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2 Small Biotech Stocks Poised To Break Out!

Summary

Sentiment on the biotech sector has improved markedly in recent weeks and the sector is up some 15% above its lows in February.

Small biotech names have started to move up again both as a "risk on" mood returns to the sector and as speculation around M&A targets picks up.

This has led to some massive gains in some of the small cap stocks in the Biotech Forum portfolio. Here are two $5 biotech stocks that could have substantial upside.

The biotech sector has gone from "worst to first" recently. After enduring the longest and deepest bear market since the financial crisis, biotechs have bounced some 15% off their lows in February. That rebound has accelerated during the first two weeks of April. The sector is one of the best performing in the market so far in the second quarter after being the worst in the fourth quarter of 2015 and through most of the opening quarter of this year.

Sentiment has started to shift into "risk on" mode once again across the small caps in the sector. In addition, this sub-sector has been bolstered by increasing speculation around buyouts now that the Treasury Department has derailed the mega-merger between Allergan (NYSE:AGN) and Pfizer (NYSE:PFE). Some recent favorable Ad Comm decisions have triggered some major rallies in selected names as well.

Some of the recent rises in some of the 15 small cap positions within the Biotech Forum portfolio has been nothing short of spectacular. Here are just a few that have jumped recently.

Relypsa (NASDAQ:RLYP) jumped over 65% last Thursday on multiple reports from Reuters and others; the small biopharma has hired an investment bank and is fielding offers. I just provided my take on what this could mean for the stock.

Next, we have Acadia Pharmaceuticals (NASDAQ:ACAD), which has rocketed after an Ad Comm panel voted 12-2 to recommend its drug Nuplazid to the FDA for approval. The drug would be the first compound approved to treat psychosis in patients with Parkinson's Disease. This is potentially a huge market and the drug has a multibillion-dollar potential as it also is being studied for other indications. Its PDUFA with the FDA is May 1st. If approved, which is likely, the stock could rally further depending on what if any label requirements the FDA requires with approval.

Finally, we have small cap Argos Therapeutics (NASDAQ:ARGS), which as the chart attests, is one of the best-performing stocks so far in 2016. The equity was deeply...


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