Market volatility has suddenly created some great opportunities, including those in the biotech sector.
Supporting the inevitable ascent of the industry is the release of a steady stream of compounds that have helped them rack up billions in new revenue.
Consider that since it began trading in early 2001, the iShares Nasdaq Biotechnology Index (Nasdaq: IBB) is up 130%. That's more than triple the S&P 500's 13-year return of 43%.
And for biotech as a group, things just keep getting better, with a number of leaders crushing the market over the last two years.
One example is Gilead Sciences Inc. (Nasdaq: GILD), which has returned roughly 185% in two years. Gilead has treatments for HIV, cardiovascular diseases, hepatitis C, and more.
Regeneron Pharmaceuticals Inc. (Nasdaq: REGN) has a two-year return of 187%. The company is best known for EYELEA, a compound that combats age-related macular degeneration of the eyes that can lead to blindness.
But as impressive as these stocks have been, there are three great opportunities in the sector with just as much, if not more, potential that just got cheap.
They're all 2014 IPOs... and the market hasn't quite figured out just how profitable they'll be.
For the time being, these shares are in the discount bin. They won't stay there for long...
Profit Machine No. 1
Auspex Pharmaceuticals Inc. (Nasdaq: ASPX) went public on Feb. 5 with an offering price of $12. It was recently trading at $23 for gains to date of 92%.
Auspex specializes in developing drugs to treat orphan diseases, defined as those that affect fewer than 200,000 patients. Because there are more than 6,000 such diseases in the United States, the federal government gives firms what amounts to a 7-year monopoly on orphan drugs.
Based in suburban San Diego, Auspex is focused on conditions that cause hyperkinetic movement disorders such as Huntington's disease and Tourette's syndrome.
It's most promising candidate is SD-809, a drug proposed to treat involuntary abdominal spasms related to Huntington's, a hereditary neurodegenerative disease that results in motor, cognitive, and psychiatric disability, primarily due to the destruction of neurons in the brain.
SD-809 is in advanced clinical trials and has already shown a tremendous amount of potential. Other drugs in Auspex's pipeline include those used to treat rheumatoid arthritis and conditions like pulmonary fibrosis (scarring of the lungs) and obstruction of the coronary arteries.
Profit Machine No. 2
On Feb. 6, Revance Therapeutics, Inc. (Nasdaq: RVNC) went public with an offering price $16. Recently trading at about $36, the stock is already up 125%.
Revance isa specialty firm focused primarily on products for dermatological applications that provide an alternative to Botox injections.
As such, the company's lead product does rely on the botulinum toxin but is applied topically to reduce or eliminate facial lines like "crow's feet" and "laugh lines."
Currently in advanced clinical trials, the product is significant for patients who prefer to avoid injections. However, Revance does have a similar leading candidate, RT002, that is essentially an injectable form of compound.
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About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.