The world of biotech stocks is notoriously difficult to predict. History is littered with companies that appeared destined for superstar status only to crash and burn. A brutal FDA approval process is partly responsible for that truth. 90% of clinical drug development leads to failure. Developmental costs are another important factor.
High failure combined with high costs produces disaster in many cases. It is not uncommon for hundreds of millions of dollars to be spent, and to never produce any revenue. The biotech sector is perhaps littered with more disasters than any other. The companies listed below look to be headed in that direction based on the available information.
Atara Biotherapeutics (ATRA)
Atara Biotherapeutics (NASDAQ:ATRA) stock has lost hope based on the market’s reaction since early 2022. Prices have fallen from $16 to $1.83. Any time that happens it’s reasonable to assume that the thousands of shareholders have reached the same conclusion.
The CEO’s comments regarding the firm’s prospects are typical of any biotech. CEO Pascal Touchon notes that the company is productively engaged with the FDA regarding one of its products. Meanwhile, the company continues to look for ways to reduce cash burn while extending its runway. No one but insiders really knows whether that’s realistic or not. The company is engaged in commercialization discussions with potential partners regarding its EBVALLO therapeutic.
Meanwhile, it’s hardly making any money. Atara Biotherapeutics recorded slightly more than $1.2 million in revenue in Q1 2023, but that was far less than the $7.31 million in Q1 a year earlier. The company lost $90 million during Q1 a year ago and $74 million during the first quarter this year. It looks like a disaster.
Enochian Biosciences (ENOB)
Enochian Biosciences (NASDAQ:ENOB) is a stock and company for which it is very difficult to find information. However, the limited information that is available paints a picture of a very distressed firm.
Investors can easily discover that Enochain Biosciences is focused on cell and gene therapies to promote immune response for use in treating cancer. But it gets murkier after that with recent financial information proving very difficult to obtain. There’s nothing on its website for the past 2 years in that regard. No 10-Q, no 10-K, nothing
There is a release from February about its continued delayed filing of a relevant 10-Q for the period ended December 31, 2022. Weeks later the company announced full compliance with Nasdaq listing requirements. However, the associated 10-K and 10-Q that it stated have been filed have not been posted on its investor relations site. I can only assume that Enochian Biosciences is attempting to hide very negative financial statements for as long as possible and that is only going to make things worse.
Pieris Pharmaceuticals (PIRS)
Pieris Pharmaceuticals (NASDAQ:PIRS) recently saw its stock price drop dramatically. It went from a company that was already in trouble based on its share price of 90 cents in June, to one that is now much closer to failure.
The news that AstraZeneca (NASDAQ:AZN) had chosen to discontinue its Phase 2a trial partnership for Pieris’ Elarekibep drug due to safety indications sent PIRS stock to 25 cents on June 21. It has since fallen further, now trading for around 20 cents.
That leaves the company with a dashed dream and a pipeline of potential drugs that are all in Phase 1 trials or earlier.
Further, Pieris Pharmaceutical’s revenues fell by more than 80% to under $2 million during the first quarter. Even a year ago when it reported more than $10 million in revenue the company still produced losses above $5 million. Those losses swelled to more than $13 million in Q1 2023. The AstraZeneca news is a gut punch that seriously jeopardizes the firm’s ability to continue to operate and should lead investors to at least speculate that the company might be doomed.
On the date of publication, Alex Sirois did not have (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.
