My Top Small-Cap Play for 2021

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My top small-cap pick for 2021 is a stock I’ve discussed quite a bit during the past year.

Xeris Pharmaceuticals (XERS) is a small specialty company that focuses on drug delivery. It has developed a ready-to-use injectable drug system that eliminates the need for refrigeration required for some drugs such as insulin.

The company’s lead product is the Gvoke HypoPen, which allows an immediate injection of glucagon for severe hypoglycemia when people with diabetes have a sudden drop in blood sugar. Previously the only product available required mixing chemicals before the injection could be done. The key is that the formulation is “non-aqueous.” This delivery system can be used for other drugs, as well.

On Dec. 11, 2020, Xeris received news that the European Union Committee for Medicinal Products for Human Use (CHMP) recommended Gvoke to treat severe hypoglycemia in people with Diabetes mellitus. A final decision will be made in the first quarter of 2021, and the company should launch in Europe in the second half of the year.

The company has three other drugs in phase two studies and one in stage one that will use this delivery system. The market for these drugs is very large, and Xeris has stated that it would be interested in partnerships that will help to cover the expenses of required studies bringing these drugs to market.

Xeris already has a growing income stream from Gvoke. The company’s third-quarter revenues were $9.5 million vs. just $0.3 million in the same quarter last year. The revenue stream will continue to build, but the catalyst here is additional Food and Drug Administration approvals or a partnership for faster development of its product for large markets.

Last Week, Piper Jaffray reiterated its “buy” rating on the stock with a price target of $11. The analyst believes that peak sales of Gvoke alone are at least $250 million. Any news about the develop of other drugs should produce a positive reaction, and the sales of Gvoke should provide solid support while we wait.

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