Our Best Small Cap Biotech Picks For The Rest Of This Year

Submitted by Scott Matusow as part of our contributors program.

Our Best Small Cap Biotech Picks For The Rest Of This Year

At stockmatusow, we have compiled 5 of our best end of year, and long term small cap developmental biopharma companies we feel have an excellent chance to be longterm “multibaggers.” By multibaggers, we mean that we feel these stocks can bring back 3 to 10 times return of investment over time. However, because these companies are in the developmental stages, greater risk comes into play, but as the old adage goes, “higher risk, higher reward”

Sarepta (SRPT)

Sarepta focuses on the discovery and development of RNA-based therapeutics for the treatment of rare and infectious diseases. Its lead product candidate is eteplirsen, an antisense PMO-based therapeutic, which is in Phase IIb clinical development for the treatment of individuals with Duchenne muscular dystrophy (DMD).

DMD is a very rare disease that affects 1 in 3,600 boys — a potential cure for any form of MD would be on par with Jonas Salk’s discovery of the Polio vaccine in my strong opinion. DMD is classified as a recessive X-linked form of muscular dystrophy, and the disorder is caused by a mutation in the dystrophin gene.

Dystrophin is a rod-shaped cytoplasmic protein, and a vital part of a protein complex that connects the cytoskeleton of a muscle fiber to the surrounding extracellular matrix through the cell membrane. This complex is variously known as the costamere or the dystrophin-associated protein complex. Many muscle proteins, such as ?-dystrobrevin, syncoilin, synemin, sarcoglycan, dystroglycan, and sarcospan, colocalize with dystrophin at the costamere.

Dystrophin deficiency has been definitively established as one of the root causes of the general class of myopathies collectively referred to as muscular dystrophy. The large cytosolic protein was first identified in 1987 by Louis M. Kunkel, after the 1986 discovery of the mutated gene that causes Duchenne muscular dystrophy .

Some analysts have put a $50 price target (which is too low in our opinion) on Sarepta, and on potential approval next year,it’s my opinion the stock will surpass $75, at least temporarily, so traders and investors might consider selling any large gap, as it’s likely the stock will likely settle back down to the mid to low $50 range. Remember, should the FDA approval, a lot of investors and traders will be realizing massive profit, and are likely to take that profit. In turn, I would expect short sellers to take advantage of this and sell the gap as well.

The company plans to meet with the FDA soon to discuss the path forward to an NDA filing for eteplirsen, which is likely by January of 2014. However, it’s possible an NDA filing could come earlier, based on the 96 week data.

Sarepta is a very volatile stock, so it might be a good idea to consider hedging any long position by considering buying puts.

Halozyme (HALO) engages in the research, development, and commercialization of human enzymes. Its research focuses on human enzymes that transiently modify tissue under the skin to facilitate the delivery of injected drugs and fluids, or to alter abnormal tissue structures for clinical benefit. The company