Biotech companies often return incredible investment rewards. Ten-fold, twenty-fold, and even a hundred-fold return can occur over time after a company announces the approval of a breakthrough drug and moves solidly into commercialization.
Medivation (MDVN) tops the list of top biotech blockbusters over the last decade with gains of more than 11,000%. To put that in perspective, an investment of $10,000 in this biotech back in 2003 would now be worth over $1 million. Questcor Pharmaceuticals (QCOR) shares zoomed up more than 5,000% in the past decade and Illumina (ILMN) soared more than 3,900% during the past 10 years.
It’s probably no surprise that the upward ride for these companies wasn’t smooth and steady, proving that the best investing approach is to choose great companies and stick with them for the long term. The trouble is that picking the next big winner can be tricky.
There are, however, a few well tested criteria that help in the search for the next biotech bonanza. First, look for companies with drugs that treat rare and devastating diseases and that have products in stage II or III of testing. Second, look at companies that have received a recent FDA approval for one of their drugs. Third, look for a company with a pipeline of drugs and the capital resources to bring them to market. Finally, it’s important to consider market size and patient demand in biotech drug development. Oncology was named the top the drug development field for 2013 and beyond by The Life Sciences Report/Sagient Research Watchlist.
Given these criteria, Galena Biopharma, Inc. (NASDAQ: GALE) is worthy of consideration. Galena Biopharma develops and commercializes innovative, targeted oncology treatments that address major unmet medical needs to advance cancer care. The company just announced the official commercial product launch of Abstral® Sublingual Tablets in the United States. Abstral® is a sublingual fentanyl tablet used for the management of breakthrough pain in cancer patients.
GALE also has multiple cancer drugs in various stages of development. Based on a very successful Phase II trial, the (FDA) granted Galena’s NeuVaxTM a Special Protocol Assessment (SPA) for a Phase III clinical trial. NeuVaxTM is a treatment for breast cancer patients to forestall or defeat cancer recurrence and it’s showing excellent results. If approved by the FDA, NeuVaxTM will be the first of its kind in an even wider scope than the widely used drug Herceptin. The Herceptin drug market alone is roughly $7 billion and the market potential for NeuVaxTM could be enormous. The drug is in Stages 1 through 3 clinical trials for other breast cancer treatments and for prostate cancer. GALE is also entering phase two trials with a targeted vaccine (Folate Binding Protein-E39) aimed at preventing the recurrence of ovarian, endometrial, and breast cancers.
To complement the rollout of their first commercial product Galena Biopharma recently completed a firm commitment underwriting led by Oppenheimer & Co. This offering delivered over $37 million to Galena and they intend to use the proceeds for the commercialization of Abstral®, their ongoing Phase 3 NeuVax™ clinical trial, corporate expenses, plus their other clinical trials.
The next biotech bonanza just might be underway.
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