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Tickers in this Article: AIS, ARNA, ASTM, BCRX, DNDN, ROCM, TEVA, ZLCS
If you're looking for cutting-edge companies that have a chance to triple or quadruple in the coming months and years, don't look any further than today's best small biotechs, writes Mike Murphy of New World Investor.

The drive to produce, innovate, and cure is so strong in biotech, especially in the smaller drug companies, that knocking one out of the park is not only possible, but probable.

My current recommendations focus on finding the next big winners and companies that will offer solid profits from effective drugs. Just don’t buy any of them if you are planning to go to a desert island for the next five years, as we may trade in and out of these stocks.

Aastrom Biosciences (ASTM)
Target Price: $8 by the end of 2012, $12 by the end of 2013, $20 in 2014 after the data is reported, and $30 in 2015 (after FDA approval).

Aastrom is a regenerative stem cell company with products in Critical Limb Ischemia (entering Phase III) and dilated cardiomyopathy (in Phase II). Like Dendreon (DNDN), see below, their technology is applicable to other regenerative applications in the future, and works by boosting the body’s natural healing processes.

AIS Antares Pharma (AIS)
Buy Limit: $3. Target Price: $5 by the end of 2012.

Antares makes drug-delivery systems regulated as devices—injectors, disintegrating tablets, and transdermal gels.

Partner Teva Pharmaceuticals (TEVA) is making a push to take 10% of the US human growth hormone market using Antares’ needle-free injector, and is working on an epinephrine injector. BioSante has sublicensed an estradiol gel for hot flashes on the market now, and has LibiGel, the “female Viagra” testosterone gel, in Phase III trials ending in 2011, with an NDA filing in 2011.

Arena Pharmaceuticals (ARNA)
Buy Limit: $5. Target Price: $24, or more, after FDA approval in 2012.

Arena has Lorqess, an obesity drug that works and is safe, but was nixed by the Advisory Committee. They received a trivial Complete Response Letter, and should get approval between April and June 2012.

BioCryst Pharmaceuticals (BCRX)
Buy Limit: $4. Target Price: $6 in 2012, $30 after order announcements, and $50 after US peramivir approval in 2012-2013.

BCRX focuses on research and development of drugs that interfere with the progression of cancers, viral infections, and gout.

Peramivir is in pivotal trials for intravenous use in hospitals against seasonal flu. Peramivir works, the first order is in at a huge price, and the drug is already approved and in use in Japan and South Korea.

Dendreon (DNDN)
Buy Limit: $28. Target Price: $50 in 2012.

DNDN researches, develops, and commercializes therapeutics that equip the immune system to resist cancer.

Provenge—their approved therapeutic vaccine for prostate cancer—is personalized medicine at its best, and production will expand dramatically in 2011. This is the first of a series of billion-dollar drugs manufactured by DNDN technology.

Rochester Medical (ROCM)
Buy Limit: $12. Target Price: $18 in 2012.

ROCM makes urinary continence and urine drainage care products for the extended-care and acute-care markets.

There is already great demand for these products, and ROCM is providing a superior solution. Their extended-care catheters are made of silicone instead of latex to reduce allergic reactions. Their anti-infective catheter fights hospital-caused infections.

Medicare now reimburses for 600 catheters a month per patient, instead of 4, and will no longer reimburse hospitals for treating hospital-caused infections. Management has been deliberately running the company at breakeven to pour as much money as possible into sales and marketing, to take advantage of these regulatory changes, but this is about to come to an end.

Zalicus (ZLCS)
Buy Limit: $2. Target Price: $7 in 2012.

ZLCS has one technology for pain pathways, and another that develops combinations of approved drugs to combat diseases. How do they do it? The company’s high-tech assay equipment identifies synergistic combinations between already-existing drugs in an effort to better target diseases.

In spite of the failure of their first two drugs, they merged with privately-held Neuromed in a deal that is very beneficial for both sides. Exalgo for pain was approved in 2010, and that roll out plus additional partnership announcements in 2011 will drive the stock higher.

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