Update-1… 11/9  Small Caps Outperform

CRIS $2.62, GERN $3.92, OCRX $3.41

Bio Investor Forum-A Runway for Emerging Biotech Companies

These are risky times for small cap biotech investments as you know the group took a big hit in July/August and are extremely volatile. Some of our smaller cap picks are still doing well YTD and if you expect a Q4 rally it would be a good time for adding a few speculative biopharma stocks. Here are the current Rayno focus stocks and performance YTD including the following small caps: Array Biopharma (ARRY) up 10.9%, Fibrocell Science (FCSC) up 59.8%, GlycoMimetics (GLYC) down 4%, and Ignyta (RXDX) up 49%. The XBI, a good indicator of speculative appetite, is up 6.2% YTD (NB it was up 40% YTD in July!).

Here are three interesting speculative biopharma stocks we found while attending the Bio Investor Forum (BIF#15). All have longer term potential, clinical pipelines, and are due for a bounce from current levels.

Curis, Inc. (CRIS), Price $1.98, Market Cap $256.6M, Cash and equivalents $99M

Curis is focused on drug discovery and development in oncology with a pipeline of small molecules : oral drugs targeting PD-L1/TIM-3 immune checkpoint inhibitors and IRAK4 kinase inhibitors. The Company added them to the pipeline through a licensing agreement with Aurigene for immune-modulating molecular targets. Clinical trials will begin in H1 2016. The Company has three other products in Phase 1 trials for lymphoma, multiple myeloma and solid tumors. The most advanced product is CUDC-107 an oral-small molecule inhibitor of HDAC and P13K currently being investigated in two clinical studies.

Erivedge is an oral small molecule designed to inhibit the Hedgehog signaling pathway and is on the market for basal cell carcinoma (BCC).The drug was developed under collaboration with Genentech/Roche. Curis received a $6.8M royalty on 2014 revenues of $136M.

Geron Corp. (GERN) Price $3.50, Market Cap $553M, Cash and equivalents $152M

Geron focuses on development of a telomerase inhibitor, imetelstat a short modified but potent oligonucleotide, for treatment of hematologic malignancies and has a collaboration and license agreement with Janssen Biotech to commercialize worldwide indications in oncology. The Janssen deal offers up-front money, cost sharing and royalties.Imetalstat has been shown in pre-clinical studies to exhibit preferential inhibition of clonal proliferation of malignant progenitor cells compared to normal cells. Four clinical trials are underway by Geron and Janssen for thrombocythemia, multiple myeloma and myelofibrosis (MF). One of the Janssen trials will assess the imetelstat drug in high risk MF patients whose disease has relapsed after or refractory to JAK inhibitor treatment. There will be clinical updates at the upcoming American Society of Hematology (ASH) Meeting in December.

Ocera Therapeutics,Inc. (OCRX) Price $3.42,Market Cap $68M, Cash and equivalents $47M

Ocera Therapeutics is focused on the treatment of hyperammonemia and hepatic encephalopathy (HE) in patients with liver cirrhosis, acute liver injury and acute liver failure with a $1.5B market.Their lead compound is OCR-002 in Phase 2b and data will be presented at the American Association for the Study of Liver Diseases (AASLD) in San Francisco, on November 13-17. OCR-002 is Ornithine Phenylacetate (OP) an ammonia scavenger which rapidly removes ammonia from the blood.

We will track news and events for these companies over the coming months.

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