Emerging Midcap Companies Offer Upside in Biotech

May 4, 2012

Investors should look to the emerging midcap companies in the biotechnology sector for upside as the large-cap names are generally mature companies, and despite, sometimes outperforming the market, says Dr. Geoffrey Porges, M.D., a Vice President and Senior Research Analyst at Sanford C. Bernstein & Co., LLC.

“What we’re looking to do is provide our clients and their portfolios the opportunity to see a company go from $1 billion to $4 billion in value, and more and more, we’re looking for those in the emerging midcap names in our coverage,” he said.

Porges has Medivation, Inc., (MDVN) as a top pick in the midcap space. He says he has a $106 target price for MDVN, which recently was trading at about $74. Medivation is planning to launch a prostate cancer drug by the end of 2012 or early in 2013, which should replace older, ineffective treatments, Porges said.

“Medivation is right in the heart of that prostate cancer market. They have a drug that’s following in the footsteps of J&J’s Zytiga, which launched very successfully in 2011,” he said. “Medivation’s drug is probably the most promising new medicine for prostate cancer in a decade. It should be filed with the FDA by the middle of the year.”