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Ignyta Is Proof That Biotech Bargains Still Exist

Summary

Trading near its all-time low Ignyta has an advanced pipeline, hoard of cash, best-in-class drug Entrectinib entering registrational clinical trial and a high probability of partnering.

Entrectinib highly differentiated from LOXO-101 but company valued at 2.5 times below LOXO market cap.

The average analyst 12 month price target is ~$17 representing close to 300% upside.

With the biotech sector becoming red hot again it can be hard for investors to find stocks with significant upside. I try to identify companies that are undervalued, have an advanced pipeline, and are prime candidates to get acquired or establish lucrative partnerships. For example, over a year ago I detailed why Medivation (NASDAQ:MDVN) would be acquired in the short term. There has never been a company with a billion dollar a year drug that has not been acquired or become a huge company. Last week it was announced that Pfizer will be purchasing the company for $14 billion, about 100% upside from when I urged investors to first buy the stock. Likewise, I am one of the only writers who follows MEI Pharma (NASDAQ:MEIP) and have written numerous times illustrating why their lead drug Pracinostat for elderly AML was a likely takeover candidate. On August 8th it was announced that MEI Pharma had signed a deal worth a potential $444 million with Helsinn for the rights to Pracinostat, shooting the stock up nearly 100% from its lows. I predicted the same way before Johnson & Johnson (NYSE:JNJ) inked the $935 million deal for Geron's (NASDAQ:GERN) Imetelstat. I'm constantly searching for beaten down or ignored biotech stocks with a good probability to partner as this means big time profits with minimal risk. Although I currently like TG Therapeutics (NASDAQ:TGTX) from a value standpoint, in my opinion there is not a better deal on the market right now than lightly traded Ignyta (NASDAQ:RXDX). Not only is the company focused on personalized cancer medicine, one of the hottest areas in biotech, but it has an advanced pipeline, a hoard of cash and several big pharma partial owners. The current market cap of the company is only $235 million, with over $170 million of that in cash. Their lead drug, Entrectinib, is currently enrolling a registrational phase 2 study and to date has delivered impressive responses...


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