While the biotech industry lost some momentum earlier this year with investors focusing on outdoor stocks to capitalize on the economic recovery, the recent spread of the hyper-contagious Delta variant of coronavirus, and consequent resurgence of COVID-19 cases in several countries, is driving renewed interest in the industry. This is evidenced by the iShares Biotechnology ETF’s (IBB) and the VanEck Vectors Biotech ETF’s (BBH) 6.6% and 9.6% returns, respectively, over the past three months.
he rising prevalence of chronic maladies, such as cancer and diabetes, is also driving an increasing need for the development of new, advanced drugs. In addition, technological innovations and rising investment in this space should keep bolstering the industry’s growth. According to a Global Market Insights report, the biotechnology market is expected to grow at a 9.4% CAGR between 2021 – 2027.
Given this backdrop, we think biotech companies ASLAN Pharmaceuticals Limited (ASLN), Aquestive Therapeutics, Inc. (AQST), and Aravive, Inc. (ARAV) possess immense growth potential based on their innovative product portfolios. And Wall Street analysts expect shares of these companies to rally significantly in the near term.
ASLAN Pharmaceuticals Limited (ASLN)
Headquartered in Singapore, ASLN is a clinical-stage immunology-focused biopharmaceutical company that is developing various innovative treatments. The company’s clinical portfolio comprises ASLAN004 and ASLAN003. Also, it has a joint venture with Bukwang Pharmaceutical Co., Ltd. to develop immuno-oncology therapeutics that target the AhR pathway.
On July 13, ASLN closed a secured loan facility provided by K2 HealthVentures (K2HV). It is expected to use the proceeds to advance the clinical development of ASLAN003 and for general corporate purposes. Dr. Carl Firth, the company’s CEO, said, “These resources provide additional working capital, strengthen our balance sheet, and enhance our financial flexibility by extending our expected cash runway through late 2023, as we look forward to expanding our clinical activities for ASLAN003.”
ASLN’s research and development expenses for the first quarter, ended March 31, 2021, came in at $3.75 million, up 59.3% year-over-year. However, an increase in R&D expenses was primarily driven by manufacturing expenses incurred in preparation for the Phase 2b trial of ASLAN004. The company’s total assets increased 535.6% sequentially to $102.22 million. Its total liabilities decreased 19.8% sequentially to $21.05 million.
Analysts expect ASLN’s EPS to decline 4.2% in its fiscal year 2022. The stock has gained 53.6% year-to-date to close yesterday’s trading session at $2.92.
Wall Street analysts expect the stock to hit $8 in the near term, indicating a potential 174% upside. All three analysts that have rated ASLN rated it a Buy.
Aquestive Therapeutics, Inc. (AQST)
Specialty pharmaceutical company AQST in Warren, N.J., focuses on developing treatments for diseases related to the central nervous system (CNS). Its CNS programs consist of a pipeline of products that include Libervant, Sympazan, and AQST-117. It also has a pipeline of products under partner programs, including Suboxone and APL-130277 to treat opioid dependence and Parkinson’s disease.
AQST announced on July 19 that the U.S. Food and Drug Administration (FDA) has accepted for filing the resubmission of the New Drug Application (NDA) for Libervant (diazepam) Buccal Film for the management of seizure clusters. If approved, refractory epilepsy patients could benefit significantly from the first-of-its-kind treatment option.
For the first quarter, ended March 31, 2021, AQST’s revenues increased 26.9% year-over-year to $11.12 million. The company’s loss from operations decreased 38.5% year-over-year to $8.53 million. Its net loss for the quarter came in at $14.67 million, down 11.2% year-over-year. AQST’s loss per share decreased 16.3% year-over-year to $0.41.
The company’s revenue is expected to increase 87.1% year-over-year to $74.96 million in its fiscal year 2022. AQST’s EPS is expected to grow 12.2% for the quarter ending September 30, 2021. The stock has gained 14.6% since hitting its 52-week low of $3.17 on May 13, 2021, to close yesterday’s trading session at $3.77.
It is expected to hit $14.20 in the near term, indicating a potential 276.7% upside. Furthermore, all five analysts that have rated the stock rated it a Buy.
Aravive, Inc. (ARAV)
Formerly known as Versartis, Inc., ARAV is a clinical-stage biotechnology company that is developing innovative therapeutics to treat life-threatening diseases, including cancer and fibrosis. It’s lead therapeutic, AVB-500, is a first-in-class ultra-high affinity decoy protein that targets the GAS6-AXL signaling pathway associated with tumor cell growth, tumor metastasis, resistance to treatment, and decreased survival. ARAV is based in Houston, Tex.
On July 15, 2021, ARAV achieved a $3 million development milestone payment from its licensee, 3D Medicines Inc. This milestone is based on the Center for Drug Evaluation (CDE) of the China National Medical Products Administration (NMPA) approval of the Investigational New Drug (IND) application submitted by 3D Medicines Inc. to participate in ARAV’s international AVB-500 Phase 3 platinum-resistant ovarian cancer (PROC) clinical trial.
ARAV’s total revenue came in at $256,000 for the first quarter ended March 31, 2021. The revenue was derived from its collaboration and license agreement with 3D Medicines. The company’s loss from operations decreased 22.3% year-over-year to $8 million. Its net loss declined 25.9% year-over-year to $8 million. ARAV’s loss per share came in at $0.44, down 38.9% year-over-year. Its total assets increased 28.9% sequentially to $87.27 million.
For its fiscal year 2020, ARAV’s revenue is expected to be $7.76 million, up 85.2% year-over-year. Its EPS is expected to grow at an 168.3% rate per annum over the next five years.
Wall Street Analysts expect the stock to hit $26 in the near term, indicating a potential 447.4% upside. Furthermore, all the five analysts that have rated the stock rated it a Buy.
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ASLN shares were trading at $2.87 per share on Thursday morning, down $0.05 (-1.71%). Year-to-date, ASLN has gained 56.83%, versus a 16.86% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...
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