GEO Investing

SanaCurrents is increasing the frequency of its sentiment reports to subscribers to 3 per month. We anticipate there will be a significant number of important catalysts this year for SanaCurrents companies and we did not want you to miss out on any.

As noted last month, the fourth quarter of last year was bearish for all stocks. However, positive results can be achieved in the most difficult of markets, especially when medical and biopharma stocks deliver on anticipated catalysts at pre-established dates.

Evolus, Inc. (NASDAQ: EOLS) is the latest company to answer the challenge of the fourth quarter bear market.  Evolus, which will introduce a competing formulation of Allergan’s (NYSE:AGN) Botox for the aesthetics market, saw its stock dip to $10.50 per share on December 21. But Evolus had a pre-established date for FDA approval (February 2) for its new aesthetics therapy, named Jeuveau. While EOLS shares slowly rose during January, the shares still closed at $14.39 per share on January 24.

One week later, after the FDA signed off on Jeuveau, Evolus shares touched $22.34 per share on February 4, a 55% gain in just seven trading days and after our sentiment report.

Before Evolus, consider ARCH Therapeutics (OTC:ARTH), a microcap device company followed by SanaCurrents. ARCH shares rose 15% after its wound sealant device received marketing approval from the FDA on December 17, 2018. If any stocks would be vulnerable to a down market it would be microcaps, yet a positive announcement by ARCH in depths of the bearish turn pushed its shares higher.

The recent results highlight investors’ hunger to find promising therapies at companies of all sizes. The majority of innovation in biopharma and devices comes from smaller companies, who have an eye for a larger company partner to help finance and commercialize the drug in later stages of development. However, the biggest increase in shareholder value typically is realized in the early development of the drug, such as with Eidos (NASDAQ: EIDX) and Evolus. Both companies went public in 2018, presenting an opportunity for public investors to capture the upside of the stocks.

Not all small cap stocks will grab 55% returns, but the potential exists if investors stay ahead of the anticipated catalysts. The FDA approved 64 novel therapies last year, a record number for the agency. The FDA also wants to encourage competition for certain biologic drugs, which likely had an impact on approving the Evolus drug after it had received a curious complete response letter in May 2018.

In addition, 2018 was another strong year for the biopharma IPO market. Newly listed companies such as Gritstone Oncology (NASDAQ: GRTS) and Y-Mabs Therapeutics (NASDAQ: YMAB) likely will report this year on clinical catalysts that could trigger significant stock increases. As the fourth quarter demonstrated, such news can overcome the bearish of markets.

We look forward to increasing our coverage to you, and presenting more opportunities for strong returns independent of the swings of the larger market .


Bill Langbein

Founder, SanaCurrents

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