Small cap healthcare, pharma or biotech stocks Astex Pharmaceuticals (NASDAQ: ASTX), Kindred Healthcare (NYSE: KND) and Halozyme Therapeutics (NASDAQ: HALO) are all scheduled to report earnings after the market closes on Monday. That means investors and traders alike have just two trading days left to open, add to or close a position on these three small cap stocks. With that in mind, here is a closer look at where all three of these stocks stand going into their earnings:
Astex Pharmaceuticals (NASDAQ: ASTX): Watch the Cash Position and the Pipeline
Astex Pharmaceuticals is dedicated to the discovery and development of novel small molecule therapeutics with a focus on oncology and the intention to partner with leading pharmaceutical companies. Specifically, Astex Pharmaceuticals has developed DACOGEN(R) (decitabine) for injection and the company receives significant royalties on global sales of it. Astex Pharmaceuticals fell 2.84% to $3.08 (ASTX has a 52 week trading range of $1.57 to $3.55 a share) for a market cap of $102.67 million plus the stock is up 53.2% over the past year and up 10% over the past five years. Its also been getting a steady stream of bullish coverage on various financial sites. However, investors should note that Astex Pharmaceuticals’ main drug Dacogen is set to loose patent protection in May, but the main rival drug lost protection in 2011 and sales for it have not fallen off a cliff as no generic drug is on the market yet. Moreover, Astex Pharmaceuticals has a couple of clinical trials underway and investors can expect to hear either good or bad news about them this year. Otherwise and going into earnings, investors should pay attention to Astex Pharmaceuticals’ cash and cash equivalents position which stood close to $130 million at the end of September as expenses are rising with the clinical studies being underway under way just when royalties are expected to start declining from DACOGEN.
Kindred Healthcare (NYSE: KND) Must Deal With Medicare Reimbursement Cuts
Kindred Healthcare provides healthcare services in at least 2,212 locations through long-term acute care hospitals, inpatient rehabilitation hospitals (IRFs), nursing and rehabilitation centers, assisted living facilities, a contract rehabilitation services business and a home health and hospice business. Kindred Healthcare rose 0.09% to $11.45 (KND has a 52 week trading range of $7.60 to $12.76 a share) for a market cap of $610.11 million plus the stock is down 2.8% over the past year and down 55.2% over the past five years. Back in January, Kindred Healthcare cut its earnings guidance for 2013 from $1.20 to $1.40 per share to between $1.10 and $1.30 per share to reflect lower Medicare payments that were part of the deal to avert the fiscal cliff. Specifically, the cuts involve Medicare payments for rehabilitation therapy and Kindred Healthcare operates 118 long-term acute care hospitals and 224 nursing and rehabilitation centers. And there could be more cuts coming in the future which investors will need to keep in mind when Kindred Healthcare reports earnings.
Halozyme Therapeutics (NASDAQ: HALO): Trouble With European Regulators?
Halozyme Therapeutics is a biopharmaceutical company with a diversified portfolio of enzymes that target the extracellular matrix and a research focuses primarily on a family of human enzymes (known as hyaluronidases) which increase the absorption and dispersion of biologics, drugs and fluids and are intended to address therapeutic areas like diabetes, oncology and dermatology. Halozyme Therapeutics fell 0.86% to $5.81 (HALO has a 52 week trading range of $3.86 to $13.50 a share) for a market cap of $654.82 million plus the stock is down 50.5% over the past year and down 7.2% over the past five years. Near the end of January, Halozyme Therapeutics took a hit after Wedbush analyst Gregory Wade downgraded the stock based on negative comments from Roche which is collaborating with the company on an injectable form of its cancer drug, Herceptin. Apparently, there are doubts that injectable Herceptin will receive European approval which would trigger an automatic Roche payment to Halozyme Therapeutics. In addition, the company was indirectly hit by the FDA temporarily halting the study of another company’s drug using Halozyme's enzyme back in August amid concerns about side effects. Otherwise and going into earnings, Halozyme Therapeutics is expected to produce a narrower than expected loss while revenues have fallen for four quarters in a row.
The Bottom Line. Small cap Astex Pharmaceuticals could be a good long term bet while risk adverse investors might want to sit on the sidelines with Kindred Healthcare and Halozyme Therapeutics.
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