E Is OxiGene The Cheapest Biotech On The Nasdaq?

Cancer stocks in Phase 2 and 3 in general carry valuations up to a billion dollar because the potential of an effective and safe drug against cancer is gigantic. 

Major sell-off provides excellent entry point

In just a 2 week timespan, shares lost more than a quarter of its value. Why? The offering on the 20th of March was a factor, but the share price is now a good 20% lower than the offering price. I like buying stocks after a fierce sell-off. Panic selling are often provide great buying opportunities, because a good part of the selling is caused by actions that are not motivated by the underlying business. For example, stop-losses can be triggered, investors are hurt by sudden margin calls, or they simply freak out and start selling. Isn’t the catchphrase buy low, sell high? This time, the sell-off is so irrational, that shares are currently trading at net cash level! 

Risks

OxiGene is a biotech stock, and it’s no secret that biotech stocks are risky by nature. I can’t tell when exactly or even if their drug candidates will eventually be granted market approval by the FDA. Delays could occur, or the FDA could put a program on hold for whatever reason. A phase III trial is costly too, so OxiGene may need to partner up, or raise more capital to be able to finance the development. Also, they in license the technology from Arizona State University and Baylor University, so these agreements need to be continued (no reason at the moment to assume otherwise). Lastly, there could be some resistance >$1.70 because of the ample supply of directly exercisable warrants priced at $1.71.

Conclusion

OxiGene’s share price has entered such undervalued levels that the market now puts 0 value on its entire drug pipeline. This doesn’t make any sense whatsoever. OxiGene actually boasts a rich pipeline worth in the millions, and with multiple near-term catalysts lined up, the current risk vs. reward appears to be extremely compelling. With good news, shares will absolutely skyrocket, and with unfavorable news, the downside is very slim because the company trades at net cash, making OxiGene a super attractive asymmetrical trade. 

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Disclosure: Long OXGN. Please do your due diligence before investing.

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Comments

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Dick Kaplan 5 years ago Member's comment

$OXGN looks very promising, thanks.

Dan Jackson 5 years ago Member's comment

Excellent article, but "cheap" is a relative firm. Personally, I consider it to be fairly priced:

charts.stocktwits.com/.../original_34689474.jpg

Danny Straus 5 years ago Member's comment

I disagree, after reading the above this looks like a distinct opportunity.