BioXcel Technologies (NASDAQ: BTAI) Offers Growth Without Coronavirus Risk

If you’re looking for a way to invest in the biotech sector, but don’t want exposure to the crowded coronavirus vaccine trade, I submit that BioXcel Technologies (NASDAQ: BTAI) is an attractive option. BTAI stock has grown over 280% this year, and that’s after BTAI stock has pulled back from higher highs.

Analysts give the stock a consensus buy rating. But the stock only has a rating from six analysts. While that isn’t necessarily a rousing endorsement, it does indicate the BTAI stock may be flying under the radar with much of the focus on the companies that are in the race for a Covid-19 vaccine.

And that’s why even with the stock’s impressive gains this year, there still can be time to jump in.

BioXcel is Operating in a Less Crowded Field

BioXcel is a leader in developing drugs for brain diseases and tough-to-treat cancers. Investors are pushing the stock higher despite the fact the company does not have a drug successfully through late-stage trials.

However, that may be about to change. BioXcel plans to release new data from Phase 3 results for its two lead candidates. The stock has a consensus price target of over $70. With that type of potential growth, it’s obvious that analysts are expecting the company to be successful.

Of course, if the clinical trial results do not go as planned, it could have disastrous effects on the stock. And that’s where the risk and the potential reward exist with BioXcel Technologies. The difference is that unlike the biotechs seeking a Covid-19 treatment or vaccine, BioXcel is operating in a much less crowded field.

The Biotech Trade is About Hope

Small-cap and mid-cap stocks like Inovio (NASDAQ: INO), Co-Diagnostics (NASDAQ: CODX) and Novavax (NASDAQ: NVAX) have been surging this year. Each of these companies, in one way or another, are in the race for a vaccine or treatment surrounding the novel coronavirus.

And like BioXcel Technologies, none of these companies is profitable. But that hasn’t stopped their stocks from climbing. That’s because many biotech stocks trade on the news. Traditional fundamental metrics are not as important as the company’s pipeline.

As alluded to earlier, BioXcel has two drugs, Serenity I and Serenity II in Phase 3 trials. These drugs are being developed to treat acute agitation caused by schizophrenia or bipolar conditions. When the company reports on the results of the Phase 3 trials, investors are expecting to hear additional data about an earlier trial of the drugs.

In June, H.C. Wainwright analyst, Raghuram Selvaraju said a successful trial could “unequivocally position” the company as a key player in the fields of neuropsychiatry and neurology. The drug recently received a U.S. patent for the formulation of the drug that will run through at least 2038.

And Serenity I and Serenity II are not the company’s only drugs currently in the trial stage. BioXcel also has a drug “Tranquility” that is designed as an acute treatment for geriatric dementia. Those results are not due out until after the Serenity results. 

BioXcel also has several immune-oncology drugs in early-stage trials. But it’s the neurological drugs that are the real catalysts. In fact, Yatin Suneja, says that these drugs “are basically going to change the profile of the company.” And when that happens, the risk profile for BTAI stock will moderate.

Their Cornerstone Drug Just Received Compassionate Use Approval

I said earlier that BioXcel Technologies is not a Covid-19 play. But it is helping in the fight in a way that may be a win-win situation. The companies Serenity drug is being used for compassionate use at Massachusetts General Hospital. This allows it to be administered to critically ill Covid-19 patients who may require calming sedation.

Compassionate use, which is commonly known as expanded use, gives patients access to a treatment that has not made it completely through the regulatory process when no comparable or satisfactory therapeutic alternatives are available.

Getting Approval is Only the First Hurdle

There is a high degree of traders shorting BTAI stock, but not necessarily because it expects the drugs to have an unsuccessful trial. It’s just that there’s no guarantee that the drug will be readily accepted in the marketplace.

A competitor, Alexza Pharmaceuticals, released Adasuve which was a drug that was similar to BioXcel’s Serenity drugs. However, while the drug was approved sales have not reached projected levels.

This is why SunTrust analyst Robyn Karnauskas is one analyst who is excited for the company’s Tranquility project. In an interview for Barron’s Karnauskas said, “It’s given in a different setting, not a hospital setting, so it’s easy to understand how you would often need a drug like this.”