While it’s a good idea to go through your portfolio at least once a quarter and evaluate how your stocks are doing, special circumstances dictate that you do it more scrupulously, and our present pandemic certainly counts.
The markets are caught in limbo, awaiting another stimulus package after a massive run from late March through September.
The biggest winners have been tech stocks, especially biotechs and pharmaceutical companies. Much of that hype initially centered on the race for a COVID-19 vaccine. But it then filtered through the entire industry, since many companies that were once small-time outsiders were launched into headliners with a cure.
Diagnostic companies, testing and healthcare equipment companies all started rising as well. But we’re in a different place now.
Here are 7 unhealthy biotech stocks to sell before they sicken your portfolio:
- Galapagos NV (NASDAQ:GLPG)
- Heron Therapeutics (NASDAQ:HRTX)
- Ionis Pharmaceuticals (NASDAQ:IONS)
- REGENXBIO (NASDAQ:RGNX)
- Illumina (NASDAQ:ILMN)
- China Biologic Products (NASDAQ:CBPO)
- Ligand Pharmaceuticals (NASDAQ:LGND)
For these biotech stocks, the ardor has cooled. While these aren’t terrible stocks, they’re stocks best exited before a correction hits or their momentum slows further.
Unhealthy Biotech Stocks to Sell: Galapagos NV (GLPG)
Based in Belgium, this biotech focuses on small molecule and antibody therapies, aiming to discover novel drug targets.
Last summer, Gilead Sciences (NASDAQ:GILD) announced it was investing around $5 billion in the company, which sent the stock flying.
But the pandemic crushed the stock and just as it began climbing back, it was hit by news that its osteoarthritis drug in development with GILD failed FDA trials.
Even with the cash infusion, this is a costly setback, as the company has to spend more on trials that may or may not get it approval. And it pushes back the possible launch date and increases its burn rate.
Down 40% year to date, there’s still more downside risk.
Heron Therapeutics (HRTX)
While only sporting a $1.4 billion market cap, this biotech has two drugs recently approved by the FDA (one of which is coming this week).
Both drugs are antiemetics (drugs that reduce nausea and vomiting) to be used in conjunction with chemotherapy for cancer patients.
But its biggest ace, still in trials in the U.S. and the E.U., is a non-addictive, non-opioid painkiller.
Unfortunately, the opioid epidemic has been supplanted by the pandemic. So this boutique biotech has been pushed to the back burner.
Down 34% year to date, if the market sells off, HRTX is going with it.
Ionis Therapeutics (IONS)
There’s a novel approach in biotech called antisense therapeutics. It basically alters pieces of messenger RNA so when the body builds new DNA strands from that RNA, it can help mitigate certain diseases.
IONS has been involved in antisense therapeutics since 1989. And it has two drugs available in the U.S. and one in the E.U. All work to help people with rare diseases better manage their symptoms.
The massive chemical conglomerate Bayer (OTCMKTS:BAYRY) is a partner and just recently took over development and production of an IONS clotting drug.
IONS is down 23% year to date and there’s nothing, good or bad, that is going to move the stock anytime soon.
Boasting a $1 billion market cap, RGNX has a number of partnerships with leading drug makers to use its gene therapy solutions for a variety of different pathologies.
One of the drugs it worked on with Novartis (NYSE:NVS) was lucrative enough that RGNX didn’t have to look for cash for other projects by issuing more stock. Unfortunately, a big impending payment from NVS looks like it has been pushed further into the future due to an FDA ruling.
The stock is down 33% year to date, and absent any other big news from its partners, is likely to hang fire at best.
This major gene sequencing company should be going gangbusters here. And it was doing pretty well after the March market dive.
But in late September it announced it was re-buying cancer-screening start-up, Grail for $8 billion. Grail had been a division of ILMN a few years ago and it was spun off with big-name investors Bill Gates and Jeff Bezos buying in.
ILMN stock got hammered on the announcement because many of the industry analysts couldn’t understand why it buy Grail back, since its leading product puts ILMN in direct competition with some of its other customers that are working on similar technologies.
The stock has regained some of that value, but it’s still not clear how it’s going to move forward with this major purpose.
Down 4% year to date, there’s as much risk as promise here, and it’s expensive.
China Biologic Products (CBPO)
As the race for a vaccine or cure for COVID-19 continues around the globe, there are other diseases that still need attention as well.
That’s where CBPO comes in. It has a portfolio of plasma-based drugs for the treatment of everything from tetanus and rabies to hepatitis B.
The problem is, the pandemic has changed the priorities of both patients and healthcare professionals. And that has meant some conditions don’t rise to the level of attention they did before the pandemic.
This can be seen in CBPO’s second-quarter earnings. Sales were off, while income and profits also lagged. And earnings missed consensus.
While the stock is only off 2% year to date, it may be stuck here for a while.
Ligand Pharmaceuticals (LGND)
LGND is a R&D contracting firm for biotech and pharmaceutical companies. It develops drug candidates and then it partners with a firm that will take it through trials and market it.
This means LGND doesn’t bear the costs and risks associated with bringing a drug to market and the drug company doesn’t have to invest on an in-house R&D staff and facilities. LGND makes its money off negotiated royalty payments from its partners.
Currently, LGND is receiving royalties from 9 different drugs on the market now. But the pandemic has shifted resources for its customer base, putting LGND in a tough spot. That’s best illustrated by the fact that 63% of its stock is now in short positions. The stock is already down 20% year to date.
On the date of publication, Louis Navellier has no long positions in any of the stocks in this article. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The 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.