With the biotech sector going on sale due to its massive underperformance in the S&P 500 year to date, it is likely to generate bargains.
This bargain will definitely draw in traders and investors, but which biotech company stocks are the best to buy for the beginning of 2017?
Here are FSM News’ four biotech stock highlights that we think would be the best buys as we welcome the coming year.
ACADIA Pharmaceuticals (ACAD)
Acadia Pharmaceuticals is making a buzz in the biotech sector as its drug Nuplazid is the first and only FDA-approved (Food and Drug Administration) treatment for Parkinson’s disease Psychosis (PDP). While launching a new medicine to the market is difficult, the challenge isn’t quite hampering when there isn’t any rival to worry about.
Nuplazid was previously introduced only a few months back, but the early results are positive. Third-quarter total sales poured in at $5.3 million, an amount that exceeded than double of analysts’ expectations. This is seen as a good beginning for the biotech even if the total sales are nowhere near to balance the company’s massive spending.
While the said drug has just hardly begun to penetrate into the PDP market, the Acadia management is also proposing for expanding Nuplazid's labeling.
Overall, Acadia gives investors a lot of reasons to believe that it will display an incredibly fast growth for the coming years ahead—a long term gain. It is a recommended bet to get shares for Acadia while they are currently trading at a discount.
The ACAD stock finished the prior trading session at $29.750, up by 7.52% or $2.08.
Geron Corporation (Gern)
Geron comes as one of the sector’s most intriguing long-term value plays after suffering a market beat-down in the year. While this biotech firm doesn’t possess a product to offer to the market yet, its lead candidate, imetelstat, has generated attractive trial results that indicate it could potentially take over a somewhat underserved niche.
Its partner Johnson & Johnson is anticipating additional data from continued studies with the said drug next year. Should trial results for myelofibrosis, a bone marrow disorder that unsettles the body's normal production of blood cells, remain consistent with prior observations, the healthcare giant will aid in funding larger trials in order to support New Drug Applications.
As it stands, there is only one treatment for myelofibrosis, and that is Jakafi, manufactured by Incyte. According to third-quarter earnings report, Jafaki has generated sales and royalty revenue at a year run rate of $1.01 billion. The drug has also gained the FDA approval in 2011 due to its capability to lower spleen size, which is a symptom of the disease.
But Geron’s imetelstat is the first to reveal clear signs of decreased disease activity and even push the rare blood cancer to total diminution.
Currently, Geron’s enterprise value is a mere $340 million. But with a partner ready to usher the lead drug through the regulatory pathway and eventually into the commercial scene, there is a likely chance Geron could offer great returns to persevering investors next year.
At Monday’s close, GERN shares earned 5.39% or $0.110 to trade at 2.150.
Ligand Pharmaceuticals (LGND)
Ligand Pharmaceuticals boasts of a market cap less than $3 billion with a deep pipeline, eight programs in late-stage clinical studies and 18 more in mid-stage levels, which is a considerable amount the competes better against other larger biotech firms.
The success behind this is Ligand’s partnerships; the company has more than 90 partners and licenses for its drug development platforms, and many of which are the largest drug manufacturers in the market.
The appeal that comes with Ligand’s products is that they aid biopharmaceutical firms develop new drugs more effectively. Captisol, its leading technology, possesses a chemical structure that enhances solubility, stability, bioavailability and dosing of active pharmaceutical components.
From January to September 2016, Ligand’s revenue surged almost 40% in comparison to the same period last year. The biotech is seen to sustain this pace of growth for the next couple of years, supported by its solid pipeline and the soaring sales of Kyprolis and Promacta—its current products.
LGND ended Monday’s trading session with a gain of 3.12% or $3.14 to trade at 103.65.
Trevena Inc. (TRVN)
The clinical-stage biotech Trevena is scheduled to post top-line results from two phase 3 studies, namely APOLLO-1 and APOLLO-2, for its lead drug in the first quarter of 2017. The said experimental drug, oliceridine, is an injected dose for the treatment of moderate to severe pain in post-surgery.
Oliceridine should not be taken lightly because the acute pain market is enormous, and there’s an urgent need for viable substitutes to addictive drugs like morphine. With these descriptions, this specific drug market has all the factors in place to possibly make a highly lucrative product such as oliceridine.
All the evidence so far indicates that this experimental drug is an effective pain reliever, which suggests that it may hit the mark in each trial regarding its primary point: the ability to beat placebo as a pain reliever. This is a feat achieved successfully in its mid-stage trials that even led to a breakthrough therapy designation from the FDA previously in February.
However, oliceridine’s value proposition depends on how well it stacks up against morphine in regards to safety and efficacy, the secondary standpoint in the trials. Should Trevena’s drug generate a promising clinical profile relative to morphine, it may produce hundreds of millions in sales—a great potential haul for a firm with a market cap of roughly $300 million.
Keep in mind that there is a gripping bear case surrounding the drug’s ultimate commercial potential. Bears have shared that oliceridine’s target market is just a minute fraction of the acute-pain aspect, and the biotech company may not be able to persuade payers to cover for an obviously more costly drug than morphine.
In the previous Monday session, TRVN was last up by 3.11% or $0.18 to $5.97.
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