Dogecoin (CRYPTO:DOGE), in many ways, is at the epicenter of the cryptocurrency craze. Its price appreciated by a staggering 12,000% during just the first five months of 2021. The probability that this star of the cryptocurrency world will keep churning higher, however, appears to be slim at this point. In fact, Dogecoin’s price has fallen by more than 58% from its recent highs, implying that the rampant enthusiasm that drove the coin’s price through the roof earlier this year may be waning, perhaps for good.
So, with the crypto bubble on shaky ground, aggressive investors might be wise to consider alternative growth vehicles soon. The good news is that there are a handful of biotech penny stocks (equities with a sub-$5 share price) capable of delivering jaw-dropping returns for risk-tolerant investors. Adaptimmune Therapeutics (NASDAQ:ADAP) and Verastem (NASDAQ:VSTM), for instance, both have the ingredients necessary to go on a sustained growth spurt. Here’s a rundown of the core value propositions associated with these two small-cap biotech companies.
Adaptimmune: The cutting edge of cancer care
While adoptive T-cell therapies have transformed the treatment paradigm for several types of liquid tumors, their utility in the solid tumor setting has so far been underwhelming. Adaptimmune, a small-cap immuntherapy company, is hoping to reverse this unfortunate situation with its SPEAR (Specific Peptide Enhanced Affinity Receptor) platform.
Last month, the company took a major step toward achieving this lofty goal by releasing mid-stage trial data for its lead product candidate known as afamitresgene autoleucel, or afami-cel for short. The main headline from this top-line data release is that afami-cel reportedly shrank tumors in a respectable 41.4% of heavily pre-treated patients with synovial sarcoma, a relatively uncommon type of soft tissue cancer.
Armed with these encouraging preliminary data, and with more data on the way, Adaptimmune is gearing up for its first regulatory filing for afami-cel as a treatment for advanced synovial sarcoma in 2022. Meanwhile, the biotech also has plans to expand into several additional solid tumor types, such as liver, lung, and head and neck cancers.
Why is Adaptimmune an intriguing growth play? First and foremost, the company’s current market cap of $614 million pales in comparison to the value of its solid tumor pipeline as a whole. The market, in effect, is giving the company next to no chance at grabbing more than one minor indication within the next three years, despite these stellar top-line data in synovial sarcoma.
Secondly, the market is arguably undervaluing Adaptimmune’s prospects as a buyout candidate. Big pharma could become keenly interested in the biotech’s novel platform if afami-cel gets a green light from the Food and Drug Administration (FDA) next year.
Adaptimmune probably shouldn’t be in penny-stock territory based on the steady progress of its unique cancer pipeline. So while patience may be required with this unloved biotech stock, Adaptimmune clearly ticks several boxes prized by value and growth investors alike.
Verastem: A viable comeback story
Verastem is an unusual story in the world of biotech. Less than two years ago, the company was taking on water due to the poor commercial performance of its leukemia and lymphoma drug Copiktra.
So, with the drug failing to live up to expectations, Verastem’s management decided to expand the company’s pipeline by in-licensing the RAF/MEK inhibitor VS-6766 from Chugai Pharmaceutical for $3 million, plus royalties. Since then, the biotech has rolled on some impressive top-line data for VS-6766 as part of a combo therapy with the FAK inhibitor defactinib in patients with recurrent low-grade serous ovarian cancer.
What’s more, Verastem did the best possible thing with Copiktra by divesting its commercial rights to Secura Bio in late 2020, giving the company some much-needed financial flexibility. And in response to these smart strategic moves, the biotech’s shares have risen by a healthy 123% since the start of 2021, making it one of the best-performing healthcare equities so far this year.
Why is Verastem’s stock still an attractive growth vehicle even after this prolonged march higher? The simple reason is that company’s potent ovarian cancer combo appears to have a real shot at becoming a commercial-stage product. The FDA, after all, saw fit to grant the anti-cancer combo Breakthrough Therapy Designation (BTD) last month. Not all BTD drugs go on to gain FDA approval, but most of these drug candidates do eventually cross the finish line from a historical perspective.
The big picture is that Verastem may be harboring a blockbuster-level (greater than $1 billion in annual sales) cancer care product. If true, the biotech’s present market cap of $818 million will look like an incredible bargain in hindsight.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.