Investors looking for stocks that can rise sharply in a short period of time found what they were looking for last month in the biopharmaceutical industry. Shares of at least three pharmaceutical companies more than doubled in November.
Could last month’s results soar further in the new year? Let’s weigh the opportunities they face against the challenges they face to gauge their likelihood of greater gains in the future.
Image source: Getty Images.
Koro Bio
November 3, Koro Bio (KRRO 16.92%) Use Frequency Therapy’ Nasdaq Listed to enter the U.S. public market through a reverse merger. Korro’s shares soared around 171% in November as the company received a $170 million cash infusion from a who’s who of private investors, in addition to the IPO.
Korro will use its newfound cash hoard to advance its RNA-editing platform, which could produce a slew of new drugs, starting with a treatment for alpha-1 antitrypsin deficiency (AATD). A deficiency in AAT can lead to lung damage at a young age, and there are no treatments that address the underlying cause of this rare genetic disorder.
The company believes its new cash buffer will last until 2026. Unfortunately, it may take a long time to determine whether its AATD candidates have a future. The company has not yet started clinical trials.
Korro Bio has a market capitalization of about $335 million at recent prices, about half of which was cash raised from the new private placement. If AATD plans to be successful in its first clinical trial, this stock could be a dream come true. However, betting on success without existing clinical data to analyze is an extremely risky proposition.
rotation therapy
At the end of October, the company (formerly known as Catalyst Biosciences) took control of a commercial-stage pharmaceutical company in China.Company name changed rotation therapy (circulation -0.51%)Its shares soared 246% in November.
Gyre currently markets pirfenidone, a treatment for idiopathic pulmonary fibrosis (IDF), in China under the brand name Etuary.
The stock soared in November on positive news about a new anti-fibrotic drug candidate called Hydronidone. Gyre Therapeutics is developing Hydronidone in the United States and China for the treatment of metabolic dysfunction-associated steatohepatitis (MASH). Until a few months ago, this condition was known as nonalcoholic steatohepatitis (NASH).
MASH is a disease that threatens liver function in millions of Americans, and the U.S. Food and Drug Administration (FDA) has not approved any treatments to stop or slow its progression. If Hydronidone succeeds, it could boost Gyre’s recent market value of about $1.8 billion several times.
Following an encouraging Phase 2 proof-of-concept trial showing an encouraging reduction in liver fibrosis, Gyre has completed enrollment of patients with chronic hepatitis B into a Phase 3 trial in China. Before getting too excited, though, investors should know that the FDA is generally reluctant to approve drugs without successful Phase 3 trials that include mostly U.S. patients.
Success in Hydronidone’s ongoing Phase 3 trial in Hepatitis B patients in China would bode well for the success of its upcoming study in MASH patients in the U.S. and send the stock sharply higher. The company’s projected Phase 3 data in 2024 could send its shares soaring further.
With commercial sales and encouraging clinical data, Gyre Therapeutics is far less risky than Korro Bio. In other words, this stock is only suitable for investors with a high risk tolerance.
incanex healthcare
shares incanex healthcare (IXHL -34.54%) It surged 661% in November. Nearly all of the gains came immediately after the company moved from Australia to the United States at the end of the month.
The company is developing cannabinoids and psychedelic compounds for the treatment of obstructive sleep apnea, traumatic brain injury, a range of inflammatory diseases and a variety of neurological disorders.
Incannex Healthcare targets dozens of indications, with a global market size of more than $420 billion. All this activity would be great if it had the resources to pursue all these signs, but it doesn’t. In fact, Incannex still has no product revenue stream.
Incannex’s lead drug candidate, IHL-42X, is a combination of dronabinol, a synthetic form of THC, the psychoactive compound in marijuana, and acetazolamide, an ancient diuretic. The company is developing the combination to treat obstructive sleep apnea, with results from a Phase 2 trial in Australia showing significant improvement compared to placebo.
Incannex has not yet announced the start of clinical studies of IHL-42X in the United States. While the stock could soar further, it’s best to keep the stock on the watch list until it succeeds in a large Phase 3 study.