It’s time to flip the calendar to a new month, but a new quarter as well, resetting the psychological clock for investors. We’re also entering a time of year that’s uniquely (though reliably) bullish for biotech stocks … a boost most of them could use after a miserable showing in 2015 and a lackluster first half of 2016. On average, biotech stocks gain 7.5% in the third quarter of the year.
The good news is, at least a handful of biotech stocks are starting to get some actual traction for all the right reasons, making the most of the brewing bullish wave.
With that as the backdrop, here’s a closer look at 10 biotech stocks with major catalysts in the queue for calendar Q3.
If the news is good, it could light a fire under these names. Of course, if the news is bad, it could just as easily deflate them. It’s also worth adding each of these stocks could dish out some trade-worthy action leading up to the news.
In no particular order, here are biotech stocks to watch like a hawk in the upcoming quarter:
Biotech Stocks to Watch in Q3: Insys Therapeutics (INSY)
July 1 is the targeted Prescription Drug User Fee Act date for Insys Therapeutics Inc (NASDAQ:INSY) drug Syndros (dronabinol oral solution) as a therapy for AIDS-related anorexia, after being pushed back from an original PDUFA date of April 1.
Syndros is an orally dosed liquid marinol, built from the ground up to make use of the medicinal qualities of marijuana. The marinol market is worth $150 million per year now, but has been relatively underaddressed. If Syndros is given the green light, though, some experts think it could be one of the better plays in what will sooner than later be a $700 million market.
It would be a much-needed break for current and would-be INSY owners. The company has been in hot water for off-label marketing of its current breadwinner drug, Subsys.
Biotech Stocks to Watch in Q3: GW Pharmaceuticals (GWPH)
Note that there’s also no firm date for the phase 2 trial update of GWP42004 from GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH), as a treatment for type 2 diabetes. But, based on the company’s past statements, that news should be posted sooner than later … by the end of July at the latest.
Type 2 diabetes has long been addressed by the pharmaceutical industry, and is a highly competitive arena. Then again, with nearly $60 billion worth of annual revenue up for grabs, that comes as no surprise.
GWP42004 is a cannabis extract better known to the scientific community as tetrahydrocannabivarin, or THCV. THCV has been linked to the protection of pancreatic islet cells in preclinical and clinical trials so far.
Biotech Stocks to Watch in Q3: Valeant Pharmaceuticals (VRX)
If there’s any biotech stock that needs a break right now, it’s Valeant Pharmaceuticals Intl Inc (NYSE:VRX). It has become public enemy No. 1 (for several reasons), and a new CEO has been handed the keys to a hot mess.
Well, Valeant Pharmaceuticals just might get that break on July 19. That’s when it will hear the FDA advisory committee’s opinion on Brodalumab as a treatment for severe plaque psoriasis. It’s not an earth-shattering opportunity, but a small victory could go miles for VRX.
Brodalumab is a monoclonal antibody, and has shown solid efficacy as a therapy for plaque psoriasis. How solid? The drug achieved a complete reduction in psoriasis in twice the number of patients that another popular treatment for the disease can boast.
Biotech Stocks to Watch in Q3: Ultragenyx Pharmaceutical (RARE)
Ultragenyx Pharmaceutical Inc (NASDAQ:RARE) is yet another one of several biotech stocks with plans to report something big at some point likely in July, but with no specific (given) date yet, we’ll just have to keep our eyes and ears open.
The news will be an update on rhGUS as a treatment for Mucopolysaccharidosis 7 (or MPS 7, though it’s also often referred to as “Sly Sydnrome”), which often results on conditions like joint stiffness and organ dysfunction.
The drug is in phase 3 trials right now, and while MPS 7 is a relatively unknown ailment, there’s some measurable upside for RARE with it simply because so few biotech stocks even come close to being in the race.
Biotech Stocks to Watch in Q3: Sage Therapeutics (SAGE)
Still another biotech stock without a firm date in place for a key R&D update, put Sage Therapeutics Inc (NASDAQ:SAGE) on your watchlist. Just know that sometime in July it’s supposed to post a phase 2 update on SAGE-547 as a therapy for postpartum depression.
An earlier, smaller-scale study of the drug in this capacity went well, with all patients in the study showing significant improvement of postpartum depression in relatively short order.
