Long-time aggressive investors know that biotechnology stocks can offer huge upside and also can get absolutely hammered, and in some cases even go out of business. Needless to say the biotech world has had a very difficult year. Even the biggest and the best companies, many of which trade cheaper than big pharmaceutical companies, have suffered as investors have fled the industry. Much of the blame for the poor showing is the very shrill rhetoric from politicians in an election year over drug pricing, and while there is always an argument for lower prices, taking down an entire sector is extreme.

In two recent Wedbush research reports, the focus is on companies that not only have data that could prove to be huge, but that have both been absolutely hammered over the past year, offering aggressive accounts the best entry points in some time. These stocks are very speculative and, though rated Outperform at Wedbush, are only appropriate for very aggressive portfolios.

Insulet

This medical device company’s products help to deal with one of the fastest growing medical problems in the country. Insulet Corp. (NASDAQ: PODD) develops, manufactures, and sells insulin infusion systems for people with insulin-dependent diabetes in the United States. It also sells blood glucose testing supplies, insulin pumps, pump supplies, pharmaceuticals and other products for the management and treatment of diabetes.

The company offers OmniPod Insulin Management System, which consists of the OmniPod, an easy-to-use continuous insulin delivery system for people with insulin-dependent diabetes, and personal diabetes manager, a handheld wireless device. The company sells and markets its OmniPod System through a combination of direct sales representatives and independent distributors.

In a new research note the Wedbush analysts noted:

We remain highly encouraged with the rapid adoption of Neulasta Onpro Kit and would expect the success generated from this product to continue capturing the interest of other potential biopharma companies to partner with Insulet in order to deliver other drugs through its Omnipod technology. The drug delivery segment is expected to account for 18% of Insulet’s total revenue this year and represent its fastest growing business unit. While we expect growth to slowdown as penetration of Neulasta begins to level off in 2017, Insulet management previously has highlighted that it is working with 6 other pharmaceutical companies to develop customized drug delivery products that can leverage the Omnipod technology and reaccelerate the drug delivery franchise down the road.

In addition sales are huge and they also pointed out in the report:

Symphony Health Solutions prescription data for Neulasta unit sales in May were 94,852 (-2% yr/yr) of which Neulasta Onpro Kit (OPK) accounted for 36%, or 34,210 units, representing a new record; this share is sequentially up 2 percentage points from the month of April. As a frame of reference, Neulasta OPK exited 2015 with a 27% share of the Neulasta franchise. We currently forecast Insulet’s Drug Delivery segment to generate revenue of $60 million, which includes approximately $6 million of non-Amgen related revenue, and is in line with PODD management’s 2016 guidance that drug delivery should grow 75% in 2016. Thus far, we would note that, our analysis of the Symphony prescription data has closely mirrored the figures reported by Amgen.

In data we got from the American Diabetes Association, Diabetes is one of the nation’s fastest growing medical problems. 29 million people in the United States (9.3 percent) have diabetes. 1.4 million Americans are diagnosed with diabetes every year. Diabetes remains the 7th leading cause of death in the United States in 2010, with 69,071 death certificates listing it as the underlying cause of death, and a total of 234,051 death certificates listing diabetes as an underlying or contributing cause of death.

The Wedbush price target for the stock is $44, and the Thomson/First Call consensus target is $37.45. The shares closed most recently at $28.66.

Pacira Pharmaceuticals

This stock has been on a roller-coaster for years and is now trading where it was in 2013. Pacira Pharmaceuticals Inc. (NASDAQ: PCRX) is a specialty pharmaceutical company that develops, commercializes and manufactures proprietary pharmaceutical products primarily for use in hospitals and ambulatory surgery centers in the United States.

The company develops pharmaceutical products based on its proprietary DepoFoam drug delivery technology. Its lead product includes, Exparel, a liposome injection of bupivacaine, an amide-type anesthetic indicated for infiltration into the surgical site to produce postsurgical analgesia.

The company also markets DepoCyt(e), a liposomal formulation of the chemotherapeutic agent cytarabine indicated for the intrathecal treatment of lymphomatous meningitis, a life-threatening complication of lymphoma, a cancer of the immune system. Its development pipeline comprises DepoMeloxicam, a long-acting non-steroidal anti-inflammatory drug, which is in preclinical development for the treatment of acute postsurgical pain; and DepoTranexamic Acid, a pre-clinical development product for the treatment or prevention of excessive blood loss during surgery by promoting hemostasis.

Wedbush notes that the company still has a since rescinded FDA warning letter pall hanging over the stock, but the firm thinks that the new promotional strategy for Exparel will yield solid results. The analyst noted in the report:

The Symphony Health (SH) EXPAREL estimated sales per day in May increased 0.8% over April and Q2 is tracking about -1.24% below consensus. Symphony Health sales and volume estimates for May were more than $21 million (WAC$) and over 68 thousand pack units. On a selling day basis May sales and volume were 0.8% over April. We count 21 selling days each in April and May and 22 in June and 64 for Q2. Recent quarterly capture rates for SH EXPAREL estimates have been close to 100% (Q4 100.1%; Q1 99.8%) but remain cautious on accuracy as historical capture rates have been variable (68.5%-108%).

Wedbush has a stunning $105 price target, while the consensus target is a huge $79.67. The stock closed most recently at $37.93.

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Again, these two stocks are only suited for very aggressive accounts, but the upside potential make them both good plays for accounts looking for big alpha moves.

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