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Biotech stocks are not for everyone, let’s make that perfectly clear. It’s challenging to invest in a field in which companies – particularly startups – can go for years without seeing a penny of revenue.
While there are several outstanding companies from which to choose, the field is also littered with biotech stocks to sell before you get in too much trouble.
Biotech stocks represent companies that are in the medical field. They develop and commercialize new medical treatments, drugs, and technologies, working in the fields of gene therapy, personalized medicine and biologics.
The challenge in this sector is that it takes a long time to bring a new drug or therapy to market.
Even after the drug or therapy is discovered and developed in a laboratory setting, biotech companies must undergo preclinical research and a series of clinical trials. All these trials must be successful to go to the next step in the process.
Clinical trials can often be expensive and time-consuming. And if the drug or therapy passes all of that, it still needs to get approval from the Food and Drug Administration (and regulators in other countries) before it can be brought to market.
Well-established biotech companies that have a history of success can better withstand these issues if they’ve previously brought drugs to market and are bringing in revenue.
But for a new company that doesn’t have a revenue stream, clinical trials can try the patience of any investor – particularly as a company goes deeper into debt.
The biotech stocks we’re looking at today all have good ideas, but the hurdles they have to clear to turn the corner are extremely high.
If you’re going to invest in the biotech sector, you should consider avoiding these names – and if you’re an investor, you should take this opportunity to recognize biotech stocks to sell now.
Ginkgo Bioworks (DNA)
Ginkgo Bioworks (NYSE:DNA) is a Boston-based company that uses genetic engineering to produce bacteria with industrial applications for other biotech companies.
The company specializes in cell programming and biosecurity. It’s working with Dutch biotech company Novo Nordisk (NYSE:NVO) on several research and development projects over the next five years, including diabetes and obesity medications.
Ginkgo also announced a collaboration with agricultural company Syngenta to develop and optimize a microbial strain for a secondary metabolite in Syngenta’s pipeline.
As promising as these sound, the reality doesn’t match up. DNA stock is down 82% this year and the company has just been trying to maintain its New York Stock Exchange listing compliance.
The company also instituted deep staff cuts, laying off at least 35% of its 1,200-member workforce.
Revenue in the first quarter was $38 million, down from $81 million in the first quarter of 2023. Overall, the company reported a loss of $178 million for the quarter.
DNA stock gets an “F” rating in the Portfolio Grader.
Tonix Pharmaceuticals (TNXP)
Tonix Pharmaceuticals (NASDAQ:TXNP) is making drugs and therapies to treat central nervous system disorders. But like many other biotech companies, it’s paying the bills is a challenge.
Tonix hasn’t yet brought a drug to market. It does have a candidate in Phase 3 testing as a treatment for fibromyalgia. The company is hoping for FDA approval for its drug, Tonmya, in the second half 2025.
Tonix also has a therapy in Phase 2 trials that would treat long Covid-19 symptoms, but Tonmya is much closer to becoming a reality.
That’s why the company’s trying to raise money. It had two separate $4 million public offerings in June that will help, but also served to dilute investor equity. It also completed a 1-for-32 reverse stock split to regain Nasdaq listing compliance.
Tonix recorded a net loss of $14.9 million in the first quarter, or 18 cents per share. It only had $7 million in cash on hand at the end of the quarter, so it needs all the money it can get from its fundraising efforts.
TNXP stock is already back below $1 per share, having dropped 93% in 2024. It gets an “F” rating in the Portfolio Grader.
Tonix stock is down 95% this year, getting an “F’ rating in the Portfolio Grader.
Gain Therapeutics (GANX)
Gain Therapeutics (NASDAQ:GANX) is a Maryland company that is developing possible therapies for neurodegenerative diseases, genetic disorders and cancer.
The company lead candidate, which is in Phase 1 trials, has the potential to treat Parkinson’s disease and other neurodegenerative diseases such as Gaucher disease, and Alzheimer’s disease.
Gain also has a drug discovery platform called Magellan that uses artificial intelligence to help it develop therapies.
It’s also trying to raise money, although doing so isn’t a good deal for current shareholders.
