It started out as a tough year for biotechs with the Nasdaq Biotechnology Index (NBI) down 12.51% since Jan. 1.
But asset manager Chen Lin said he is "excited" by the rebound he's seeing in the sector. The NBI has gone up 8.84% from March 14 to April 1.
At the start of 2022, Chen offered his top overall opportunities for investors for the year. Now, he's updating with his top picks for the second quarter. They include a couple of biotechs, some miners and one energy company.
Axsome Therapeutics Inc.
Axsome Therapeutics Inc. (AXSM:NASDAQ), a biopharmaceutical company that focuses on therapies for central nervous system conditions, is awaiting decisions by the Food and Drug Administration on drug candidates for major depressive order and migraine.
The company also has announced it will acquire the drug Sunosi from Jazz Pharmaceuticals Plc (JAZZ:NASDAQ) for $53 million and royalty rights, making Axsome a commercial-stage company. Sunosi improves wakefulness in adults with excessive daytime sleepiness from narcolepsy or obstructive sleep apnea.
"If you want the excitement, this one is it," Chen told Streetwise Reports.
The FDA decisions on both drugs could come soon, Chen said. "I've been advising my (readers) to buy."
Axsome has a $1.61 billion market cap.
Amyris Inc. (AMRS:NASDAQ) is the only Q2 pick that also made Chen's overall list for 2022. The synthetic biotechnology and renewable chemical company operates in the specialty and performance chemicals, flavors and fragrances, cosmetics, pharmaceuticals, and nutraceuticals markets.
The stock has been a "wild one," Chen said, from the $3.30 per share he bought it at in 2020 to $20.57 on April 1, 2021. On Friday, it was at $4.38. The company's market cap is $1.38 billion.
The company and ImmunityBio Inc. (IBRX:NASDAQ) completed a joint venture agreement in January to accelerate commercialization of a next-generation COVID-19 vaccine, but the companies have not yet completed human trials or received approval by regulators.
Chen said he liked the way the company has tried to manage expectations during the crisis. "I think it's a very good price at $4 and change," he said.
Kinross Gold Corp.
On the mining side, Chen starts his picks with Kinross Gold Corp. (K:TSX; KGC:NYSE) The Toronto-based senior said this week it is negotiating with a third-party mining company to try and sell 100% of its assets in Russia after the invasion of Ukraine. It could be the first sale of an asset being left behind in Russia by a Western company.
The Wall Street Journal reported this week that the negotiations were with a "Russian-backed investment firm with interests in gold mining assets."
In February, Kinross said it expected 13% of its global production to come from Russia, where it has operated for more than 25 years.
Despite the setback, Chen sees the company as undervalued.
"For long-term investors, this is a very good opportunity," Chen said. "It's at rock bottom, very, very cheap."
Kinross has a market cap of $7.61 billion.
Polymetal International Plc
Another pick by Chen that has been affected by the war in Ukraine is Polymetal International Plc (POYYF:OTCPK), a top 10 global gold producer and top five global silver producer that has assets in Russia and Kazakhstan. Its market cap is $2.01 billion.
Because of the Russian association, its stock dropped more than 90% at one point, but its share price has more than doubled since last week. It's a great opportunity for "those willing to take a little bit of risk," he said.
Polymetal also has paid a dividend for the past decade, Chen said. "Right now, that dividend rate is like 60% (of net underlying earnings)." Polymetal announced it will pay a dividend of $0.52/share in early March for H2 2021, pending board approval.
Pan Orient Energy Corp.
Finally, one company Chen said is a favorite is Calgary-based oil and gas exploration and production company Pan Orient Energy Corp. (POE:TSX.V)
The company is currently looking to sell its Thailand assets as they have reached a mature stage. It just paid a CA$0.40 per share special distribution to shareholders.
Pan Orient said it "hopes to be in a position to announce a potential transaction late in the first half of 2022."
The company should be "trading much, much higher" than it is, Chen said.
1) Steve Sobek compiled this article for Streetwise Reports LLC. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
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