Why Billionaire Phillip Frost’s Bet On PROLOR Biotech Is Lucrative

While many investors flock to traditionally defensive companies, like Coca Cola (NYSE:KO) and GE (NYSE:GE), amidst macro headwinds, some of the best risk/reward can be found in biotechnology. From inelastic demand to innovation and growth potential, this industry provides a lucrative hedge against domestic stagnation. Here is one for investors interested in following Forbes’ Billionaires:

PROLOR Biotech (PBTH) is an Israeli emerging healthcare company that uses low-risk CTP technology to develop new forms of previously approved therapeutics. This business model provides for a safe investment due to less expensive and shorter clinical trials. A major catalyst for the firm is hGH-CTP, which will be the first FDA-approved long-acting hGH product. It has already had strong Phase II results that indicated patients could receive just weekly injections to return IGF-1 levels within normal range. By contrast, commercial hGH requires daily injections.

Considering that Marcadia Biotech was acquired for an implied value of $537M due to its diabetes drugs, PROLOR appears significantly undervalued as it has a similar product, MOD-6030, plus hGH-CTP and other catalysts in hemophilia (Factor VIIa-CTP, Factor IX-CTP) and multiple sclerosis (IFN-Beta-CTP). Fortunately, the firm also has strong IP protection that makes it particularly attractive as a takeover target to larger biotech firms with weak pipelines, like Merck & Co. (MRK) and Pfizer (PFE).

Furthermore, unlike many emerging biotech companies, PROLOR is strong financially with a net cash position of $17.6M. As the Chairman is a billionaire who has made his fortune in healthcare, odds are against the firm running into any meaningful liquidity problem. Moreover, there is enough cash to last past 2012, which will likely be an inflection point for the firm when Phase III trials begin for hGH-CTP.

Disclosure: I may initiate a long position in PBTH within the next 72 hours. | http://www.prolor-biotech.com/

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