What happened
Wednesday seemed to be a relatively good day for the stock market. While the tech-heavy Nasdaq Composite Index is slightly down for the day as of this writing, both the Dow Jones and the S&P 500 are recording notable gains. Among the many companies enjoying sizable gains, a trio of biotech stocks is soaring through the roof, despite not reporting any news of their own.
The trio in question is composed of Orchard Therapeutics (ORTX), 9 Meters Biopharma (NMTR.Q), and DBV Technologies (DBVT 29.77%), which are up by 29.8%, 25%, and 16.2% as of 3:10 p.m. EST Wednesday, respectively. All three of these are small-cap stocks: Orchard Therapeutics, with its $614.84 million market cap, is the biggest of the bunch. Small-cap stocks tend to jump higher than most other stocks when the market rises.
So what
Daily fluctuations in the prices of securities mean very little in the grand scheme of things. What matters is the investment thesis of each company. With that in mind, let's briefly look into the prospects of these three biotechs. Turning first to DBV Technologies, this clinical-stage company is headquartered in France and focuses on developing treatments for food allergies. Its leading candidate is Viaskin, a potential peanut allergy treatment.
Viaskin is a patch that is supposed to desensitize a patient's immune system by exposing the patient to increased amounts of peanut protein. Unfortunately, due to concerns regarding the potential effect of patch-site adhesion on the efficacy of Viaskin, the U.S. Food and Drug Administration (FDA) declined to approve it.
And while the company recently submitted Viaskin for approval in Europe, there is another peanut allergy treatment on the market called Palforzia with which DBV Technologies will have to compete.
Next, let's look into Orchard Therapeutics, which develops gene therapies for rare inherited diseases. The company does not have any products approved by the FDA, but two of its treatments have been given the green light in Europe.
Image source: Getty Images.
Orchard Therapeutics' most recent regulatory win was the December approval of Libmeldy for the treatment of metachromatic leukodystrophy (MLD), a rare and potentially fatal hereditary disease. MLD occurs in roughly one in 100,000 live births.
Orchard Therapeutics is gearing up to launch Libmeldy in Europe this year, and it said the treatment will carry a hefty price tag between 2.5 million and 3 million Euros. Libmeldy will no doubt have a major effect on Orchard Therapeutics' top and bottom lines, and the company boasts several other candidates as well.
Lastly, 9 Meters Biopharma develops medicines for rare diseases with an unmet need. The company has no products on the market at the moment, but its leading pipeline candidates include Larazotide, a potential medicine for celiac disease, and NM-002, an experimental treatment for short bowel syndrome. 9 Meters Biopharma expects initial data from a phase 3 clinical trial for Larazotide in the second half of this year, while it will initiate a phase 2 study for NM-002 in the second quarter.
Now what
All three of these companies seem somewhat speculative bets at this point. Drugmakers often run into regulatory setbacks or clinical trial failure, and small-cap biotech stocks are even more likely to see their shares plunge as a result of such headwinds. For those reasons, only investors comfortable with a little risk should consider investing in any of these three biotechs, and of the bunch, Orchard Therapeutics seems like the most promising.