Postpartum depression (or PPD) is experienced by up to 20% of women following childbirth, making for a sizable market. The downside is, about a dozen broad-use antidepressants are also approved treatments for PPD. So Sage Therapeutics is going to have to show regulators something pretty incredible specifically with postpartum depression if it’s to get any traction from the trial’s results.
Maybe it will.
Biotech Stocks to Watch in Q3: Portola Pharmaceuticals (PTLA)
Portola Pharmaceuticals Inc (NASDAQ:PTLA) isn’t exactly a household name … even among households familiar with biotech stocks. But the company may well make a name for itself come Aug. 17 when it hears from the FDA about andexanet alfa as a factor Xa inhibitor, which in simplest terms means it prevents free bleeding in patients with blood that doesn’t clot properly.
The FDA’s priority review isn’t a guarantee of an approval, but it sure doesn’t hurt the approval odds.
An estimated 50,000 U.S. patients were admitted into a hospital last year specifically because of uncontrolled bleeding issues, but Portola is eyeing the much bigger global market that could consist of 500,000 patients in just a few years.
Biotech Stocks to Watch in Q3: Achillion Pharmaceuticals (ACHN)
It’s another non-specific date, Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) has simply said to look for an update sometime during the third quarter, which means it could come as late as the end of September.
Regardless of when it comes, though, the phase 2a top-line report regarding an HCV drug combo from Achillion is sure to turn some heads.
Hepatitis C has been a major hot button among biotech stocks of late, with uber-expensive treatments from Gilead Sciences, Inc. (NASDAQ:GILD) forcing the debate between cost and efficacy. The pairing of AL-335, odalasvir (ACH-3102), and simeprevir may well be a much-needed cost-effective alternative. Co-developed with Johnson & Johnson (NYSE:JNJ) subsidiary Janssen after the latter ponied up $1.1 billion for part of the drug’s rights, this treatment certainly has a credible backer.
Biotech Stocks to Watch in Q3: Alder Biopharmaceuticals (ALDR)
The migraine market may not be as riveting as, say, the cancer market, but don’t dismiss the opportunity it brings. About $3 billion is up for grabs here.
Enter Alder Biopharmaceuticals Inc (ALDR), which has developed ALD403 as an entrant in the highly-contested buy mostly-poorly run migraine race. ALD403 is an unusual approach to migraine treatment, in that it’s an antibody rather than a narcotic. Nevertheless, the drug performed well in the initial part of the phase 2b trial, with about a third of the sample population reporting a 75% reduction in the number of days they suffered a migraine during the testing period.
All we know at this time is to expect some sort of update on the aforementioned trial during the third quarter of 2016. Alder might, however, at least give some sort of advance notice of when it’s going to unveil the information.
Biotech Stocks to Watch in Q3: Novavax (NVAX)
Note that the end of September is likely the very latest that Novavax (NASDAQ:NVAX) will give the market an update on its RSV (respiratory syncytial virus) F vaccine. The company has said it simply expects to provide an update sometime in Q3. It could come at any point in the next three months.
RSV isn’t a high-profile target for drug developers; many investors have never even heard of the disease. Don’t let its obscurity fool you, though. Novavax estimates the non-served market to be capable of driving between $6 billion and $8 billion in annual revenue as its peak.
The RSV F vaccine is presently in phase 3 testing, though it’s worth noting it has been fast-tracked by the FDA, accelerating its trial and review-to-approval process.
Biotech Stocks to Watch in Q3: Vertex Pharmaceuticals (VRTX)
Last but not least, put Vertex Pharmaceuticals (VRTX) on your list of biotech stocks to watch in the third quarter. Sometime during Q3, it will to release an update on its phase 3 trial of Orkambi. (lumacaftor/ivacaftor) as a treatment for a subset of cystic fibrosis patients.
Orkambi has already been approved for other segments of cystic fibrosis patients. The trial in question, however, is testing the therapy in CF patients between the ages of six and eleven years old who also have a specific mutation. Orkambi has also been given priority review status by the FDA for this segment of the market, meaning it has been ushered to the front of the line to when and where possible. It doesn’t guarantee an approval, but it does acknowledge the agency sees a dire need for the drug’s potential.
Even if it’s approved later on, though, the United Kingdom has already balked at its high price. The U.S. is gradually becoming similarly less accommodating to overpriced therapies.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.