BOSTON ( TheStreet) -- Investing in biotech stocks is tricky. Biotechs are usually unprofitable and burn through cash, appearing destined for shareholder dilution or bankruptcy court. Yet, those that do succeed deliver obscene returns. Dendreon ( DNDN), which developed the Provenge prostate-cancer drug, has surged, on average, 68% a year since 2007.

Here are 10 of the highest-rated biotech stocks. They're exceptionally risky, but predicted by analysts to double, triple, quadruple or even quintuple in the next 12 months. Below, they are ordered by projected return, from big to biggest. Investors should investigate each company and its drug candidates.

10. NeurogesX ( NGSX) develops novel pain-management therapies. NeurogesX's second-quarter loss widened 88% to $10 million, or 58 cents a share, as revenue turned positive. The operating margin remained negative. NeurogesX has $68 million of cash and $40 million of debt, equal to a quick ratio of 4.9. Its stock trades at a sales multiple of 21 and a cash flow multiple of 7.3, 79% and 60% discounts to peer averages. All five of the analysts covering NeurogesX rate its stock "buy." A median price target of $14 implies that the stock will rise 96%.

Bullish Scenario: Roth Capital Partners predicts that NeurogesX's stock will gain 123% to $16.

9. NovaBay Pharmaceuticals ( NBY) is developing product candidates to treat and prevent a range of infections in hospital and non-hospital environments. NovaBay's second-quarter loss widened to $1.2 million, or 5 cents a share, even though revenue grew 8.1% to $2.6 million. The operating margin fell further into negative territory. NovaBay's stock trades at a book value multiple of 4, a 23% discount to the pharmaceutical industry average. All three analysts following NovaBay advise purchasing its shares. A median target of $3.60 suggests a 102% return.

Bullish Scenario: Griffin Securities expects NovaBay's stock to more than quintuple to $9.

8. Nabi Biopharmaceuticals ( NABI) develops vaccines for nicotine addiction and infectious diseases. Its second-quarter loss narrowed 41% to $3.4 million, or 8 cents a share, as revenue turned positive. Nabi has $104 million of cash and no debt. Its stock sells for a forward earnings multiple of 13, a book value multiple of 3.3, a sales multiple of 7.3 and a cash flow multiple of 4 -- 62%, 38%, 93% and 78% discounts to peer averages. Just two analysts follow Nabi. Both advocate purchasing its shares. A median target of $11 implies a one-year gain of 122%.

Bullish Scenario: C.K. Cooper forecasts that Nabi's shares will appreciate 153% to $12.50.

7. OncoGenex Pharmaceuticals ( OGXI) develops and commercializes cancer therapies. It swung to a second-quarter profit of $150,000, or 2 cents a share, from a year-earlier loss. Revenue turned positive, hitting $1.7 million. OncoGenex has $48 million of cash and $51 million of debt. Its stock trades at a sales multiple of 3.7 and a cash flow multiple of 4.6, 96% and 75% discounts to pharmaceutical industry averages. All eight analysts following the company rate its stock "buy." A median target of $48.17 suggests a 12-month gain of 156%.

Bullish Scenario: Rodman & Renshaw ( RODM) predicts the stock will more than triple to $58.

6. Athersys ( ATHX) is developing therapeutics using stem-cell research, including MultiStem. Its second-quarter loss narrowed to $3.1 million, or 16 cents a share, from a loss of $3.4 million, or 18 cents, a year earlier. Revenue more than quadrupled to $1.9 million. Athersys has $12 million of cash and no debt. Its stock sells for a book value multiple of 3.8 and a sales multiple of 11, 28% and 89% discounts to peer averages. All four of the analysts evaluating Athersys advocate purchasing its shares. A median price target of $7.33 implies 160% of upside.

Bullish Scenario: WBB Securities offers a target of $9, predicting the stock will more than triple.

5. Curis ( CRIS) researches and develops cancer therapeutics. Collaborator Genentech just initiated a Phase II trial of GDC-0449. Curis's second-quarter loss decreased 50% to $2.1 million, or 3 cents a share, as revenue expanded 57%. Curis has $45 million of cash and no debt. Its stock trades at a book value multiple of 2.1 and a sales multiple of 7.1, 61% and 93% discounts to industry averages. All five analysts covering Curis recommend that clients purchase its shares. A median price target of $3.75 suggests that the stock will rally 164%.

Bullish Scenario: RBC ( RY) forecasts that Curis's stock will appreciate 182% to $4.

4. Avanir Pharmaceuticals ( AVNR) acquires, develops and commercializes drugs for central nervous system disorders. Lead product candidate Zenvia for pseudobulbar affect has completed three Phase III clinical trials. Avanir's second-quarter loss widened 15% to $5.7 million, but remained steady on a per share basis, at 6 cents. Revenue declined 18%. Avanir's stock sells for a book value multiple of 9.7 and a sales multiple of 76, massive premiums to pharmaceutical peer averages. Of analysts following Avanir, all four advise purchasing its shares.

Bullish Scenario: Jefferies ( JEF) offers a target of $10, implying the stock will more than triple.

3. Novavax ( NVAX) develops recombinant vaccines for infectious diseases including influenza. Its second-quarter net loss expanded 10% to $9.4 million, but the per share loss contracted to 8 cents. Revenue dropped 76%. Novavax has $27 million of cash and $440,000 of debt. Its stock trades at a book value multiple of 4.1, a 23% discount to the biotech industry average. It's expensive based on sales. All five of the analysts researching Novavax recommend purchasing its shares. A median price target of $7.06 implies that the stock will triple in 12 months.

Bullish Scenario: McNicoll, Lewis & Vlak expects Novavax's stock to more than quadruple to $11.

2. Cyclacel Pharmaceuticals ( CYCC) develops mechanism-targeted drugs for human cancers, targeting the cell cycle in order to slow progression or shrink tumors. Cyclacel's second-quarter loss decreased 44% to $3.9 million, or 18 cents a share, as revenue fell 55%. Cyclacel has $20 million of cash and no debt. Its stock sells for a book value multiple of 4.3, a 19% discount to its peer average. It's expensive based on sales. Just two analysts follow the company, both rating its stock "buy." A median target of $5.25 suggests the stock will more than triple.

Bullish Scenario: Roth Capital Partners values the stock at $7, implying it will more than quadruple.

1. Soligenix ( SNGX) develops products to treat the life-threatening side-effects of cancer treatments and gastrointestinal disease treatments. Its second-quarter loss dropped to $1.6 million, but remained constant on a per share basis, at 1 cent. Revenue gained 34% to $450,000. Soligenix has $10 million of cash and no debt. Its stock trades at a book value multiple of 4.3 and a sales multiple of 17, 19% and 83% discounts to industry averages. The three analysts covering Solgenix all rate its stock "buy." A median target of $1.50 suggests it will surge 618%.

Bullish Scenario: Brean Murray Carret echoes the median target of $1.50, suggesting a rise of 618%.

-- Written by Jake Lynch in Boston.

RELATED STORIES:


Become a fan of TheStreet on Facebook.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.