3 Biotech Stocks to Avoid Right Now

Did you know that new biotech stocks go public at a rate of about one per week? With so many investment options in this space to choose from, it’s a little surprising that some of the most popular companies right now haven’t had much success when it comes to drug development…

Every business has a story to tell, and plenty of investors like what they’ve been hearing from these three. Before following the crowd, though, you should know that there are potholes along these companies’ paths to success.

Company (Symbol) Year-to-Date Gain Market Cap
Cassava Sciences (NASDAQ:SAVA) 698% $2.1 billion
Ocugen (NASDAQ:OCGN) 435% $1.8 billion
Rubius Therapeutics (NASDAQ:RUBY) 270% $2.3 billion

DATA SOURCE: YAHOO! FINANCE.

1. Cassava Sciences

This company’s developing a potential new Alzheimer’s disease drug called simufilam. In the U.S., 1 in 9 people over the age of 65 have Alzheimer’s disease, but there still aren’t any available treatments for this progressive and ultimately fatal disease. As the first, simufilam could become one of the top-selling drugs of its time.

Following a successful phase 2 trial, Cassava Sciences told investors the Food and Drug Administration (FDA) gave the green light for a pair of phase 3 trials slated to begin in the second half of the year. If simufilam succeeds at both, shares of this biotech could explode higher.

Unfortunately, Cassava Sciences has been developing simufilam for over a decade and it still doesn’t have any evidence from a randomized controlled trial that simufilam works as intended.

The company included a placebo group in a small phase 2 study that wrapped up last March, but simufilam failed to reduce signs of inflammation that show up in fluid that bathes the brain the first time the data was analyzed, in May. Investigators also gave Alzheimer’s disease patients cognitive tests to see if simufilam actually made a difference, but they couldn’t measure an improvement.

2. Ocugen

Shares of this clinical-stage drugmaker have been soaring in response to good news for a COVID-19 vaccine called Covaxin. The vaccine’s developer, Bharat Biotech, is a well-established vaccine manufacturer headquartered in India.

Bharat Biotech has hired Ocugen to co-develop Covaxin for the U.S. market, and it looks like a winner. In a phase 3 study with over 25,000 volunteers, Covaxin was about 81% effective at preventing COVID-19 infections in India.

Before buying any Ocugen shares, you should know that…

Continue reading at THE MOTLEY FOOL

 

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