It’s been a year of ups and downs across the industry, and these three biotech stocks could be in the early stages of a much longer climb. Despite eye-popping returns, all three are developing new drugs with blockbuster sales potential that their stock prices haven’t yet caught up with.
Chasing stocks on the rise usually doesn’t work out the way investors want it to, but all three of these drugmakers have what it takes to keep their stock prices moving in the right direction.
|Company (Symbol)||Stock Price Gain in 2019||Market Cap|
|Axsome Therapeutics(NASDAQ:AXSM)||838%||$875 million|
|Galapagos NV (NASDAQ:GLPG)||85%||$9.3 billion|
|Blueprint Medicines(NASDAQ:BPMC)||75%||$4.6 billion|
Here’s what investors need to know about the paths ahead for these drugmakers.
1. Axsome Therapeutics: Running toward danger
When your pharmacist warns you about dangerous drug interactions, usually it’s because one drug amplifies the effects of another. Axsome Therapeutics is making new combination treatments based on well-known interactions physicians have been taught to avoid, and the results so far have exceeded all expectations.
The company’s lead candidate, AXS-05, is a decades-old antidepressant — bupropion — that gets a measured boost from dextromethorphan, the active ingredient in most cough suppressants. This seemingly minor tweak improved bupropion’s efficacy by a mile for patients with treatment-resistant depression. In a mid-stage study, AXS-05 helped 47% of patients achieve remission compared to just 16% in the placebo group.
The FDA appears willing to review an application to treat people with major depressive disorder (MDD), based on mid-stage trial results, then use data from an ongoing phase 3 trial for confirmation. MDD affects around 6.7% of adults in the U.S., and around a third of them resist currently available treatments.
While the MDD indication for AXS-05 could generate annual sales above $1 billion in several years, it’s not the only blockbuster indication in front of Axsome and its pipeline. The company’s lead candidate is also in a phase 3 study for the treatment of agitation brought on by Alzheimer’s disease, and a mid-stage smoking-cessation trial study produced compelling results earlier this year.
Axsome isn’t a one-trick pony, either. The company has applied its combination approach to rizatriptan, a commonly prescribed acute migraine headache reliever that doesn’t work as often as patients would like it to, and a nonsteroidal anti-inflammatory drug called meloxicam. Axsome expects to report pivotal trial results for AXS-07 before the end of the year, and send a new drug application to the FDA in early 2020.
2. Galapagos NV: Gilead’s independent subsidiary
Successful hepatitis and HIV treatments have given Gilead Sciences(NASDAQ:GILD) a lot of cash to work with, and Galapagos is about to receive a significant chunk. Gilead will hand over a $3.95 billion upfront payment, a $1.1 billion equity stake, and add two members to Galapagos’ board of directors.
In return, Gilead receives rights to GLPG1690, a potential new treatment for idiopathic pulmonary fibrosis (IPF), and a lot more. From now through 2032, Gilead Sciences has the option to license any new drug candidate ready for phase 3 trials after Galapagos funds its development through phase 2 studies.
For the next decade, Galapagos will discover and develop whatever it fancies, knowing that Gilead can opt in for $150 million and take over the most expensive stages of development. Galapagos also remains eligible for steady royalty payments that will range from 20% to 24% of sales that result from the collaboration.
Gilead plans on sending an application for filgotinib, an oral anti-inflammation candidate for rheumatoid arthritis, to the FDA by the end of the year. To keep climbing past its recent $9.3 billion market cap, Galapagos needs filgotinib plus at least one more experimental therapy to earn approval and succeed in commercial stages. That’s a tall order for any partnership, but Galapagos’ chances look better than average…
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