Pharmaceutical researchers are now working on 861 medicines for cancer. Many are are in development involving innovative research on using existing medicines in new ways with many clinical trials proceeding. The medicines in development—all in either clinical trials or under FDA review including: 122 for lung cancer, the leading cause of cancer death in the United States:
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Covidien, plc, a Dublin, Ireland medical device and pharmaceutical maker but with its U.S. headquarters in Mansfield, Mass. announced an agreement to acquire Aspect Medical Systems (ASPM) of Norwood, Mass. Read more…
All agree that small-cap healthcare companies – if they are to survive – need access to capital. Referencing previous financing and structures posts: these events could be a sign of a broader market recovery as I-Banks ramp-up their capacity and capability in restructuring, advisory and underwriting. Large and small investment banks such as: Wells Fargo, Bank of America Merrill Lynch, Centerview Partners, Jefferies & Company, Morgan Joseph, Thomas Weisel Partners and Leerink Swann have hired bankers amid expectations of financing activity.
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I keep reiterating, research coverage is still the starting point of an investment decision. It’s extremely time consuming for the buy-side, individual investors and retail brokers to research small-cap stocks that trade under $1-2.00; there are just too many risk factors associated with “penny-stocks”! There is a recovery – but, CEOs need to better focus their VISIBILITY. As the market rebounds uncovered companies are subject to depreciated attraction for financing when compared with their analyst covered peers.
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Another financing vehicle is being utilized by small-cap healthcare companies: the Standby Equity Distribution Agreement (SEDA). This relatively new “mechanism” is another … alternative to the traditional PIPE, Registered Direct Offering (RDO) or secondary offering to assist small publicly-traded companies raise additional capital by selling new stock without making a formal market offering.
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In today’s capital markets; this old but new (usage) capital-raising rage has many small-cap healthcare companies filling their coffers after finding that public equity (PIPE) offerings are limiting due to their “current” stock price circumstance. Registered Direct securities offerings (RDOs) raise capital from investors groups. The issue has been avoiding the depreciating pricing that usually accompanies a PIPE offering provideing investors with registered stock that is immediately tradable and liquid.
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The stock market and overall economy are still depreciated; but, this sector is holding up better as there are signs that drug companies and biotechs seem to be recession resistant. Regulatory constraints are still the event driver (with about 23 major decisions due in the next few months) of this sector as many biotechs are still struggling to stay alive. One important factor is increasing merger activity; another reason to like healthcare smaller cap stocks as larger drug firms “should” be looking to acquire biotechs to augment their pipelines and diminishing patent protection.
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I get calls and e-mails re where to begin, whether one should invest, what should be bought and I state investing in this sector has a high degree of risk. Understand the sector by reading and garnering/surfing the web re the industry could lead you to individual companies. The biotech sector can be volatile day-to-day but can be expected to show the best returns over the next few years.
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In my 7/16/09 blog, I wrote described company “x” in “How does one anticipate the pitfalls of sustainability” as I was left scratching my head about yet another biotechnology Chapter 11 bankruptcy or should I have been? I hate to dwell upon negativity but, I had thought they might emerge a smaller but less encumbered company. Dash that thought
