JMP Securities Very Positive on Five Key Biotech Stocks (AMGN, BIIB, AFFY, ALNY, CELG, ONXX, PCYC, PFE, LLY, MRK, BMY)

By Jon C. Ogg Updated Dec 30, 7:35AM EST · Published Feb 8, 10:10AM EST

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Investing in biotech or biopharmaceutical stocks can prove to be a very daunting task. Many of the stocks have limited pipelines or their very survival depends on a single binary event that may require approval from the Federal Drug Administration (FDA). In the quest to find the next Amgen Inc. (NASDAQ: AMGN) or Biogen Idec Inc. (NASDAQ: BIIB), investors need to look for companies with not only strong pipelines, but strong balance sheets.

JMP Securities initiated coverage today on five biopharmaceutical stocks that may fit the bill, as far as having the strong pipelines and the cash on hand to continue to develop and market drugs with staying power. The stocks initiated with Market Outperform ratings are:

Affymax Inc. (NASDAQ: AFFY) is on the map with its top drug called Omontys (peginesatide). This injection is for the treatment of anemia in chronic kidney disease in adult patients on dialysis. The Thomson/First Call consensus price target is $30.

Alnylam Pharmaceuticals Inc. (NASDAQ: ALNY) engages in discovering, developing and commercializing novel therapeutics based on RNA interference (RNAi). The Wall St. consensus price target for the stock is $28.50.

Celgene Corp. (NASDAQ: CELG) is already a favorite among Wall St. analysts. Their lead drug is Revlimid, an oral immunomodulatory drug for the treatment of patients with multiple myeloma and myelodysplastic syndromes. The consensus estimate for this very popular name is $114.

Onyx Pharmaceuticals Inc. (NASDAQ: ONXX), through its collaboration agreement with Bayer HealthCare Pharmaceuticals, develops and markets the Nexavar (sorafenib) tablet, a multiple kinase inhibitor for the treatment of liver cancer and advanced kidney cancer. The consensus price target is $100.

Pharmacyclics Inc. (NASDAQ: PCYC) operates as a clinical-stage biopharmaceutical company focusing on developing and commercializing small-molecule drugs for the treatment of cancer and immune mediated diseases. The consensus estimate is $80.

Each of these stocks is widely followed on Wall St. and considered some of the best in class. One other enticing part of investing in quality biopharmaceutical stocks is that, due to the huge cost of new drug development, they are often potential takeover candidates. Large pharmaceutical companies like Pfizer Inc. (NYSE: PFE), Eli Lilly & Co. (NYSE: LLY) Merck & Co. Inc. (NYSE: MRK) and Bristol-Myers Squibb Co. (NYSE: BMY) often find it more cost effective to purchase new drugs and pipelines by buying the company. Perhaps one of these stocks could be on their radar screens.

About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. a673b.bigscoots-temp.com.