Investing in biotech stocks is not for the meek. Losses can be very large and occur very quickly. In fact, I’ve uncovered seven of the top biotech stocks to sell as we get into the final months of the year. Some of the top ones include:
Biotech Stocks to Sell: HOOKIPA Pharma (HOOK)
HOOKIPA Pharma (NASDAQ:HOOK) is developing a novel platform for therapies aimed at commercializing immunotherapeutics for cancer. After all, such therapies can stimulate an immune response, and help find and attack cancer cells. If HOOKIPA Pharma commercializes such therapeutics, it stands to do very well. However, to achieve its goal, it will burn through a lot of cash in the process.
That isn’t to say that the company is facing a liquidity crisis at the moment. In fact, there doesn’t appear to be an emergent liquidity crisis at all. Instead, HOOKIPA Pharma has enough money to continue to stay afloat for at least a year and a half. However, if you look at its pipeline it’s pretty clear that the company doesn’t have any obvious commercialization prospects within that timeframe. Thus, it could very possibly continue to bleed cash and simply never commercialize.
Amyris (OTCMKTS:AMRSQ) undertook voluntary Chapter 11 restructuring in early August, which tanked the stock. From here, It’s difficult to see how the restructuring could plausibly lead to a better business moving forward. Thus, investors should stay away even as low prices make it increasingly tempting.
The company is selling off its brands and intends to refocus on all of the business process competencies it has built experience in. That means the company will sell its sustainable synthetic ingredients businesses and start over in an effort to build the same business again. It begs the obvious question of why investors should believe in it this time. Fool me once, shame on you, fool me twice, shame on me.
Amyris’ business idea certainly had and continues to have merit. The company produces synthetic versions of natural ingredients like squalene that result in animal deaths. Most investors would be interested in contributing to businesses that achieve that goal assuming the products are equivalent. It’s a noble goal but it clearly hasn’t resulted in a fiscally sustainable business model.
Biotech Stocks to Sell: Novavax (NVAX)
Novavax (NASDAQ:NVAX) is another one of the top biotech stocks to sell. The company was the fourth to receive US FDA approval to market its Covid-19 vaccine. And many investors saw the victory as being too little, too late. The company’s losses served to bolster that notion. However, Novavax staged something of a turnaround in Q2, posting profits.
As positive as that seems, Novavax continues to head downward overall. There is perhaps no more convincing piece of evidence for that assertion than a continued sales decline. Novavax is expected to experience declining sales throughout 2024. In other words, the net income the firm showed in Q2 is arguably a false flag.
The company is expected by most analysts to see shrinking revenues in 2024. Novavax is expected to produce $1.36 billion in sales in 2023. That number is expected to fall to $1.29 billion next year. It’s also highly variable with a range between $756 million to $2.4 billion. It could explode upward or implode dramatically. Given the high short interest in the shares currently, I’d bet on the latter occurring.
Seelos Therapeutics (SEEL)
Seelos Therapeutics (NASDAQ:SEEL) should also be avoided. At the moment, Its research touches on interesting pressing unmet needs like Amyotrophic Lateral Sclerosis (ALS) and the use of ketamine for mental health issues. Those issues are gaining traction which in turn attracts investors. However, Seelos Therapeutics as a business has done very little to substantiate it as an investment.
Sure, it’s an interesting idea but has very unattractive results. Nothing better substantiates than the fact that as of June 30, the company had $5.8 million in cash and an accumulated deficit of $257.7 million. It is a going concern and the same 10-Q notes that the company may never reach profitability and expects to continue to incur significant losses.
Losses increased in the most recent 6-month period. The company issues stock and warrants to fund increasingly larger losses. Thus, holders of that stock and those warrants are continually subsidizing a company headed in the wrong direction.
Invivyd (NASDAQ:IVVD) is a small biotech firm developing coronavirus therapeutics. And it should be avoided. The company has unsuccessfully attempted to leverage the pandemic to propel its business.
The firm rebranded back in 2020 from its former name, Adagio Therapeutics. At that time, optimism surrounding its lead candidate drug adintrevimab was waning. Its CEO left, and the company hasn’t done much in the interim. It is closer to commercializing adintrevimab for Covid-19 but it’s simply too late. The potential revenues from that application aren’t what they used to be. Firms including Invivyd that attempted to make it big off the pandemic continue to fall off.
The company has a cash runway through Q4 2024 but that should provide little consolation for investors. Invivyd is chasing emergency use authorization (EUA) as 2024 nears. The pandemic is officially over and very few people are concerned about the health threat now. The economic effects matter but that isn’t what Invivyd is addressing.
The last time I wrote about Zomedica (NYSEAMERICAN:ZOM) was prior to the commercialization of its TRUFORMA diagnostic platform in veterinary medicine. The platform provides quick on-site testing for thyroid and adrenal issues for use in cats and dogs. Its benefit is that such testing is generally required to be sent to off-site labs for analysis. This can result in errors being introduced and time lost. Truforma solves those issues. However, it hasn’t managed to achieve much commercial success as adoption simply hasn’t materialized. Zomedica’s opportunity was in commercializing TRUFORMA and that doesn’t look likely to happen.
Moderna (NASDAQ:MRNA) was one of the pandemic winners. It was one of the big COVID-19 firms to initially commercialize a vaccine. That propelled it from a relative unknown to a stock worth nearly $500. Now, it’s sliding back the other way and should be avoided.
The company produced $36 billion in revenues over the last two years. It’s on track to post about $7 billion this year and $6 billion next year. Although it has a deep pipeline of drugs based on mRNA therapy, it’s basically only COVID-19 revenues that prop it up. I don’t need to beat a dead horse in regard to that shrinking opportunity or explain why that is. The company is now losing a lot of money. It reported a $1.38 billion loss in Q2. Pandemic profits are dying and so is Moderna.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.