Three biotech stocks to buy now
Professional investors Ailsa Craig and Marek Poszepczynski of the International Biotechnology Trust pick three of their favourite biotech stocks to buy now.
Biotechnology investors are increasingly beginning to focus on life beyond the pandemic. There are many innovative companies in the biotech sector addressing long-term challenges, such as cancer and various neurological conditions.
As we look forward to the eventual endemic stage of the pandemic, these companies will benefit from the resumption of standard medical activities. We could also see the development of groundbreaking new drugs to treat conditions with considerable unmet need. We highlight three portfolio holdings well placed to outperform.
A niche with few competitors
Antipsychotic drugs are life-changing for patients, but the side effects can be severe. In certain cases patients develop treatment-induced tardive dyskinesia – involuntary movements similar to those experienced by patients suffering from Parkinson’s disease.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
US biopharmaceutical company Neurocrine Biosciences (Nasdaq: NBIX) is working to tackle this problem. Ingrezza, one of its drugs, improves the quality of life for patients on antipsychotic medication, while Ongentys, another treatment, is used to treat Parkinson’s disease. During the pandemic, sales of these drugs slid sharply: movement disorders such as Parkinson’s tend to be diagnosed in person. The shares fell too, bringing their valuation down to a more attractive level.
It will take time for sales trajectories to recover to pre-pandemic levels, but the long-term growth prospects for this company remain attractive. Neurocrine’s drugs address urgent, unmet medical needs, and few other competitors operate in the sector.
Making headway with headaches
Migraines create debilitating auditory and visual disturbances as well as severe pain. Up to 25 million days of work and education are lost every year owing to migraines, according to The Migraine Trust. The condition also places significant strain on accident and emergency departments. However, after many years of research, a new treatment known as calcitonin gene-related peptide (CGRP) inhibition has proved effective.
Injectable forms of this drug are already in use, but US-based Biohaven Pharmaceuticals (NYSE: BHVN) has developed it in a much more convenient tablet form. Biohaven recently received additional-usage approval for the treatment. It is applied to acute and chronic cases, as well as being used for migraine prevention. After the breakthrough, Biohaven announced a $1.2bn licensing deal with Pfizer for ex-US rights to the compound. This area has not seen major progress for many years, meaning competition is sparse.
Managers with a proven record
Cancer therapies have become more effective over the past decade, but treatment resistance remains a problem. US start-up ORIC Pharmaceuticals’ (Nasdaq: ORIC) principal drug, ORIC-101, targets the glucocorticoid receptor, which is linked to multiple types of treatment resistance.
Current trials are focused on prostate cancer, but if ORIC-101 proves effective, it could benefit sufferers of many other types of cancer. ORIC’s drugs are in the early stages of development, making it relatively risky. But it has a strong management team with a record of developing successful treatments, while the potential appetite for its products would be significant.
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
Ailsa Craig is an investment manager at the International Biotechnology Trust
-
Higher rates are disappearing – should you fix your savings?
Fixed savings rates have dropped to their lowest levels in over a year. Should you fix your savings now ahead of a potential base rate cut in November?
By Katie Williams Published
-
Nine million people fall victim to financial scams, says Citizens Advice
The charity says that around one in five people across the UK have been caught out by a finance scam in the past year - here is how to protect your money
By Chris Newlands Published
-
What will a broken-up Google look like?
The US courts have ruled that Google is a monopoly, leaving it facing the prospect of a break-up. WIll that be a good thing?
By Matthew Lynn Published
-
How will the UK gambling sector be hit by the Budget?
There are concerns for the UK gambling sector in the lead-up to the Autumn Budget. What could be on the cards?
By Dr Matthew Partridge Published
-
HSBC returns to cost-cutting plan
HSBC is set to revamp its commercial banking division – but will it come at a cost?
By Dr Matthew Partridge Published
-
Will European stocks bounce back?
European stocks have looked unattractive for some time – will they bounce back?
By Alex Rankine Published
-
British American Tobacco goes smokeless – can it survive?
British American Tobacco’s core product is struggling, but new areas bode well, says Bruce Packard
By Bruce Packard Published
-
Pfizer shares rise as US investor takes $1 billion stake
Pfizer shares are on the up since US activist investor Starboard Value built up a stake in the drug maker. But strategic options appear limited
By Dr Matthew Partridge Published
-
LSL Property Services: a profit-machine in the property sector
LSL covers every area of the residential real estate market and should thrive after its shake-up
By Rupert Hargreaves Published
-
Global car shares slide amid lower demand in China – what happens now?
Has the car sector run into trouble? Britain’s Aston Martin and Germany’s Volkswagen are among the key automobile brands that have issued profit warnings.
By Alex Rankine Published