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.
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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.
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