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3 Small-Cap Biotech Stocks That Could be Poised to Explode

With the threat of severe drug pricing regulations behind it for now, the biotech sector has launched a rally in recent days, with the iShares NASDAQ Biotechnology Index (ETF) (NASDAQ:IBB) gaining over 5% in the past three weeks.

President Trump’s blueprint for lowering drug prices that was revealed last week wasn’t nearly as tough as many critics expected, laying much of the blame on middlemen rather than the pharma companies that he said were “getting away with murder” during a speech last year.

In light of that, several biotech insiders have confidently bought shares of their companies in recent days, a clear signal that they see big things ahead for these companies and their shares in the near future. We’ll check out those purchases below.

Alongside our tracking of insider trading activity, we also track the top consensus picks of the best performing hedge funds each quarter. This “Best Performing Hedge Funds Strategy” gained 4% last quarter vs. a loss of 1% for the S&P 500 ETF (SPY), and a further 7.6% so far in the second-quarter compared to a 0.9% loss for the SPY. Since its inception in May 2014 this strategy’s picks have returned 87.8% vs. 53.3% for the SPY. You can see our latest picks by trying our newsletters free of charge for 14 days.

Sergey Nivens/Shutterstock.com

Sergey Nivens/Shutterstock.com

Nabriva Therapeutics PLC – ADR (NASDAQ:NBRV)

Who Bought Shares: General Counsel & Secretary Robert Crotty

How Many Shares Were Bought: 10,000 @ $4.48 per share

Date of the Transaction(s): May 23

Nabriva Therapeutics PLC – ADR (NASDAQ:NBRV) released positive top-line results on Monday from the Phase 3 trial of its community-acquired bacterial pneumonia (CABP) treatment lemafulin. The stock shot up in pre-market trading on the news, but then sank during the day’s trading session. That sequence of events prompted Nabriva’s General Counsel and Secretary Robert Crotty to purchase 10,000 shares of the company today, his first purchase of the stock.

In the trial, lemafulin was tested against the current standard-of-care CABP treatment, moxifloxacin, and achieved an identical 90.8% early clinical response rate, which is the primary outcome for CABP trials. While strong, the fact that it didn’t outperform moxifloxacin, while also having a slightly higher incidence rate of treatment-emergent adverse events (32.6% compared to 25%), may have contributed to the later selloff. Nonetheless, lemafulin appears to be another potent treatment option to combat the serious issue of growing antibiotic resistance.

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On the next page we’ll delve into the recent insider buying activity at Aerie Pharmaceuticals Inc (NASDAQ:AERI) and Editas Medicine Inc (NASDAQ:EDIT).

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