4 Biotech Stocks I'm Targeting Now

It has been an absolutely brutal couple of weeks in the markets. Fears and the impacts of the Wuhan coronavirus continue to increase, almost to the point of mass hysteria now. The new oil price war between Saudi Arabia and Russia is an ill-timed additional worry for the markets. The energy sector has absolutely been crushed this year and plunging energy prices are spiking worries about debt defaults through the shale patch. Increasing credit worries are a huge headwind to the overall market as just about any company with a good dollop of debt is being taken out to the woodshed and beaten like a rented mule. The Dow suffered its largest daily loss since the second Reagan administration and the S&P 500 and NASDAQ were down over 9%. The same trading action seems to be killing any small and midsize small biotech company that may need to raise additional capital in the near future. I have been busy deploying additional funds into the market on this massive dip. I have targeted biotech heavily, but I have stayed primarily to those names that have plenty of cash on the balance sheet and should be just fine once saner heads prevail. I continue to use covered calls exclusively to put new money to work. With volatility spiking it seems daily, option premiums have increased dramatically. This provides additional downside protection and potentially much greater returns than I can remember ever seeing outside the financial crisis in 2008. For biotech, here are some names I have added exposure to via this buy-write option strategy. All of them have little to no balance sheet worries. Let's start with Amicus Therapeutics . The stock has been hard hit in recent trading action despite the company reporting that fourth quarter Galafold revenue doubled on a year-over-year basis to just north of $180 million. The company expects FY2020 Galafold sales to rise to $250 million to $260 million. Amicus also plans to file a Biologic License Application, or BLA, with the FDA sometime in 2021 for another drug candidate, provided study results support that which leadership expects. Amicus ended 2019 with over $450 million and leadership has stated it is more than well-funded deep into 2022 at the current time. I have also opened a decent size position in Amarin using covered calls. Its primary asset is Vascepa. Late last year, this compound became the first and only drug with its FDA-approved indication for reducing cardiovascular risk in patients with persistent high cardiovascular risk despite maximally tolerated statin therapy. As you can see below, Vascepa is still seeing solid growth despite the Covid-19 outbreak. Vascepa Scripts for week ending 03/06/2020 (Source: Tucaman) Total Rx: 89'880 (+12.46%) New Rx: 44'925 (+11.53%) In addition, Goldman Sachs just upgraded Amarin from Neutral to Buy with a $28 price target on the stock. Option premiums are large and liquid in this name. Finally, the company ended FY2019 with over $600 million on hand so has no need to raise capital. Other names that are cash rich and profitable that have fallen with the market and I have profiled often on these pages are Exelixis and Alexion Pharmaceuticals . I have added exposure to both during this sharp pullback using my standard buy-write strategy.

4 Biotech Stocks I'm Targeting Now

I've stayed primarily to those names that have plenty of cash on the balance sheet and should be just fine once saner heads prevail.

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