3 Biotech Stocks That Could Soar in September
Sangamo Therapeutics, Inc. (NASDAQ: SGMO), Esperion Therapeutics, Inc. (NASDAQ: ESPR), and Loxo Oncology, Inc. (NASDAQ: LOXO) are all scheduled to present highly anticipated trial results in September that could boost expectations for their experimental therapies. Here's what could go right or wrong in the weeks ahead.
Sangamo Therapeutics: A moment we’ve all been waiting for
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Sangamo has been developing treatments based on zinc-finger nuclease gene editing techniques for decades, without any success. At an event scheduled for Sept. 5, we'll find out if the company's rare-disease candidate SB-913 works as intended. This is a big deal for Sangamo and gene editing, in general, because it would be the first time any experimental therapy has successfully placed a normal functioning copy of a faulty gene in the right spot in vivo.
Last year, investigators began a nine-patient trial with SB-913, a potential treatment for people with Hunter Syndrome. The study was designed to monitor the patients for three years, and if all goes according to plan, they should be producing measurable quantities of a vital enzyme they couldn't produce before.
Of course, Sangamo's treatment would need to jump through a lot more hoops before it has any chance of approval, but success with the first human proof-of-concept trial for this therapy would probably send the stock to new heights. Although Hunter syndrome affects only approximately 500 people in the U.S., Sangamo has a similar therapy in the clinic, plus success with SB-913 could bring more deep-pocketed drugmakers to the deal table.
Esperion Therapeutics: Safety profile intact?
This stock crashed earlier this year after analysts noted 0.9% of patients taking its cholesterol-reducing candidate, bempedoic acid, passed away during a clinical trial versus just 0.3% of those taking a placebo. The difference wasn't strong enough to be considered statistically significant, but long-term therapies intended for generally healthy people are always held to high standards.
Esperion's candidate will get a chance to redeem itself at the end of September, although a recent update suggests we'll have to wait until October. The company soon will release top-line results from another 52-week study. Although the primary goal is to show a cholesterol reduction, fewer deaths in the treated group this time around could help this stock make a big comeback.
Loxo Oncology: Durable responses?
This biotech turned some heads earlier this year with LOXO-292, a highly selective kinase inhibitor that shrank tumors for 22 of 32 patients with a specific form of lung cancer. The oral treatment also appears active at doses low enough to limit toxicity.
On Sept. 25, Loxo Oncology is scheduled to present some follow-up data from patients receiving higher dosages. Stronger tumor responses at higher dosages would help the stock climb somewhat. If the tumors that got smaller at the last data cutoff haven't spread or started growing again, though, the stock could soar.
|Company||Market Cap||Trailing 12-Month Net (Loss)||Cash, Cash Equivalents, and Marketable Securities as of June 30|
|Sangamo Therapeutics, Inc.||$1.9 billion||($62 million)||$540 million|
|Esperion Therapeutics, Inc.||$1.3 billion||($175 million)||$180 million|
|Loxo Oncology, Inc.||$5.2 billion||($109 million)||$671 million|
Things also could go terribly wrong
Although there's a chance for these three biotech stocks to soar in the weeks ahead, investors should tread lightly. None of these companies have a product to sell, but the smallest of the bunch, Esperion, is a $1.3 billion company at the moment. If another imbalance of deaths point a grim finger at bempedoic acid, the stock could get wiped out because the company doesn't have anything else in development.
Cash-laden Sangamo and Loxo Oncology have a lot more room for error than tiny Esperion. That said, there isn't much use for experimental cancer treatments that shrink tumors in the beginning then allow them to come back months later, and surprisingly bad data for LOXO-292 could cause the stock to slide.
Luckily, Loxo has another treatment under priority review at the Food and Drug Administration (FDA). As long as larotrectinib earns approval on or before its proposed action date in November, trouble with LOXO-292 wouldn't be the end of the world.
If any of these companies have more to gain than to lose this month, I'd say it's Sangamo. Investors are far more concerned with a hemophilia candidate that Pfizer agreed to help develop last year that doesn't use the company's zinc-finger technology to edit genomes. With expectations for SB-913 fairly low to begin with, a failure probably wouldn't be devastating.
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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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