Retail traders have dominated market headlines this year. Thanks to apps like Robinhood & Webull, smaller companies have gained momentum. But it isn’t just penny stocks on the docket right now. Certain sector trends have emerged. One of these is in biotechnology. Since the March 2020 sell-off, major industry ETFs like Nasdaq’s IBB (NASDAQ: IBB) and S&P’s XBI (NYSE: XBI) have surged.
Earlier this year, both reached fresh all-time highs. Even in light of the market’s recent volatility, they remain at levels between 70-100% higher compared to last March. You’ve also got ETFs like the Russell 2000 Small-Cap ETF (NYSE: IWM), heavily weighted in health care industry names, surging over the last year.
According to the ETF’s Q1, 2021 Fact Sheet, nearly 20% of its holdings are in health care stocks. Does this mean that small-cap biotech stocks are the center of attention right now? I’ll let you draw your own conclusions. However, considering the strength in broader benchmark ETFs, it might not hurt to take a closer look.Click to enlargeBiotech Stocks To Watch Right Now
When it comes to penny stocks or even small-cap stocks, volatility can play a big role. Then if you factor in the general nature of biotech stocks, it can add another layer of excitement. But as they say, no guts, no glory. Investing in companies like Novavax (NASDAQ: NVAX) or Cassava Sciences (NASDAQ: SAVA) last year would show you exactly why penny stocks have so much potential.
Both were trading below $5 a share in 2020. This year, NVAX stock peaked at $331.68, and SAVA hit a high of $117.54. Does this mean that all penny stocks are going to 10x or better? Absolutely not. But when you find hot sectors and companies able to execute their operational strategies, great things can happen. What’s more, you’ve also got companies like Fate Therapeutics (NASDAQ: FATE), which wasn’t a penny stock but one trading around $16 last year. This year, the cancer stock hit a high of $121.16
This leads me to the focus of the article today. Not only is it biotechnology but oncology treatment stocks (aka “cancer stocks“) in particular, gaining interest. Now, I’m not going to focus on chemotherapies in this article. I’m going to look at more targeted, novel treatments that could have a shot at being an “off-the-shelf” option for those with certain cancer types.What Does “Off The Shelf” Actually Mean?
When we talk about off-the-shelf immunotherapies, we aren’t talking about something you go into a pharmacy and buy. The term references therapeutics that don’t need to be manufactured specifically for each patient individually. These are genetically engineered healthy cells manufactured from normal, healthy donors.
One treatment type helping set a new standard is chimeric antigen receptor (CAR) T-cell therapy (CAR-T). While early progress has shown promise, CAR-T can be expensive and not necessarily an “off-the-shelf” option. CAR-T therapies need a match from a specific donor to a specific patient. CRISPR technology is also used in developing CAR-T cells. But this too can pose higher expenses and issues with timing. CRISPR gene editing includes additional manufacturing steps, which also causes prices to rise.NK Cell Therapy & A New Generation Of Cancer Treatment
In comparison to CAR-T, NK or “natural killer” cell therapies offer several advantages. Since this type of treatment inherently involves allogeneic cell lines, NK cells can be created to trigger adverse immune responses in patients. This would be something like cytokine release syndrome or the cytokine “storm,” which has actually lead to trial stoppages and patient deaths in CAR-T studies.
NK cells can “identify” cancer cells on their own as well as if they’re paired with CARs. They can also allow each dose to have a more durable response and the ability to receive multiple doses. Aside from combining NK with CARs, this type of cancer treatment has also shown to boost success rates of other monotherapies that, when combined, produce a 1-2 punch for patients.Are Small-Cap Companies Jumping Ahead Of Large-Caps In Treatment Development?
Fate Therapeutics mentioned above, for example, develops targeted treatments. Its FT538 is the company’s monotherapy targeting several cancer types. It’s currently in a Phase 1 study for relapsed / refractory acute myeloid leukemia. As a standalone, it has shown mixed responses in its current 3-person study. Only 2 patients were evaluable, and of those 2, 1 achieved an “objective” response with leukemic blast clearance in bone marrow. In other cancers like prostate cancer, FT538 showed a modest response in treating tumor cells. However, it wasn’t able to completely eradicate them:Click to enlarge
But, as you’ll see, when FT538 was combined with another treatment, B7H3TriKE, the tumor cells appear to have disappeared within 72 hours of treatment. In data published last November at the Society for Immunotherapy of Cancer, researchers stated that “the combination of B7H3 TriKE with an off-the-shelf NK cell therapy presents an appealing therapeutic strategy for the treatment of solid tumors with decreased risk of toxicity in allogeneic settings compared to T-cell derived products.”
