Biotechnology Stocks: Want Huge Short-Term Profits?

| March 25, 2011 | 0 Comments

That’s a loaded question if I ever saw one.  What investor doesn’t want to make a bunch of money in a short period of time?

But now that I have your attention, I’m going to tell you about a terrific way to turbo-charge your portfolio with big short-term winners.  I’m talking about investing in shares of small biotech companies.

Biotechnology is the cutting edge of medicine.

This fascinating industry is comprised of several hundred companies developing revolutionary treatments and cures for all manner of diseases. And those companies making meaningful advances are often rewarded with huge short-term stock gains.

Here’s a terrific recent example…

Back in mid-December 2010, I recommended shares of an exciting biotech to subscribers of my Biotech SuperTrader service.  The company was none other than Achillion Pharmaceuticals (ACHN).  They focus on developing new treatments for patients suffering from infectious diseases.

What caught my eye was the company’s cutting-edge drug candidate for Hepatitis C Virus (HCV).  The drug’s designed to cripple the protease enzyme… an enzyme critical for HCV to reproduce.

By blocking protease, the drug prevents HCV from making copies of itself. And if the virus can’t replicate, then it can’t spread and infect the patient’s healthy cells.

It certainly sounded great in theory, but I was curious to see how it was working in real life.

And I wasn’t disappointed…

The drug was showing phenomenal success in clinical testing.  In preclinical studies, the drug showed greater potency than two leading HCV protease inhibitors in phase 3 clinical trials.  And in a recently concluded phase 1 study, patients taking the drug exhibited a huge drop in viral load.

What’s more, the virus remained suppressed even after treatment stopped.  Now, in my experience, that’s a clear sign of a powerful drug.

But, efficacy alone doesn’t mean a drug will ultimately gain FDA approval. It also must be safe for patients to use.

Turns out Achillion’s drug was showing a very good safety profile as well. No patients taking the drug had any serious adverse events.  And there were no significant changes in vital signs, ECGs, or laboratory evaluations.

At that point, I realized Achillion had a drug with potential to become the leading treatment for HCV.  And that meant the company was quite possibly sitting on a huge gold mine.

You see, HCV is a widespread disease.

The number infected with HCV worldwide is over 170 million people.  And some Wall Street analysts estimate the HCV drug field could grow to a whopping $15 billion a year as early as 2017.

The only question left in my mind was if there was any near-term catalyst to jump-start the shares.  After a bit more research, I found the company was going to release data from their ongoing phase 2a trial in the first quarter of 2011.

That’s when I knew Achillion had big short-term profit potential.

I figured investors might drive the shares higher in anticipation of good results.  And if they didn’t, positive results would send the shares soaring.

Here’s what happened…

When I recommended it, Achillion was trading at just $2.90 a share (green circle).  My timing was perfect… I caught the stock just as it was taking off in a strong uptrend.  As you can see, the shares have been climbing steadily higher ever since.

In early March, I recommended we take our profits off the table (red circle).  The shares were trading around $5.93.  That gave us a stellar 104% gain in just a little over two months’ time.

No question about it… small biotech stocks can generate big gains in a hurry.  If you’re not trading these stocks, you’re missing out on a great opportunity to supercharge your portfolio.

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Category: Stocks

About the Author ()

Robert Morris is the editor of Penny Stock All-Stars, an investment advisory focused on discovering small-cap and micro-cap stocks that are destined to become the market’s next Blue Chips. The Wall Street veteran and small-cap stock specialist is also a regular contributor to Penny Stock Research. Every week, Robert shares his thoughts with our readers on a variety of penny stock-related topics. In addition to Penny Stock Research, Robert also writes frequently for two other free financial e-letters, ETF Trading Research and the Dynamic Wealth Report. He’s also the editor of two highly successful and popular investment advisories, Biotech SuperTrader and China Stock Insider.

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