Every investor buying clinical-stage biotech stocks dreams of one becoming the next Amgen (NASDAQ:AMGN). That is a drug developer that can turn a formula into a blockbuster drug capable of providing plenty of high cash flows and earnings for its shareholders. AMGN sold more than $22.8 billion worth of drugs last year alone.
But the odds of that are not in your favor. Less than 20% of biotech stocks are able to get a drug to market.
The secret to finding the next Amgen, Gilead (NASDAQ:GILD) or Celgene (NASDAQ:CELG) isn’t to bet on the clinical guys, but the biotech stocks that have already received approval for one or more drugs. These firms have already done the heavy lifting and now working on sales, production and grow their revenues. That de-risks these firms plenty. The idea is to think long-term as these sales ramp-up and potentially become blockbusters.
For investors, this tier of biotech stocks offers a real chance of becoming the “next big thing.” And even if they don’t, you less likely to see your capital vaporize. With that, here are five biotech stocks that could hit it big.
5 Biotech Stocks That Could Be The Next Amgen:
Enanta Pharmaceuticals (ENTA)
For biotech giant AbbVie (NASDAQ:ABBV) its new hepatitis drug Mavyret is already seeing massive growth and being heralded as a future blockbuster. Behind that successful drug is a biotech stock you’ve never heard of named Enanta Pharmaceuticals (NASDAQ:ENTA).
Enanta specializes in creating therapies for viral infections and liver diseases. And it’s been crazy successful in doing that. ENTA designed a protease inhibitor called glecaprevir that stands as the basis for Mavyret. Before that, the biotech developed other inhibitor’s that went into other ABBV hepatitis medications. What’s great is that Enanta has been able to parley these successful medications into double-digit royalties.
Already, ENTA is profitable — a rarity in the biotech space — and features no debt on its balance sheet as well as a hefty cash balance. Based on continued rising sales of Mavyret and other HBV/HCV drugs — AbbVie expects revenue from HCV to reach $2.5 billion this year — Enanta is on its way to becoming as big as its partner. And that journey may come sooner than later. The biotech is plowing its extensive knowledge of the liver into the hot area of NASH. A success here could propel the biotech in the very big time.
All in all, ENTA offers one of the surest things in the sector.
5 Biotech Stocks That Could Be The Next Amgen:
Neurocrine Biosciences (NBIX)
Conservative and biotech stocks don’t usually go hand in hand. But that’s exactly the case with Neurocrine Biosciences (NASDAQ:NBIX). The drug markers management is very calculated in the types of bets it makes, does great studies and has developed a real winning drug discovery platform. This conservativism has paid-off in strides.
For starters, it has its own blockbuster on its hands in Ingrezza. The drug is used to treat tardive dyskinesia — which is marked by jerky movements of the face and body out of a patients control. The problem is TD is a side effect of many depression, schizophrenia and other mental health drugs. Take them too long and there’s a very good chance you’ll get TD. With a huge market, Ingrezza is flying off the shelves and beat sales expectations in the first quarter. As the only drug available to treat TD, the runway for NBIX is huge.
But the firm isn’t done. Partnering with ABBV, Neurocrine recently submitted a new drug application for Elagolix which will be used to treat endometriosis. Again, a huge untapped market for NBIX. Meanwhile, the biotech is beginning trials to see if Ingrezza can be used to treat Tourette syndrome.
With one upcoming blockbuster under its belt and another awaiting approval, NBIX is on its way to becoming biotech stock royalty.
5 Biotech Stocks That Could Be The Next Amgen:
Portola Pharmaceuticals (PTLA)
It’s rare for a biotech to have one drug approval under its belt but scoring two is a great achievement. And it’s even greater for Portola Pharmaceuticals (NASDAQ:PTLA) who had a tough time getting its two drugs past the FDA. But investors should be thrilled that PTLA scored the wins. Both drugs have huge markets.
BEVYXXA is an anticoagulant, while ANDEXXA is a reversal agent for anticoagulation therapy. The key is that ANDEXXA is for those who are experiencing uncontrolled or life-threatening bleeding. That’s becoming a problem as more doctors are prescribing trio of Eliquis, Xarelto or Pradaxa- Xa inhibitors- for preventing blood clots/strokes. Without PTLA’s medicine, nearly 75,000 people each year potentially could lose their lives. And so far, PTLA has the show all to itself.
Given the growing and unmet need, Portola is sitting a gold mine as hospitals will begin keeping the drug on hand for emergency situations. There’s plenty of blockbuster potential in it.
While they wait for the drugs to take off, PTLA features a decent balance sheet at more than $451 million in cash. That gives it plenty of wiggle room to build-out a sales staff and get the ball rolling. Meanwhile, more cash keeps coming in. At the end of May, it received a $100 million milestone payment for ANDEXXA.
In the end, Portola has a very big niche all to itself. A hallmark that Amgen had in its early days.
5 Biotech Stocks That Could Be The Next Amgen:
Flexion Therapeutics (FLXN)
Opioid addiction is quickly becoming a major problem. Curbing that abuse has become a top priority for health advocates and regulators. So, any pain medication that isn’t addictive and is equally as effective and has a real shot at becoming a blockbuster. That’s where Flexion Therapeutics (NASDAQ:FLXN) comes in.
FLXN’s Zilretta is an injection used to treat the pain associated with osteoarthritis of the knee. It’s a big market — with over 30 million Americans suffering from the infliction. The beauty is that Flexion recently received a so-called J-code meaning that it has been approved for reimbursement under Medicare. That provides coverage for the drug in its main demographic of users. At the same time, FLXN is running trials on Zilretta on various applications such as elbow and shoulder pain. This would open up the drug to even more patients.
Flexion only received approval back in October, but sales of the injection have already been pretty good. Doctors seem to really love the medication. Those sales should rise further as Medicare reimbursement occurs.
For investors, Flexion represents one of the sure things when it comes to fighting opioid addiction and advancements in pain meds.
5 Biotech Stocks That Could Be The Next Amgen:
Dova Pharmaceuticals (DOVA)
Sometimes biotech stocks start off on the right footing. That’s the case with Dova Pharmaceuticals (NASDAQ:DOVA). The firm didn’t develop anything from scratch but took a cast-off drug it purchased for a song and worked it through trials and into an eventual approval — in about a year. But that doesn’t make it any less of a buy for investors.
Thrombocytopenia is a low-blood platelet disorder. With it, patients find it hard to form blood clots and suffer major bleeding from even a small injury. During major medical procedures, they can actually suffer life-threatening conditions. DOVA’s drug Doptelet is approved to treat thrombocytopenia in patients with chronic liver disease. That’s a decent sized market and the only treatment is an off-label medication that doesn’t always work for all patients.
The kicker is that DOVA is looking to fast-track Doptelet for other indications of thrombocytopenia. That will expand the usage of the drug and bring in more revenues. Considering that DOVA purchased the drug for a song, margins remain high.
With the firm just receiving approval back in May, investors have a chance to get in at the beginning of the biotech stocks real growth story. Assuming it doesn’t get a buyout bid first.
Disclosure: Author is Long NBIX, ENTA, PTLA
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