Get ready, bargain shoppers. The Nasdaq Biotechnology Index has plummeted 24% since the beginning of October and it looks like this pair received more lashes than they deserved.
Agenus Inc. (NASDAQ: AGEN) and Gilead Sciences Inc. (NASDAQ: GILD) look like bargains right now, but market-beating gains are far from guaranteed. Here’s what you need to know about potential calamities on their paths to growth.
Agenus Inc.: Shots on goal
This biotech has taken a lot of shots on goal that have sailed wide, but its recently depressed market cap seems a little too pessimistic right now. A recent $150 million cash injection from Gilead Sciences for rights to three early stage cancer therapy candidates only pushed the stock’s market cap up to around $277 million at recent prices.
Agenus has two checkpoint inhibitors in development that just might find a partner desperate enough to license them, but it’s the company’s partnered early stage assets that make this stock look like a risky bargain right now. Agenus’ collaboration with Merck & Co. moved an undisclosed candidate into clinical trials this summer, and success would trigger significant milestone payments.
Gilead’s surprising upfront payment will keep Agenus from asking shareholders for more money in 2019, and perhaps much longer. The new collaboration partners have three oncology candidates nearly ready to enter clinical trials. Beginning the studies will trigger milestone payments that begin small and could eventually total $1.7 billion.
Biotech collaboration partners rarely recognize a fraction of potential milestone payments. That said, Agenus’ partners are taking a lot of shots on goal. Positive results from any one of several early stage clinical trials could send this stock soaring from its present levels.
Gilead Sciences Inc.: Let’s try oncology again
In 2017, Gilead’s $12 billion foray into the oncology space seemed bold, but investors are increasingly worried the biotech made a huge mistake. Yescarta launched in October 2017, but sales during the three months ended this Sept. 30, 2018, reached just $75 million.
The stock’s fallen 18% since the beginning of October, but a new CEO on the way could give it some lift in the new year. Daniel O’Day will step down as head of Roche‘s pharmaceutical segment to become chairman and CEO of Gilead in March.
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