In recent years, mountains of institutional capital have flowed into hundreds of biotech start-ups and so many of them have gone public that it's impossible for anyone with a day job to keep track of them all.
I'll let you in on a little secret. Those of us paid to know things about the biopharmaceutical industry can't keep up with all the new players that reach the Nasdaq exchange, either.
If trying to stay on top of all the new biotech stocks that you could buy has you feeling overwhelmed, relax. Most of them aren't worth the effort. These three stand out as some of the only ones that continued to climb after the buzz around their initial public offerings faded away. Here's why.
| Company | Initial Public Offering Date | Stock Price Gain Since IPO | Market Cap |
|---|---|---|---|
| Eidos Therapeutics (NASDAQ:EIDX) | 6/20/2018 | 88% | $1.6 billion |
| Turning Point Therapeutics (Nasdaq: TPTX) | 4/17/2019 | 100% | $1.8 billion |
| Stoke Therapeutics (NASDAQ:STOK) | 6/19/2019 | 36% | $1.2 billion |
1. Eidos Therapeutics: Part of something much larger
Eidos Therapeutics has taken off since its IPO thanks to mid-stage clinical trial results that show its lead candidate, AG10 is really good at holding together a vital transport protein, called transthyretin (TTR). A drug like AG10 could make a big difference for an estimated 400,000 people around the world currently experiencing a painful, fatal buildup of TTR fragments in their hearts.
Nearly two-thirds of Eidos is owned by BridgeBio (NASDAQ:BBIO), and its former parent would like to repurchase all the Eidos shares that it doesn't own, in exchange for 1.3 BridgeBio shares. BridgeBio doesn't intend to develop drugs itself. Instead, it supports fledgling start-ups, like Eidos. Since its inception in 2015, BridgeBio has assembled subsidiaries with 15 active rare-disease programs, four of which are already in pivotal trials.
If AG10 puts up results good enough to contend with the first Food and Drug Administration-approved TTR stabilizer, a drug called Vydaqel from Pfizer (NYSE:PFE), shares of Eidos, and BridgeBio will continue to soar.
2. Turning Point Therapeutics: Buyout target
This has been a terrific year for developers of small-molecule cancer drugs, largely because biopharma companies with deep pockets keep buying them at a premium. Turning Point Therapeutics has doubled in its first few months because the company's already moved its lead candidate, repotrectinib, into a registrational study that could make it a new treatment option for people with ROS1 positive non-small cell lung cancer, or NTRK positive solid tumors regardless of where they originated.
Repotrectinib is a kinase inhibitor designed to address acquired treatment resistance problems common among this class of treatment and it appears to work as advertised. Earlier this year, Turning Point presented results from the dose determination portion of an ongoing registrational trial that showed at 16 months, repotrectinib shrank ROS1 positive tumors for 83% of patients that hadn't tried a kinase inhibitor before and 39% of those with previous kinase inhibitor experience.
The early results are worthy of attention, but they're a little hard to interpret because there were seven different dosages tested. In late September, the company will present more results from its ongoing repotrectinib study. If they don't make surprising data we saw earlier look like a fluke, this stock will soar several times higher.
3. Stoke Therapeutics: Big expectations
This is another young drugmaker trying something different, but unlike Turning Point and Eidos, Stoke Therapeutics doesn't have any clinical data for its lead candidate, STK-001, yet. In fact, Stoke isn't allowed to begin a clinical trial with STK-001's intended audience, patients with a severe form of childhood epilepsy called Dravet syndrome yet. The company won't be able to begin clinical studies until the FDA approves an investigational new drug (IND) application that the company won't be able to submit until 2020 at the earliest.
Stoke's developing RNA drugs meant to upregulate the expression of specific proteins that patients born with severe genetic illnesses can't produce on their own. Part of Stoke's approach is old hat for RNA-antisense pioneer, Ionis Pharmaceuticals, but Stoke's the first company to try controlling the splicing of precursor messenger RNA to boost the effect.
Stoke might not have any evidence that its new technique will actually work for humans, but that hasn't stopped investors from pushing the company's market cap up to an unexplainable $1.2 billion. That's a lofty perch to fall from if STK-001 doesn't meet the extremely high expectations placed on its first clinical trial attempt.
Most likely to climb higher?
Stoke Therapeutics could be on the right path, but the odds of coming out ahead are stacked against investors who buy shares of any biotech with a 10-figure market value and zero clinical trial data to back it up.
Eidos shares have been trading at 1.47 times BridgeBio's share price recently, so the chances of another climb before the recently proposed acquisition can run its course are mighty slim. With an enormous pipeline under development by a stable of subsidiaries, though, Eidos investors will want to keep the BridgeBio shares they'll probably receive before the end of the year.
The stock most likely to continue to rise, however, has to be Turning Point. Nearly every big pharma seems eager to buy the kind of cancer treatments the start-up's developing. A repeat of the success we saw earlier among a larger group of patients could make the company's phone ring with one buyout offer after another.