Biotech and pharmaceutical stocks have been some of our biggest winners. There are several reasons why this sector has done so well.
Every week, we read about new, innovative treatments for a myriad of health issues.
A major catalyst is the millions of retiring baby boomers that are not only exploring new ways to stave off signs of aging, they are looking to postpone health-related decline and even death.
In addition, we’re seeing countless mergers and acquisitions.
And if you’re in the right place at the right time, the windfall profits are there for the taking. Because -- let’s face it -- making money from this sector can be pretty easy. Especially if you uncover unfairly beaten down biotech stocks, as we did with Applied Genetic Technologies (AGTC).
Applied Genetic Technologies (AGTC)
The clinical-stage biotechnology company uses a proprietary gene therapy platform to develop transformational genetic therapies for patients suffering from rare and debilitating diseases. Its initial focus is in the field of ophthalmology, where it has active clinical trials in X-linked retinoschisis (XLRS), achromatopsia (ACHM CNGB3 & ACHM CNGA3) and X-linked retinitis pigmentosa (XLRP).
When we spotted the opportunity in March 2018, AGTC was trading at just $3.85 a share after pulling back from a high of $5.50. With a significant amount of cash ($120 million, or $6.60 per share) and several products in various stages of FDA trials, we knew we had a potential winner on our hands.
As it turns out, we were right
By late September 2018, the stock soared to $7.50 for a potential win of 95%.
Thanks in part to Wells Fargo.
The bank upgraded AGTC from Market Perform to Outperform, lifting the price target from $6 to $20 noting its strong pipeline and current valuation.
Wells Fargo also noted that AGTC’s competitor, Nightstar Therapeutics, released data from a Phase 1-2 study of its product candidate NSR-RPGR. Its data showed that multiple patients achieved an improvement in microperimetry, and those results validate AGTC’s Phase 1-2 trail with its partner, Biogen.
In addition, the bank indicated there was evidence of higher gene expression with AGTC’s product than with the Nightstar product.
Should AGTC be able to find further success with its product, we wouldn’t be shocked to see the stock double in the months to come. However, it has already produced a fantastic win of 95% in just a few months.
Over the years, The Cheap Investor has recommended numerous biotech stocks that have given our subscribers substantial profits. In fact, we recommended some great biotech stocks in the November and December issues.