2014 Already Produces Plenty of Good News for Small Cap Biotech Investors (ICPT, EPZM, TNXP & TNIB)

It's a new year and the first one and a half trading weeks of 2014 has not disappointed biotech investors as the sector and mid cap or small cap biotech or pharma stocks like Intercept Pharmaceuticals Inc (NASDAQ: ICPT), Epizyme Inc (NASDAQ: EPZM), Tonix Pharmaceuticals Holding Corp (NASDAQ: TNXP) and TNI BioTech Inc (OTCQB: TNIB) either surging or producing some news plus there have been IPO filings for future listings for Flexion Therapeutics (NASDAQ: FLXN), Aldexa Therapeutics (NASDAQ: ALDX), Retrophin (NASDAQ: RTRX) and Dicerna Pharmaceuticals (NASDAQ: DRNA). Consider the following news so far this year:

Biotech Showcase 2014. A large number of small cap biotech stocks will be presenting at the Biotech Showcase 2014 this coming Monday, January 13th to 15th in San Francisco. The full list of companies presenting can be viewed here while all the companies participating in the "showcase" can be viewed here. Goldman Sachs Downgrades the Biotech Sector. In a 61-page research note published last Sunday, Goldman Sachs' biotechnology analysts downgraded the sector from Buy to Neutral, saying the sector is "fairly valued." Given that the biotech sector is trading at more than 25 times estimated 2014 earnings and has more than doubled in value over the past two years, it currently trades at a premium to the broader stock market. And while the biotech sector deserves some sort of premium, biotech stocks will increasingly need strong earnings to justify their lofty stock prices. More Biotech IPO Filings. So far this week, small cap Flexion Therapeutics, which is developing injectable pain therapies for osteoarthritis, has filed to raise up to $86 million in an IPO plus Aldexa Therapeutics, a clinical-stage biotech developing treatments for rare skin and eye diseases, filed raise up to $20 million in an IPO. No pricing terms were disclosed. Retrophin, which is developing treatments for postpartum milk let-down, Schizophrenia and Autism, also announced plans to raise $40 million by offering 4.8 million shares at $8.30 per share to command a market value of $193 million. In addition and late last week, Dicerna Pharmaceuticals, which is developing RNAi therapeutics for a range of diseases including cancer, filed to raise up to $69 million in an IPO. Dicerna Pharmaceuticals initially filed confidentially on November 8, 2013, and no pricing terms have been disclosed. Intercept Pharmaceuticals Inc Surges. Small cap Intercept Pharmaceuticals became a mid cap yesterday when it surged 281.09% after the company stopped a clinical trial of a liver disease drug early, saying there was clear evidence the treatment worked. Intercept Pharmaceuticals was studying the effects of experimental drug, obeticholic acid, on treating nonalcoholic steatohepatitis, a type of chronic liver disease caused by excessive fat accumulation in the liver that can cause inflammation and scarring – leading to cirrhosis, liver failure and death. Nonalcoholic steatohepatitis is the leading cause of liver transplants in the US with about 22 million Americans having the condition and about 8 million suffering from its advanced stages. There are no approved drugs for the illness. Intercept Pharmaceuticals is now up 708.3% over the past year and up 1,348.2% since October 2012.

Epizyme Inc Earns a $25 Million Payment. On Tuesday, small cap biopharmaceutical company Epizyme Inc surged 75.56% after it announced that EPZ-5676, a DOT1L inhibitor for acute leukemias, had reached its proof-of-concept milestone - earning a $25 million payment under the company's collaboration with Celgene Corporation. Although Epizyme Inc did not release a bunch of data, Celgene Corporation's $25 million payment must mean the data was good. However, Epizyme Inc did get crushed by more than 40% in one day back in November when the company issued a press release to say that results were positive enough to warrant further study, but apparently they were not positive enough for investors to not dump shares. Epizyme Inc is up 61.4% since last June.

Tonix Pharmaceuticals Holding Corp Keeps Rising Steadily Higher. Tonix Pharmaceuticals Holding Corp is already up 57% since the start of the year in a steady daily increases and on no real news or announcements. It should be mentioned that Tonix Pharmaceuticals Holding Corp's most advanced product candidate is sublingual TNX-102 (TNX-102 SL) for fibromyalgia (FM) and post-traumatic stress disorder (PTSD). In September 2013, Tonix Pharmaceuticals Holding Corp began enrollment in a pivotal trial of TNX-102 SL for the treatment of FM and is expected to enter a Phase 2 trial in 2014 for the treatment of PTSD.

TNI BioTech Announces More Deals. Small cap TNI BioTech International, which acquires patents, develops treatments, markets and licenses immunotherapies for the treatment of cancer, HIV/AIDS and autoimmune diseases, has been producing a steady stream of news. Last December, TNI BioTech International announced that the Nicaraguan Ministry of Health had granted a certificate of free sale to the company's wholly-owned subsidiary, TNI BioTech International Ltd., for Lodonal, the company's Low Dose Naltrexone product (LDN) for the treatment of patients with autoimmune diseases HIV/AIDS, Crohn's Disease, Multiple Sclerosis and certain cancers. Then back in October, TNI BioTech had announced that TNI BioTech International, Ltd. had a distribution agreement with a Nigerian company called AHAR Pharma to market Lodonal in Nigeria for the treatment of autoimmune diseases and cancer. The company says this deal will generate just over $53,000,000 in gross revenue in 2014 with approximately $21,000,000 in available cash flow to meet TNIB's financial clinical trial commitments plus AHAR Pharma had also pre-paid for the API necessary for the soft launch and has committed to purchase a minimum of $1,000,000 worth of capsules between now and January 2014. Since then, TNI BioTech has also received a Certificate of Free Sale and export licenses for the Republic of Nigeria, Republic of Equatorial Guinea, Republic of Malawi and the Republic of Gabon plus the company is having discussions with a number of other emerging countries concerning the approval of Lodonal and hopes to receive approvals in these countries for this year.