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3 oversold biotech stocks to buy now


  • A reduced focus on Covid-19 and less concern over interest rates should push many biotech stocks higher.
  • vTv Therapeutic (TVVT) has powerful medium- and long-term positive catalysts.
  • Novavax (NVAX) looks set to get a boost from an upcoming FDA approval of its coronavirus vaccine.
  • Fin (RLA) reported positive data and has a huge potential market

Biotech stocks have fallen in recent months and years. For example, the SPDR S&P Biotech ETF (NYSE:XBI) has fallen 40% so far this year. As a result, there are plenty of oversold biotech stocks for investors to buy.

But over the next six months, two main factors should push the sector much higher. First, since coronavirus concerns have waned significantly, investors’ minds and portfolios are no longer primarily focused on Covid-19 treatments and vaccines. As a result, companies working on treatments for other diseases are likely to attract more money from investors, pushing their stocks higher.

Second, since February 2021, many investors have been concerned about the continued rise in inflation, forcing the Federal Reserve to raise interest rates to levels not seen in decades. This scenario, considered by many to be very likely since November 2021, would hurt the shares of unprofitable biotech companies enormously.

This is because these companies often need to borrow money and will not generate profits for several years, making their stocks less attractive to investors during periods of high interest rates.

Yet with many now believing inflation has peaked and Fed Chairman Jay Powell has seemingly ruled out 0.75% interest rate hikes at upcoming Fed meetings, the scenario dreaded seems much less likely.

Here are three oversold biotech stocks that are well positioned to benefit from this improved environment.

TVVT vTv Therapeutic 42 cents
NVAX Novavax $52.11
RLA Fin Therapy 42 cents

vTv Therapeutic

Source: Shutterstock

As I pointed out in previous columns, vTv Therapeutics’ (NASDAQ:TVVT) treatment for type 1 diabetes – TTP399 – has been awarded breakthrough status by the US Food and Drug Administration. The agency’s decision indicates that it is optimistic about the drug’s prospects.

In vTv’s recent earnings press release, the company revealed that it is “currently in active discussions regarding financing, partnership and licensing transactions for the further development of TTP399.“The willingness of other entities to speak with vTv about the drug indicates that it has considerable value, and there is a good chance that a deal between vTv and another company involving the drug could significantly increase the stock of VTVT at short and medium term.

What also makes me optimistic about vTv is that the company’s largest stock owner, billionaire Ronald Perelman, retained over 36.5 million shares of the company in December 2021, although he sold 87,000 shares during that month.

The market capitalization of VTVT shares is $28.9 million.

Novavax

3 oversold biotech stocks to buy now

Source: Ascannio/Shutterstock.com

In my last column on Novavax (NASDAQ:NVAX) stock, published on April 27, I warned that stocks had turned “speculative” due to low uptake of the company’s coronavirus vaccine. I noted, however, that I still thought the company had “a chance”.

Since then, I’ve become much more bullish on stocks, for three main reasons. First, it has come to my attention that the drugmaker is in the lead when it comes to developing a combination vaccine against Covid-19 and influenza. This could give the company a tremendous boost in many developed countries, where hundreds of millions of elderly and vulnerable people already get their flu shots each year. Presumably, these consumers will like the idea of ​​getting a combined flu and coronavirus vaccine each year, rather than two separate vaccines.

Second, the FDA has agreed to allow one of its panels to review Novavax’s jab next month, and the company’s CEO has said he expects the committee to approve the drug. Assuming the panel recommends Novavax’s vaccine, the vaccine would have to be approved by the agency, which would result in significant coverage of the vaccine by mainstream US media.

That, in turn, could lead to a significant portion of those people who haven’t received a Covid-19 vaccine receiving Novavax’s vaccine, which is based on older and potentially more reliable technology than mRNA shots. .

And assuming Novavax’s vaccine is eventually approved as a booster and a shot for children by the FDA, many of the millions of American children who have not received a vaccine and the 52% of American adults (in one month and a half ago) who have not been boosted could choose to receive the Novavax shot.

Finally, investors’ increased willingness to bet on high-potential biotech stocks should enable NVAX shares to rebound in the short and medium term.

Fin Therapy

3 oversold biotech stocks to buy now

Source: Shutterstock

For risk-tolerant growth investors, I believe the best bets in the biotech sector are unestablished companies whose drugs have performed well in trials involving small numbers of patients. These companies tend to have very low valuations, but their drugs have a good chance of succeeding. Fin Therapy (NASDAQ:RLA), which developed a treatment for the side effects of chemotherapy, definitely falls into this category.

In 2020, the company reported that its drug ALRN-6924 significantly reduced anemia and thrombocytopenia rates in 17 patients with small cell lung cancer who were being treated with chemotherapy. Anemia and thrombocytopenia are common side effects of chemotherapy.

According to Aileron, ALRN-6924 may help lessen the side effects of chemotherapy in patients with “p53-mutated cancer.” According to the company, 1.8 million people in America and 18 million people worldwide are diagnosed with such cancers each year.

As of the date of publication, Larry Ramer has long been a VTVT, NVAX and ALRN.

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Larry Ramer has researched and written about US stocks for 15 years. He was employed by The Fly and Israel’s largest business newspaper, Globes. Larry started writing columns for InvestorPlace in 2015. Some of his highly successful contrarian picks include GE, solar stocks and Snap. You can reach him on StockTwits at @larryramer.

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