This year has not been a great year for biotech stocks. In 2016, the sector was under intense pressure with issues like increasing political and media focus on high price tags for drugs and the changing competitive scenario weighing biotech stocks down.
While there has always been dissatisfaction about the high prices of drugs, the issue picked up pace last year in September when Hillary Clinton tweeted about “price gouging”. Clinton’s tweet was in response to news regarding a huge price hike (about 5,000%) taken by Turing Pharmaceuticals for a drug (Daraprim) that was approved by the Food and Drug Administration way back in 1953.
Needless to say, this caused a major furor considering growing concerns regarding the pricing and affordability of prescription drugs. Since then, drug stocks, especially biotech stocks, have found themselves under the microscope for price hikes and high-priced treatments.
Although biotech stocks did react favorably to the surprise win of Donald Trump in the Presidential election in November 2016, investors were in for a rude shock when the President-elect recently said that he does not like price increases; in congruence with this worry, the Nasdaq Biotechnology index is down 20% year-to-date.
Medical – Biomedical and Genetics Industry Five Year % Return
However, despite the immense pressure on the sector, some biotech stocks bucked the trend and more than doubled in 2016. Here is a look at four such stocks.
Four Bio Tech Stocks That Won BIG in 2016
CoLucid Pharmaceuticals, Inc (NASDAQ:CLCD): Cambridge, MA-based CoLucid is working on the development of a molecule for the treatment of acute migraines. The company’s pipeline candidates use a new mechanism that could address the unmet needs of migraine patients, including those with cardiovascular risk factors or stable cardiovascular disease and those who are dissatisfied with existing therapies.
CLCD shares shot up in September 2016 with the company presenting positive data from a late-stage study on its lead pipeline candidate, Lasmiditan. CoLucid’s shares are up 346% YTD.
Exelixis, Inc. (NASDAQ:EXEL): South San Francisco, CA-based Exelixis is focused on developing and commercializing small molecule therapies with the potential to improve the treatment of cancer. The company has had a phenomenal run in 2016 outperforming the Zacks categorized Medical/Biomedical Genetics industry by a huge margin. EXEL’s shares are up 169% YTD compared to the industry decline of 25.4%.
Exelixis’ portfolio includes two products derived from Cabozantinib — Cabometyx tablets (treatment for advanced kidney cancer) and Cometriq capsules (treatment for certain forms of thyroid cancer). Another product, Cotellic, derived from Cobimetinib, is marketed under a collaboration with Roche Holding Ltd. (ADR) (OTCMKTS:RHHBY) (for use in combination with Zelboraf to treat advanced melanoma).
Recently approved Cabometyx had a strong full quarter driven by Meteor data and commercial execution. The product already has a 19% share in the second-line metastatic kidney cancer market and 35% of the third-line segment. A major catalyst for EXEL would be approval for the first-line indication — the company has already presented pretty impressive results in October for the first-line patient population and is looking to seek approval for this indication. The first-line patient population represents huge commercial potential.
Exelixis is evaluating Cabometyx in several studies for different types of cancer and it has other products in its pipeline including CS-3150 (partnered with Daiichi Sankyo (OTCMKTS:DSKYF)). EXEL has made significant progress towards its goal of becoming a profitable, fully integrated, commercial company. (Looking for the Best Stocks for 2017? Be among the first to see our Top Ten Stocks for 2017 portfolio here.)
Tesaro Inc (NASDAQ:TSRO): Waltham, MA-based Tesaro is another cancer-focused company that saw its shares soaring in 2016 on impressive data. TSRO’s shares shot up in June 2016, when the company presented impressive data on its PARP inhibitor, Niraparib. YTD, Tesaro’s shares are up a whopping 162%. The company is currently seeking FDA approval for Niraparib for a certain type of ovarian cancer — the agency has granted the drug priority review with a response expected by June 30, 2017.
Importantly, the FDA does not expect to hold an advisory committee meeting for TSRO. PARP inhibitors are currently considered the next major class of therapeutics in oncology and represent immense commercial potential.
Achaogen Inc (NASDAQ:AKAO): South San Francisco, CA-based Achaogen is another company that had a phenomenal run this year mainly due to positive data on its lead pipeline candidate. AKAO shares are up 131% YTD with the stock receiving a major boost earlier this month when the company reported positive late-stage data on Plazomicin.
The candidate achieved the primary endpoint of non-inferiority (for the FDA) and superiority (for the European Medicines Agency) compared to Meropenem in patients with complicated urinary tract infections and acute pyelonephritis. Results from another phase III study showed a lower rate of mortality or serious disease-related complications for plazomicin compared with Colistin therapy in patients with serious infections due to carbapenem-resistant Enterobacteriaceae.
AKAO intends to seek FDA approval for the treatment in the second half of 2017 and EMA approval in 2018.
While CLCD, EXEL, TSRO and AKAO are all Zacks Rank #3 (Hold) stocks, CoLucid is a Zacks Rank #2 (Buy) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Where Do Zacks’ Investment Ideas Come From?
You are welcome to download the full, up-to-the-minute list of 220 Zacks Rank #1 “Strong Buy” stocks free of charge. There is no better place to start your own stock search. Plus you can access the full list of must-avoid Zacks Rank #5 “Strong Sells” and other private research. See the stocks free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report