Healthcare and pharma companies hold a lot of promise in the present landscape, where most countries have high aging demographics. Though some pharma stocks tend to be volatile, with a lot depending on new entrants, biosimilars and regulatory approvals, we have identified three companies that you could consider including in your portfolio in the fourth quarter.
Regeneron Pharmaceuticals (REGN): Though much of Regeneron’s growth between 2012 and 2015 was attributable to its blockbuster retinal treatment Eylea, the company is now gradually expanding research into other promising areas including heart and immune system disorders.
Only last month, it received an FDA approval for its skin cancer treatment called Libtayo. Notably, this is the first treatment to receive approval for advanced cutaneous squamous cell carcinoma, a kind of skin cancer that causes around 7,000 fatalities in the US every year.
There are a few other potential FDA approvals waiting in the pipeline, the most recent one expected later this month, for the expanded use of Dupixent antibody to patients suffering from Asthma. An approval could make Dupixent Regeneron’s second blockbuster drug.
These are ably backed by the S&P 500 component’s Praluent, a cholesterol-control drug that had witnessed a sleeper success.
Rhythm Pharmaceuticals (RYTM): A relative newcomer, Rhythm is a bioparma firm that focuses on rare and fatal genetic disorders. Its investigational drug setmelanotide, which will be used to treat Alstrom Syndrome and Bardet-Biedl Syndrome, had recently reported positive results from the phase 2 study.
The Boston-headquartered company’s stock, which started trading on Nasdaq in October last year, is flattish at the moment. However, the stock has an average price target of $38.20, which is at a 52% upside to the current trading price of $25.19.
The third stage trial is set to initiate this quarter and a success would give a gargantuan push to the stock.
RYTM stock has an average price target of $38.20, which is at a 52% upside to the current trading price of $25.19.
AbbVie (ABBV): Abbvie has had a rough ride this year, spurred by FDA Commissioner Scott Gottlieb’s intention to make entry of biosimilars to markets less cumbersome. The move, if materialized, would greatly dent the sale of its flagship rheumatoid arthritis treatment Humira.
However, this has created a great buying opportunity for a stock that has enormous potential. It’s true that investors need to keep a watch on the regulatory developments in the biosimilar front. But such an action need not entirely break the stock. AbbVie already has licensing tie-ups in place with rivals Amgen (AMGN) and Mylan (MYL) to delay any potential biosimilar launches until the next three to four years. The company would continue to do this.
The company also has other successful products such as Mavyret and Imbruvica, even if Humira takes a hit.
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