2 Hot Biotechs Set To Deliver Paydays To Investors In 2015

It has been a tough start to the New Year for investors. The major indexes lost between two and four percent in January. The energy sector continues to be a pariah as crude struggles to find a floor. Financials have been hit due to falling interest rates and disappointing quarterly results from the major banks. American multinationals have seen the strong dollar start to significantly impact the earnings they get from overseas. Consensus earnings estimates for the S&P 500 for 2015 have moved down some 10% over the past nine months.

Defensive sectors like Utilities and Consumer Staples have held up well as the market has shifted into a defensive mode and shunned the high beta or “risk on” parts of the market. The one exception to this is the biotech space. iShares Nasdaq Biotechnology ETF (NYSE:  IBBactually posted a nice gain for the opening month of the year powered by standout results from the likes of large cap juggernauts like Celgene (NASDAQ: CELG) and Biogen Idec (NASDAQ: BIIB).

This makes sense as this sector is seeing growth estimates hold up and is not impacted by falling oil and has less foreign currency exposure than the likes of IBM Corporation (NYSE: IBM) or Google (NASDAQ: GOOGL). Small cap biotech stocks have also been holding up well despite being in a notoriously volatile sector. This sector has powered a good portion of the gains in the Small Cap Gems portfolio in recent months. It also has contributed several standout performers within articles I have done recently here with Investors Alley. This includes Ziopharm Oncology (NASDAQ: ZIOP) which has doubled since being profiled seven weeks ago (see article here).

Hoping to duplicate that success, let’s talk about a couple of small cap biotech stocks that have some lucrative potential positive catalysts ahead of them in 2015.

20150202enta

Let’s start with Enanta Pharmaceuticals (NASDAQ: ENTA) which has a market capitalization just south of $1 billion at the current time. The company is focused on creating small molecule drugs in the infectious disease field. They currently are developing novel inhibitors designed for use against the hepatitis C virus. Hepatitis C has been in the news a lot over the past year thanks to the blockbuster success of Sovaldi/Harvoni from biotech juggernaut Gilead Sciences (NASDAQ: GILD) which happens to be the biggest position in my own portfolio at the present moment and is a core selection within the Blue Chip Gems portfolio as well.

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Bret Jensen 6 years ago Author's comment

Sold AVNR at buyout price of $17. Still hold the rocket know as ZIOP but have sold some $10 calls against part of position given lucrative premium and huge run. Still hold SGYP

Paul McGee 6 years ago Member's comment

One the best overviews of $ENTA I've seen... specially interested in the super bug research which will produce "new news".

Bret Jensen 6 years ago Author's comment

Thanks. It is an interesting stock that is starting to get some notice.

Marcy Brown 6 years ago Member's comment

Would you suggest IBB for an individual investor rather than a basket of smallcaps?

Bret Jensen 6 years ago Author's comment

Depends on your risk tolerance, certainly not a bad way to go. I usually have 50% to 75% of biotech/biopharma in three or four large caps with visible earnings growth. The rest is in 12 to 15 much more speculative small caps looking for the home runs (AVNR, NVAX, LCI,TTPH, ZLTQ) that I have nailed over the past couple of years....which balances out the frequent strike outs that are a part of investing in this volatile space. Happy Hunting.

Carol W 6 years ago Contributor's comment

are you still long ZIOP SGYP and IRWD? and is AVNRfully valued here? I see a $17 price target..are you still long? great article..I am following you now..cheers Carol

Bret Jensen 6 years ago Author's comment

I believe you posted this question and I answered on seekingalpha, correct me if I am wrong. Thanks for following and Happy Hunting.

Carol W 6 years ago Contributor's comment

yes, thanks..what is your take on ENTA and the news today?

Mike Nolan 6 years ago Member's comment

Would you mind reposting the answer for those of us not on Seeking Alpha or at least post the direct link to your answer? Thanks!