B7H3TriKE is a treatment being developed by another novel immunotherapy company, GT Biopharma Inc. (NASDAQ: GTBP). While Fate is an $8 billion+ company with an $86 stock price tag, its treatment showed high-performance when paired with GT Biopharma’s platform; a company currently valued at $302 million, trading under $20 right now.TriKE Treatment Sheds New Light On NK Cell Treatments
While stock price and valuations aren’t the focus of this article, it is important to see how small-cap companies are developing novel treatments that have actually enhanced those of larger companies. In GT Biopharma’s case, B7H3TriKE is just one treatment in the company’s pipeline. Its immunotherapies are based on this TriKE™ or “tri-specific” recombinant protein biologic. TriKE is made up of an NK cell engaging domain targeting CD16 on the NK cell, an NK cell activating domain consisting of Interleukin IL-15, and a cancer cell targeting domain.
According to the company, the NK cell-stimulating cytokine human IL-15 portion of the molecule offers a “self-sustaining” signal. This activates a patient’s own, exhausted/inhibited NK cells and enhances their ability to kill and proliferate without a need for additional engineered NK cells.
Not only has TriKE shown promise in combination with other drugs like Fate’s FT538, but it has also demonstrated efficacy as a standalone monotherapy. For example, like Fate, GT has a clinical-stage treatment candidate for acute myeloid leukemia, GTB-3550. Compared to Fate’s Phase 1, GT’s Phase 1/2 trials have enrolled more than triple the number of patients.More Data To Digest
Additionally, interim data from the Phase 1 portion of the trial show that GTB-3550 was well tolerated by all patients without any cytokine storm observed. There was also up to a 63.7% reduction in bone marrow blast levels in some patients.
“We have now completed treatment of eleven patients. In addition to strong safety results, we have seen significant reductions in CD33+ cancer cells in four of the last seven patients (57%) treated with doses of GTB-3550 ranging from 25mcg/kg/day to 150mcg/kg/day. This early sign of CD33+ target-specific cancer cell killing is very encouraging as we begin to focus on transitioning to the expanded efficacy part of the current GTB-3550 clinical trial.”Anthony Cataldo, GT Biopharma’s Chairman and Chief Executive Officer
Furthermore, this week GT Biopharma inked a deal for a sponsored research agreement. This was with its Consulting Chief Scientific Officer & the Director of the University of Minnesota’s Masonic Cancer Center, Jeffrey S. Miller, M.D. The agreement focuses on supporting the continued clinical development of the company’s TriKE candidates.Are Small-Cap Biotech Stocks On Your List Right Now?
The industry is full of opportunities. Thanks to plenty of unmet needs in several diseases, there are plenty of treatment candidates for companies to develop. Companies like Cassava and Novavax have obviously demonstrated the potential for things like small-cap stocks to evolve into market-leading companies.
You’ve also got others like Fate, which have grown from small-cap status to a multi-billion dollar valuation in less than 18 months. With new developments from companies like GT Biopharma showing early potential in clinical trials, the market remains focused on finding “early-stage” companies to follow. Now that biotech has begun to bounce back a bit, will this sector be on your watch list in Q3?
Pursuant to an agreement between Midam Ventures LLC and GT Biopharma (GTBP) Midam has been paid $150,000 for a period from March 1, 2021, to April 1, 2021. This compensation is payment 1 of 12 as part of a 12-month agreement between Midam Ventures LLC & GT Biopharma (GTBP), for a period from March 1, 2021, to February 28, 2022. Midam Ventures LLC expects to be paid $150,000 per month for a total of 12 months by GT Biopharma (GTBP). Midam has been paid an additional $150,000 for a period from April 2, 2021, to May 1, 2021. This compensation is payment 2 of 12 as part of the Agreement. Midam has been paid an additional $150,000 for a period from May 2, 2021, to June 1, 2021. This compensation is payment 3 of 12 as part of the Agreement. Midam has been paid an additional $150,000 for a period from June 2, 2021, to July 1, 2021. This compensation is payment 4 of 12 as part of the Agreement. Midam has been paid an additional $200,000 for a period from July 2, 2021, to August 2, 2021. This compensation is payment 5 of 12 as part of the Agreement. We may buy or sell additional shares of GT Biopharma (GTBP) in the open market at any time, including before, during, or after the Website and Information, to provide public dissemination of favorable Information about GT Biopharma (GTBP). Click Here For Full Disclaimer.