Biotech shares have fallen upon hard times amid a rising furor over high drug prices and slowing sales of older blockbusters.
“After a rip-roaring six-year bull run, the Nasdaq Biotechnology Index has tumbled more than 27% since its July 2015 peak A string of lackluster drug launches has also hurt confidence in an industry built on the promise of innovation and breakthrough discoveries,” Barron’s reported.
"While biotech stocks have gained 12% in 2017, due partly to depressed valuations, the engine for future growth will depend on pipelines producing innovative drugs that fill unmet needs," Barron's reported.
“It is difficult, near impossible, to predict when a company will get taken out, but pipelines mature,” says Marshall Gordon, manager of the ClearBridge Global Health Care Innovations fund. “It is always a good strategy to go after drug makers with good pipelines.”
Barron’s spotlights three promising picks with powerhouse pipelines: Regeneron Pharmaceuticals (ticker: REGN), Celgene (CELG) and Vertex Pharmaceuticals (VRTX).
For Regeneron, "there are high hopes for Dupixent, the experimental drug for atopic dermatitis now awaiting FDA approval. But Regeneron’s early stage pipeline includes cancer therapies and a next-generation version of the blockbuster eye drug Eylea," Barron's reported.
Celgene used savvy deal-making to build a diverse pipeline of experimental hematology, inflammation and immunology therapies that include the MS drug ozanimod and the Chrohn’s disease treatment mongersen.
Vertex markets the only two disease-modifying treatments available for cystic fibrosis. "But many patients still lack treatment options, a problem Vertex hopes to fix with two experimental combination medicines," Barron's reported.
To be sure, it can be tricky to correctly diagnose the future of biotech shares, but one guru sees them on a bullish path.
"Biotech stocks can be some of the riskiest stocks to have exposure to, but they can also be among the most rewarding," Brian Shannon, CMT, wrote for Yahoo Finance.
Shannon suggests the Nasdaq Biotechnology Index (IBB) ETF poised to post impressive gains.
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