investing in these already highly volatile stocks even trickier, but there are opportunities. 

Cantor Fitzgerald analysts Mara Goldstein and Monica Gorman suggest that investors stick to investing in biotech companies that have "long cash runways" and "low to moderate clinical risk" as the "better defensive positioning in the group," according to a note Tuesday.

"Biotechnology companies that raise capital can oftentimes be penalized for accessing the markets, though it is this activity that provides a cushion, in our view, in leaner times," they wrote. "We think that companies with significant cash runways have less financing risk, and are more likely to maintain R&D productivity."

The analysts highlighted four biotech stocks -- Radius Health (RDUS - Get Report) , Applied Genetics Technologies (AGTC - Get Report) , Relypsa (RLYP) and OncoMed Pharmaceuticals (OMED) -- that have "strong cash runways" and trade at modest multiples of cash.

Goldstein and Gorman also highlighted biotech companies with minimal clinical risk as being relatively less volatile.

Companies with "fewer binary events or a diverse portfolio to mitigate the potential loss of a clinical candidate," include Radius Health, Applied Genetics Technologies, Relypsa, Seattle Genetics (SGEN - Get Report) , Array (ARRY) , and OncoMed. They note that the "counterbalance to this is liquidity, with some companies, such as Seattle Genetics, Radius Health and Relypsa, having greater daily trading volumes."

Radius Health, Applied Genetics, Relypsa, OncoMed and Seattle Genetics are the analysts' top stocks in the sector to withstand Brexit-induced volatility.

Here is more information on each of the five stocks.

Radius Health
Radius Health

Three-Day Decline: -5.4%
Cantor Fitzgerald Price Target: $70
Market Cap: $1.5 billion

Radius Health's (RDUS - Get Report) total cash per share was $10.16 as of March 31.

Radius Health's "lead candidate abaloparatide-SC is currently awaiting FDA review, putting it past the bulk of clinical risk," the note said. "Further, Radius' early-stage pipeline has continued to build, diversifying its portfolio of clinical candidates. The mitigated clinical risk, in our view, combined with $10/share in cash make this an interesting choice in this environment."

Applied Genetic Technologies
Applied Genetic Technologies

Three-Day Decline: -6.5%
Cantor Fitzgerald Price Target: $32
Market Cap: $242 million
Dividend Yield: n/a

Applied Genetic Technologies' (AGTC - Get Report) total cash per share was $7.41 as of March 31.

"While AGTC is approaching some early clinical data for two candidates being developed for ophthalmology conditions (likely to be released at some point in 2016), X-linked retinoschisis and achromatopsia, we think these pose limited clinical risk given the early nature of the data," the note said. "Combined with a growing, diversified portfolio being developed through a collaboration with Biogen that contributed to the company's $7/share in cash, we think this is a strong value proposition."

Relypsa
Relypsa

Three-Day Decline: -5.8%
Cantor Fitzgerald Price Target: $41
Market Cap: $757 million
Dividend Yield: n/a

Relypsa's (RLYP) total cash per share was $4.59 as of March 31.

"With its only product in launch mode right now, we see limited clinical risk for Relypsa, though we expect continued volatility associated with the launch updates (prescription data announced mid-month)," the note said. "However, now that the company's recent debt raise brought cash per share to about $8, we see this as a lower-risk company, as prescriptions, in our view, are tracking at a reasonable level."

Seattle Genetics
Seattle Genetics

Three-Day Decline: -4.9%
Cantor Fitzgerald Price Target: $43
Market Cap: $5.36 billion
Dividend Yield: n/a

Seattle Genetics' (SGEN - Get Report) total cash per share was $4.35 as of March 31.

"Sales for Adcetris continue to grow, though this growth has largely been baked into the valuation, in our view," the note said. "However, the pipeline is taking on greater visibility, diversifying the company's assets and adding value, though we think the steady revenue streams provided by Adcetris limits any clinical risk from these assets. Plus with $600+ million in cash ($4/share), the company looks well capitalized to weather any near-term volatility."

OncoMed Pharmaceuticals
OncoMed Pharmaceuticals

Three-Day Decline: -5.3%
Cantor Fitzgerald Price Target: $16
Market Cap: $366 million
Dividend Yield: n/a

OncoMed's (OMED) total cash per share was $6.39 as of March 31.

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