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Weekend Summary: 2 Small Biotech Stocks To Buy Before September 11 comments

"By perseverance the snail reached the ark" - Charles Spurgeon

It was a tough week for biotech investors as drug price "gouging" again popped up on the political radar before the upcoming election. The ensuring sell-off in the sector left a couple of small biotech stocks with upcoming catalysts providing a solid entry point before approaching near term catalysts.

One of the things I have leveraged successfully in over two decades of investing in the biotech sector is being aware of key trial milestone and approval dates before entering a position in a developmental concern in this lucrative but volatile part of the market. An attractive small cap stock oftens starts running up before and into these dates. If results are positive at these key dates, obviously the shares could have significant further upside but one would be surprised how many of these gains occur in the weeks leading up to these types of events. Here are two small cap biotechs I like here with approaching catalysts.

(click to enlarge)

Novavax, Inc. (NASDAQ:NVAX) is a clinical-stage small vaccine maker which focuses on recombinant nanoparticle vaccines and adjuvants. The company produces its vaccines using its proprietary recombinant nanoparticle vaccine technology and has several near term market catalysts on the horizon. The company currently sports a market capitalization of approximately $2 billion and trades around $7.20 a share.

The company has myriad intriguing pipeline products but its keys near term catalyst is its RSV vaccine that is in a critical Phase III trial at the moment.

RSV F Vaccine (Respiratory Syncytial Virus Fusion Protein Vaccine)

What it Does: It is a novel vaccine developed using recombinant nanoparticle technology to target the fusion protein, or F-protein, of the RSV virus.

Key Differentiator(s):

· RSV is a very common illness having potentially very serious impacts (including death) on the very young and the very old.

· EFFICACY: It is the First and ONLY candidate to demonstrate protection from RSV in any population, breakthrough efficacy in older adults, breakthrough proof-of-principle in maternal immunization.

Phase / Status:

· Key Phase III readout is expected very soon (Sometime in September, probably towards back half of month) having been fast tracked for older adults. Assuming positive data, the company will file a BLA early in 2017.

· Top-line Phase II clinical trial results were positive, indicating the candidate is safe, well-tolerated and effective at protecting infants when they are most at risk, via maternal immunization. A Phase III trial is now underway in the United States, South America, Africa and Australia, and is now being expanded into Mexico, Europe and Asia in alignment with intentions of an $89 million grant from the Bill & Melinda Gates Foundation. Preliminary results are now expected in 2018.

· A phase 1 clinical trial underway for pediatric use (6 mos-5 years).

· A phase 2 clinical trial being planned to assess the addition of a booster for older adults.

Expected Market: The company estimates worldwide RSV F Vaccine revenue opportunity at $6-8 billion per year. Initially, Novavax is some 100 million individuals for RSV immunization in the U.S. Market including pregnancies > 27 weeks, infants & toddlers, high risk patients between 50-59 years old, and all adults over 60. The price range of existing comparable vaccines is $30-$75.

Other Considerations:

· This important vaccine was awarded a grant from the Bill and Melinda Gates Foundation for up to $89 million of development support with the goal of protecting infants via affordable maternal immunization in the developing world.

· Has the potential to be useful for other emerging viruses such as Ebola and H7N9.

Balance Sheet & Analyst Commentary:

The financial results for the quarter ended June 30th, 2016...


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