Top 3 Best Biotechs of 2018
Noting that biotech stocks have been in “hypergrowth” mode over more than six years, George Budwell, writing for The Motley Fool, looks at three biotech stocks that he would recommend to investors. Of course, it’s always worth keeping in mind that biotech stocks tend to be volatile, so great returns can also come with higher risk. But he feels these three have the best risk-to-reward ratio.
Headquartered in Summit, NJ, Celgene focuses on cancer and severe, immune and inflammatory conditions. It currently has more than 300 ongoing clinical trials with its compounds in a variety of cancers, including multiple myeloma, myelodysplastic syndrome, chronic lymphocytic leukemia (CLL), non-Hodgkin’s lymphoma (NHL), triple-negative breast cancer, and pancreatic cancer.
Budwell writes, “Celgene Corporation is a large-cap biotech stock that sports a small-cap growth trajectory. Specifically, the company is forecasting a healthy 14.5 percent compound annual growth rate for its top line over the course of 2017 to 2020. That’s a remarkable growth trajectory for a company with a market cap of $80 plus billion, especially after Celgene was forced to recently lower its revenue forecast in a significant manner for the plaque psoriasis treatment, Otezla, because of new competitive threats.”
Celgene stock is currently trading at $101.66.
Based in Seattle, Juno is an immune-oncology company focused on CAR-T therapies. The company ran into problems earlier this year with patient deaths for its lead CAR-T oncology program, JCAR015. It shifted out of that program to another CAR-T, JCAR017, and presented excellent data at the American Society of Clinical Oncology (ASCO) meeting in Chicago in June.
Budwell writes, “The biotech’s value proposition rests on the assumption that JCAR017 can produce similar efficacy results as Gilead Sciences’ recently approved Yescarta in DLCBL patients who have already received multiple lines of chemo, but with a far more attractive safety profile. And so far, this key assumption appears to be holding up as JCAR017’s clinical program progresses—at least based on Juno’s impressive abstracts for the upcoming American Society of Hematology meeting this December.”
Juno stock is currently trading for $57.26.
Located in Stamford, Conn., Cara focuses on first-in-class drugs for pain, inflammation and pruritus. On Oct. 25, the company announced it had dosed the first patient in its Phase I clinical trial of CR845 in patients with stage III-V chronic kidney disease (CKD) who are not on dialysis. The trial is looking at three different oral doses of the drug.
The company’s stock has gained about 42 percent this year, and Budwell thinks it will carry over into 2018. CR845 is expected to enter a pivotal trial before the end of the year for moderate to severe chronic kidney diseases associated with itching in hemodialysis patients, and is in a late-stage trial for acute postoperative pain. Together, if approved for both, the drug could hit $400 million in peak annual sales.
“While CR845 is no longer viewed as a rock solid blockbuster candidate because of its mixed mid-stage results in the high-value chronic-pain arena earlier this year, this experimental drug could still spark a huge rally in Cara’s shares in 2018,” Budwell writes.
Cara stock is currently trading for $13.38.