While we have made several advancements in treating cancer and other diseases, there are several disorders in the cardiovascular realm that remain unmet medical needs. Cytokinetics, Inc. (NASDAQ:CYTK) is trying to capitalize on this market, with several late-stage products. With a $340 million market cap, I think the risk is worth the reward.
No. 2: Continuing To Rally
Back in March, the company disclosed that Phase 3 testing would not be required, which means the company is now seeking an FDA approval. Thus, the company prepares to reach a wide market with peak annual sales potential of $2 billion. As a result, I think the $1.45 billion company still presents a significant amount of upside and is a prime takeover target.
No. 1: Priced For Perfection
The big stock moving news was that patients are simply responding to CO-1686, and are doing so without a maximum dose being identified. This means that responses could be even greater, as higher doses are administered. Moreover, there is nothing to compare to CO-1686, as no drug has shown any response in treating lung cancer patients with T790 mutations, which further adds to the excitement.
In addition, CO-1686 showed significant tumor shrinkage at multiple organ sites, including the brain and liver. This was an added bonus, as investors did not anticipate a response at other sites. While all of this data is particularly encouraging, Clovis’ market cap has rallied to more than $2 billion, and CO-1686 is only a Phase 1/2 drug.
Therefore, with what could be several years until an FDA approval, I think most, if not all, immediate upside is most likely priced into the stock. Hence, I would be careful buying at these levels.
Conclusion
There is only a handful of stocks that have returned gains of 200% in 2013, and five of those stocks are in biotechnology. This is consistent with the norm and is why investors often seek biotech stocks for their portfolio. While many of these performances become value traps, I think that this year, collectively, looks to be a particularly promising group.
Sherrie Stone has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Sherrie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Are These Top Biotech Performers Still Worth Buying? originally appeared on Fool.com is written by Sherrie Stone.
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