Update on my article: “Making money with biotech stocks”
There it is! Maybe you remeber, I wrote an article about Gamida Cell, Ltd. who has a current closing price for the stock of $1.64 (03.05.2023). Many arugments were related to the possible pump pre-FDA-approval. Looking back it was a bumpy ride. The stock fell first around 60% to a low $0.56 in march because they had to cut staff and reduce their product pipeline as they were running short on money to keep their “blockbuster” product ready for sale. So first learning out of this:
Check the balance and the cash run rate of a biotech company also pre-FDA-approval.
Now that it went through, the stock rose sharpely around 100% back to its old level. So given these elements, it is important to keep the balance sheet in mind (imagine if they did not have to cut staff and product pipline, the situation would be different). So the studies mentioned in my previous post should include such effect and it highlights again, that a thorough analysis of each investment opportunity is essential.
Looking at the forecast, now the next phase should be check — that is if they can deliver and provide successful sales. Before we look at some actual data and public available resources, some recap:
Gamida Cell Ltd., an Israeli biopharmaceutical company focused on developing treatments for blood cancers and blood disorders, recently received approval from the FDA for its primary drug candidate, omidubicel. The allogeneic blood-based cell therapy is designed to boost the production of neutrophils, a type of white blood cell, to reduce the risk of infection. Gamida used the investor enthusiasm that followed the FDA approval to raise $23 million in proceeds via a secondary offering. Analysts from Needham, JMP Securities, and H.C. Wainwright have all reissued Buy ratings on Gamida, and approximately seven percent of the outstanding float in the shares is currently held short.
So let’s check some current information:
Gamida ended FY2022 with just under $65 million of cash and marketable securities on the balance sheet, and cash burn has been a major concern for the stock in 2023. To address this issue, Gamida discontinued the development of its preclinical NK cell therapy candidates, reduced its workforce by 17%, and will focus on efficiently rolling out its just-approved therapy Omisirge (renamed from Omnidubicel).
Omisirge is projected to have a target population of 2,000–2,500 individuals annually, and the average price tag for its therapy will be $338,000. If the company’s projections are correct, Omisirge could eventually see north of $600 million in annual sales at peak. The company will target 10–15 transplant centers within its initial launch of Omisirge, and about 80% of individuals that will receive this therapy will come from approximately 70 transplant centers across the U.S.
I will be closely watching the next few quarters for how fast sales ramp and cash burn lessens, and another capital raise at some point over the next year cannot be counted out. However, given Omisirge’s potential peak sales compared to the stock’s current market cap, the equity deserves a small ‘watch item’ holding until data on the initial launch is seen in the quarters ahead.
Note: These are personal opinions and other individuals should build their own perspective on this strategies and stocks.
