One of my favorite sectors to trade is biotech and pharmaceuticals.
New innovation, demand for better care, and an aging baby boomer population are continuing to fuel a multi-year rally in the sector.
Plus, spot the right trade and you could make a fortune.
For example, months ago we highlighted Axsome Therapeutics (AXSM) way before it exploded higher. Today, the stock is up to $17.68 and could run even more.
It’s pushing higher in response to positive clinical data regarding one of its depression drugs, AXS-05, which significantly improved depression symptoms after six months, when compared with bupropion.
The drug was also deemed to be safe and well-tolerated with no serious side effects.
“The clinically meaningful improvements in depressive symptoms seen with AXS-05 in this study were achieved versus an active comparator that is a well-established antidepressant, as early as only one week after initiation of treatment,” said Professor Maurizio Fava, MD, Executive Vice Chair, Department of Psychiatry, Massachusetts General Hospital (MGH) and Associate Dean for Clinical & Translational Research, Harvard Medical School.
“Data show currently marketed antidepressants fail to provide adequate treatment response in about two thirds of treated patients. An estimated 16 million Americans suffer from major depressive disorder each year. As an oral NMDA receptor antagonist with multimodal activity, AXS-05 could provide a new approach to treating this potentially life-threatening condition.”
Further good news for the biotech could send it screaming higher in our opinion.
While AXSM has already made big moves, there are others that we can start pushing into. One is an oversold drug stock that was unfairly beaten down. The other specializes in the development of drugs for rare diseases turn out to be great growth stocks for patient investors.
Opportunity No. 1 – Pfizer (NYSE:PFE)
In recent weeks, drug stocks like PFE fell thanks in part to United Health Group’s quarterly warning that scared investors from the sector. Two, the President and Congress are increasing pressure on high drug prices. Proposed solutions include allowing Medicare to negotiate drug prices. Another is to mandate that annual price increases of more than 5% to 10% be justified by additional research discoveries. Both haven’t been well received by drug stock investors. However, we believe that a good deal of negativity has been firmly priced into some of the top drug stocks. Here are just a few of them, and how to trade them for potential wins.
At bottom of trend, Pfizer is just beginning to pivot higher from oversold conditions.
Opportunity No. 2 — Amicus Therapeutics Inc. (NASDAQ:FOLD)
FOLD engages in the discovery, development, and commercialization of medicines for various rare and orphan diseases. The company offers Galafold, an orally administered small molecule pharmacological chaperone for the treatment of Fabry disease. It is also conducting a Phase 1/2 clinical study of ATB200-02 for indications, including pompe disease.
The company’s Fabry disease drug, Galafold is expected to generate sales of $500 million a year. In addition, the company is developing a Pompe disease candidate called AT-GAA, and has an early-stage gene therapy platform that’s targeting a slew of rare diseases. Historically, companies that specialize in the development of drugs for rare diseases turn out to be great growth stocks for patient investors.
John F. Crowley, Chairman and CEO of Amicus Therapeutics, added, “Developing a potential cure for Pompe has been a personal and professional goal for many years. These data are profound and it is extremely rewarding to see these preclinical results that show our Amicus engineered GAA is optimized for uptake into target tissues and gets to the right cellular compartments, especially in the central nervous system. These data also provide preliminary and compelling evidence that the Amicus technology to design constructs that enhance protein targeting may be a significant platform for multiple lysosomal disorders. As these data exceed our expectations, our preclinical studies are progressing well ahead of schedule and we now expect to select a clinical candidate in 2019 to move forward into IND-enabling studies.”