Is This Small-Cap Biotechnology Firm the Next Big Breakout Stock?

It has been an exciting week for pharmaceuticals, as a spate of good trial results has sent a few stocks in this sector soaring.

The big headlines have gone to GW Pharmaceuticals, a company that develops therapies using cannabis. On Monday, the company said that its drug Epidiolex, which treats a severe form of epilepsy in children, received positive results from its Phase 3 trial with the Food and Drug Administration.

Shares of GW Pharmaceuticals shot up 120% that day.

But there is a slightly less sexy company that also has received good news, and its stock price is also on the rise -- big time.

Celator Pharmaceuticals (CPXX - Get Report)  said late Monday that its product Vyxeos has fared well in clinical testing and is being readied for submission to the FDA.

 CPXX data by YCharts

Vyxeos treats a deadly, high-risk form of blood cancer known as acute myeloid leukemia. Testing showed that Vyxeos is effective at reducing mortality rates over 60 days in AML patients to 13.7% from 21.2% in the control group.

"Based on these results, the company expects to submit a new drug application for Vyxeos with the [FDA] later this year and submit a marketing authorization application with the European Medicines Agency in the first quarter of 2017," Celator said in a statement.

FDA approval represents the ultimate good news for biotechnology stocks and has the power to send shares soaring by the thousands of percent.

One of the researchers who has worked on the drug, Gail Roboz of the leukemia program at the Weill Medical College of Cornell University, said that Vyxeos will be a game changer for AML patients, who rely on chemotherapy.

The new drug is shaping up to be safer and more effective than this traditional treatment.

Doctors will easily adapt to using the new drug as well, Roboz said.

The share price of this tiny biotech is skyrocketing. It is up Wednesday slightly, after soaring more than 400% on Tuesday. 

Celator's shares, on average, trade at a daily volume of about 375,000, but that went to 30 million shares on Tuesday, surpassing even Apple, as one analyst noted. 

Not bad for a tiny biotech company.

Celator aims to market the new drug itself in the United States and forge relationships with other pharmaceuticals companies for distribution abroad.

"We believe having a new AML drug showing a survival benefit represents a low hurdle in delivering such a partnership," Roth Capital Partners wrote in a research note on Tuesday.

That firm has upped its price target on the stock to $22 from $18.

And H.C. Wainwright has lifted its price target on the stock to $20 a share from just $7.

Celator is trading above $9 a share, up from its 52-week low of $1.12 last month and $1.68 on Monday. A jump to $20 would reflect a gain of just more than 123%, not unreasonable given Tuesday's surge.

Investors should scoop up shares of Celator before it goes stratospheric. Although it is tiny and relatively unknown, imagine what FDA approval could do for this stock.

By Kat McKerrow

Source: http://www.thestreet.com/story/13496228/1/is-this-small-cap-biotechnology-firm-the-next-big-breakout-stock.html?kval=dontmiss