3 Hot Junior Biotech Plays

Large biotechnology funds have diverged sharply in recent months, with the equal-weighted SPDR S&P Biotech ETF posting an all-time high while the market-cap weighted iShares Nasdaq Biotechnology Index Fund struggles deep within a two-year trading range. This conflict reveals unusual strength at the lower end of the capitalization spectrum, telling us that junior biotech plays are attracting substantial speculative interest.

These issues tend to offer strong upside potential with equally strong risk because the majority of drug applications fail to survive the gauntlet of research trials and FDA approval, or they get undermined by a superior competitive product. That’s why many of these stocks can be traded with greater safety during early trial phases, taking aggressive profits before actual results generate further upside or overnight destruction. (See also: The Biotech Sector: A Primer.)

These three small-cap biotech stocks are attracting significant buying interest in this mixed March environment. …read more

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