After a brutal sell-off in the biotech sector, we found a great deal of severely undervalued names trading at extremely low prices. It’s why we recommended Rigel Pharmaceuticals (RIGL) at just $1.95 a share in the April 2016 issue of The Cheap Investor.
We liked this stock in particular because it was undervalued with a substantial cash position of $126 million. At its current burn rate, that cash should last the Company for several years. In addition, it also has licensing agreements and collaborations with several well- known pharmaceutical companies, revenues from collaborations and a much smaller loss than a year ago.
Shortly after our recommendation, analysts at JP Morgan reiterated its buy rating with a $5 price target, forcing the stock to a high of $3.20 for a potential gain of 64%.
The company also just reported second quarter revenue from contracts of $8.6 million, thanks to collaboration with Bristol Myers Squibb and BerGenBio AS. It also reported that expenses were $22.2 million in the second quarter, up from $19.2 million a year earlier. That increase is from higher costs associated with its clinical drug pipeline, including costs associated with fostamatinib – a therapy for the treatment of ITP, an immune-system disorder where a patients own immune system attacks blood platelets resulting in much lower platelet counts.
To date, Phase II results for the therapy have been encouraging. Results from the first two Phase III trials are expected this month. If successful, we could see a new drug application field as soon as the first quarter of 2017… and much higher stock prices. Stay tuned.