Last month it sold 7.11 million shares at $1.35 each in an effort to raise $11 million so it can continue testing its lead drug candidate. But the public offering also increased the number of shares in the company, which diluted shares.
It’s also notable that CEO Matthias Alder abruptly left Gain in late June. He was replaced on an interim basis by Gene Mack, the chief financial officer.
All in all, Gain appears not to be on firm footing and is a long way from seeing revenue from its top drug candidate. The stock is down 62% this year and gets a “D” rating in the Portfolio Grader.
GlycoMimetics (GLYC)
GlycoMimetics (NASDAQ:GLYC) is another Maryland company. It’s working on developing glycobiology-based therapies for cancer and inflammatory disease.
Glycobiology involves working with carbohydrates or sugar chains in an effort to develop appropriate therapies.
But the company took a major hit this spring when Phase 3 trials of its lead drug candidate failed to be statistically significant. The drug, uproleselan, was bring developed for the treatment of relapsed/refractory acute myeloid leukemia.
The company noted that the study didn’t “achieve a statistically significant improvement in overall survival in the intent to treat population versus chemotherapy alone.”
Patient survival reached a median of 13 months as compared to 12.3 months just with chemotherapy.
The company said it’s planning to meet with regulators and the National Cancer Institute to determine a path forward. Meanwhile, the floor has fallen out from GLYC stock, which is down 87% on the year. It gets a “D” rating in the Portfolio Grader.
GRI Bio (GRI)
GRI Bio (NASDAQ:GRI) is developing therapies to treat inflammatory disease.
Its therapies would target the activity of Natural Killer T (“NKT”) cells, which are key regulators earlier in the inflammatory cascade, to interrupt disease progression.
The company has four drug candidates in its pipeline, with the most advanced being a treatment for idiopathic pulmonary fibrosis. That candidate is in Phase 2 trials.
Like many other early-stage biotech companies, GRI Bio is trying to raise money to keep the doors open, while at the same time trying not to be delisted by the index.
The company announced late last month that it would sell more than 2 million shares of GRI stock – an announcement that sent the stock price down by 29%.
GRI stock is now down 95% in 2024. It gets an “F” rating in the Portfolio Grader.
Ovid Therapeutics (OVID)
Ovid Therapeutics (NASDAQ:OVID) is a biotech company that is working to create therapies to combat neurological diseases.
Its drug candidate to treat brainstem malformations completed Phase 1 trials, while three other drug candidates are not as far advanced.
Ovid also has a partnership with Takeda to bring another drug, soticlestat to market to treat Dravet syndrome and Lennox-Gastaut syndrome.
Both therapies are in Phase 3 trials, but the top-line study results are not promising.
The treatment for Dravet syndrome narrowly missed its primary endpoint in reducing the frequency of seizures, and its treatment for Lennox-Gastaut syndrome missed its mark in reducing motor drop seizures.
Ovid only had revenue of $148,000 in the first quarter versus operating expenses of $17.2 million. The company has roughly $90 million of cash on hand, so it’s not at immediate risk. But it’s also a long way from turning a profit as well.
OVID stock is down 70% this year – with much of that drop coming after the Phase 3 trials on soticlestat were released. and gets a “D” rating in the Portfolio Grader.
Cosmos Health (COSM)
Cosmos Health (NASDASQ:COSM) is a Chicago company that serves as a holding company.
Its portfolio includes pharmaceutical and nutraceutical brands, including Sky Premium Life, Mediterranation, bio-bebe and C-Sept.
The company also operates a subsidiary, Cana Laboratories, to manufacture pharmaceuticals, food supplements, cosmetics, biocides, and medical devices within the European Union.
The company makes and sells branded generics and over-the-counter medications, to retail pharmacies and wholesale distributors through its subsidiaries in Greece and the U.K.
The company has not yet filed its fourth-quarter report, and received a notice of noncompliance from Nasdaq for the failure.
But its third-quarter report included a couple of red flags, including a drop in year-to-date revenue from $38.3 million to $37.5 million; and a drop in cash from $20.7 million to $2.3 million.
COSM stock is down 10% this year and gets a “D” rating in the Portfolio Grader.
On the date of publication, Louis Navellier had a long position in NVO. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.
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