5 Pharma Stocks Trading for Under $2

NEW YORK (Karvy) - Here are five pharmaceutical stocks under $2 with the potential for handsome returns based on company developments, a strong sector growth outlook for 2011, and analysts' ratings.

The pharmaceutical sector outlook for 2011 remains strong with support from emerging and recovering economies, according to analysts at IMS Health. Growth levels globally are likely to range between 5% to 7% with industry revenue estimated to touch a maximum of $890 billion. Although products with more than $30 billion of sales are likely to go off-patent in major markets in 2011, the full impact of the loss won't be experienced until 2012.

There are three key growth areas, say analysts. First, Japan, the world's second-largest pharmaceutical market, is likely to grow 5% to 7% in 2011, compared with meager 1% growth in 2010. Second, the U.S. market is forecast to grow at 5%. Lastly, growth in 17 emerging markets is seen between 15% to 17%, an increase of 3% from 2010.

Among these 17 countries, China is slated to be the strongest market with an estimated growth of 25%.

Acadia Pharmaceuticals ( ACAD) is a biopharmaceutical company developing and commercializing drugs for the treatment of central nervous system disorders. In its third quarter, the company reported a loss of $4.2 million, or 11 cents a share, narrower than a year earlier.

Looking ahead to the fourth quarter, the company expects to record revenue of $34.7 million compared with $2.3 million in the third quarter. Fourth-quarter revenue will be made up of $25.9 million from the recognition of remaining deferred revenue from Acadia's collaboration with Biovail ( BVF).

Moreover, the company adds that its existing cash resources of almost $32.2 million and anticipated payments from ongoing collaborations will fund its operations until mid-2012. On the other hand, the company has adopted austere cost-containment measures and has reduced external service costs as well to maintain profitability levels.

Of the two analysts covering the stock, one recommends buying, the other recommends holding. Currently, the stock is trading at 70 cents. The target price is $5, indicating an upside of 625%.

Repros Therapeutics ( RPRX) is a biopharmaceutical company focusing on the development of oral, small molecule drugs for unmet medical needs. For the latest third quarter, the company reported a loss of $1.2 million, or 13 cents a share, compared with a loss of $10.2 million, or $2.64 a share, a year earlier.

Repros recently began enrollment for a Phase II trial for its Androxal drug to test if the treatment of secondary hypogonadism could serve to treat Type II diabetes, which is rapidly increasing in the U.S. Estimates reveal that the Type 2 diabetes market in the U.S. is forecast to grow to over $300 billion annually over the next 20 years, with one in three U.S. adults expected to have Type II diabetes.

During its discussions with the Food and Drug Administration, the company's proposed indication for Androxal in the treatment of secondary hypogonadism was agreed upon by the agency. The confirmation will prove highly beneficial for Repros as it would lead to near-tern commercial partnerships and significant revenue generation..

Ladenburg Thalmann last month reassigned a buy rating to the stock. Currently, the stock is trading at $1.31. The target price set is $6, indicating an upside of 358%.

BioSante Pharmaceuticals ( BPAX) is a specialty pharmaceutical company. In November it reported a narrower third-quarter loss. It has a strong cash position, up 18.7% to $35.5 million.

During June, the pharma company announced the sale of an aggregate $15 million securities in a registered direct offering. Net proceeds of almost $14.2 million will be primarily used to fund BioSante's LibiGel Phase III clinical study program and for general corporate purposes.

Of the four analysts covering the stock, three recommend buying it, while one recommends holding BioSante. Currently, the stock is trading at $1.48. The target price is $4, indicating an upside of 170%.

Biodel ( BIOD) focuses on the development and commercialization of treatments for diabetes. For the fourth quarter ended Sept. 30, the company reported a narrower loss of $8.1 million, or 31 cents a share, from $10.5 million, or 44 cents a share, a year earlier. The loss was narrower than analysts' estimates of a loss of 37 cents. At the end of the quarter, cash, cash equivalents, restricted cash, and marketable securities stood at $29.1 million.

During 2011, the company seeks to conduct pre-clinical studies and Phase I clinical trials to determine whether one or more of its newer insulin formulations is likely to offer a combination of pharmacokinetic stability and tolerability characteristics that are preferable to its current formulation of Linjeta -- a human insulin for Type I and Type II Diabetes.

Of the six analysts covering the stock, one analyst recommends buying it while five recommend holding it. Currently, the stock is trading at $1.69. The target price is $4.50, indicating an upside of 166%.

Columbia Laboratories ( symbol) ( CBRX) is developing products that utilize its bioadhesive drug delivery in a controlled and sustained manner. For the third quarter ended Sept. 30, the company reported a 79% jump in revenue to $14.2 million following asset sales to Watson and other products sales. Columbia Laboratories swung to net income of $257,622 from a year-earlier loss of $5.8 million.

The company recently said that after successful completion of one of its studies it believes the outcome will have a positive impact on the top-line results of the pivotal Phase III clinical trial in December. Moreover, strong positive data may lead to a $6 to $8 million payment from Watson and facilitate Columbia's filing an NDA in first half of 2011.

The company estimates its cash balance as of Dec. 31, 2010, to be in excess of $20 million. It further added that it expects to move to sustained profitability in the upcoming quarters, realizing the benefits of tax-sheltered income through its significant net operating loss carryforwards.

Earlier this month, The Benchmark reassigned a buy rating to the stock and raised its target price to $4 from $3. Currently, the stock is trading at $1.80, indicating an upside of 125%.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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