Our Lion of Small Cap

Written by GSCR Staff   
Friday, 30 January 2015 07:49

 

Last week and again in Monday’s Goldman Guide we thought some of the mega cap financial reports yesterday would calm the market nerves.

Big misses and lowered expectations on names like The Proctor & Gamble Company (NYSE – PG) and especially Microsoft Corporation (NASDAQ – MSFT) had the opposite effect.   Apple Inc. (NASDAQ – AAPL) saved the day and the market had a subtle bounce back. What does this say about us as consumers? Do we care more about our hip gadgets than our shampoo? Just a thought, but we digress…

 

 

In any event we thought we would revisit biotech, our lion, in the small cap sector, if you will. The small cap biotech sector has been on a solid tear over the last 24 months as indicated by the chart for PowerShares S&P SmallCap Health Care ETF (NASDAQ - PSCH), which we will use as a proxy.

 

2-Year Chart for PSCH

(Source: www.otcmarkets.com)

 

MM.01.29.15-psch

 

 

 

Our candidate for today is Lion Biotechnologies, Inc. (NASDAQ – LBIO - $7.97). Lion Biotechnologies is a development stage biotechnology company that develops T-cells and engineered T-cells for the treatment of various cancers. The Company’s lead product candidate includes a ready-to-infuse autologous T-cell therapy using tumor-infiltrating lymphocytes (TILs) for the treatment of patients with stage IV metastatic melanoma. It has a patent license agreement with the National Institutes of Health to develop and manufacture certain proprietary autologous TILs adoptive cell therapy products for the treatment of metastatic melanoma, ovarian cancer, breast cancer, and colorectal cancer.

 

We should note that the technical indicators are very strong long term as illustrated by the EMA and news from the pipeline has been upbeat recently as well. In December,Lion presented positive new data from a Phase II clinical trial of TIL therapy in metastatic melanoma at the American Society of Hematology (ASH) annual meeting in San Francisco, CA. Earlier this month the Company filed an investigational new drug (IND) application with the FDA to conduct a Phase 2 clinical trial of the Company's lead product candidate, LN-144, in the treatment of patients with refractory metastatic melanoma. LN-144 is a cell product of autologous tumor infiltrating lymphocytes (TIL) derived from the patient's tumor.

 

With over $17 million in cash Lion Biotechnologies is positioned to maintain its pipeline for research provided cash flow remains steady from new investors and road shows. LBIO should climb back up to 52-week high range of $11 by the end of 2Q15.

 

Have a great day!

 

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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