The biotech sector will always house stocks with explosive upside potential. The very nature of the sector ensures that will continue to be the case. Developing breakthrough pharmaceuticals and medical devices requires massive sums of money and long periods of time.
Firms in the space must clear significant hurdles, including FDA regulatory requirements that often end in failure. In short, vast sums of money are often lost. However, vast sums of money are also gained, for companies that produce successful treatments for patients.
The stocks below offer exactly the kind of trade-off investors should be looking for. These companies have potential drugs with a real possibility of success. This upside potential isn’t without risk, but for investors considering biotech stocks, here are three options I think are worth keeping on the radar right now.
Ampio Pharmaceuticals (AMPE)
Ampio Pharmaceuticals (NYSEMKT:AMPE) develops therapeutics for treating osteoarthritis pain. To be sure, investing in Ampio stock is risky. But that risk comes with massive upside potential that may entice risk-seeking investors nonetheless.
Here’s why. At the beginning of 2023, Ampio Pharmaceuticals withdrew the three Investigational New Drug (IND) applications it had submitted for Ampion, its lead candidate. Those withdrawals signified the end of all developmental efforts for Ampion. The news didn’t affect share prices, though. They had already been hovering around the 30 cent level for months prior.
Yet, AMPE stock maintains a single analyst target price of $30. In other words, it’s potentially a 100X stock. All of its efforts have shifted away from Ampion and toward AR-300. This drug is being studied for efficacy in treating osteoarthritis pain specifically in the knee joint. The company intends to target clinical studies in relation to that use.
There’s very little news from the company, which is part of its overall risk profile. However, if Ampio can enter clinical studies as it hopes, the company’s share price will undoubtedly surge. This is a biotech stock that’s definitely worth at least putting on the watch list right now.
Harmony Biosciences (HRMY)
Harmony Biosciences (NASDAQ:HRMY) is a much safer choice than Ampio Pharmaceuticals for the biotech stock investor. Shares trade for $37 apiece, which is a level that suggests a reasonable level of stability overall. Those shares also have high potential, with an average target stock price of $60.11 at the time of writing.
The reason that Harmony Biosciences offers substantial upside is simple. Its lead drug, Pitolisant, is undergoing regulatory review. That means it has passed all three phases of clinical trials, and is very close to commercialization.
Pitolisant was developed by Bioprojet and received approval for use in Europe in 2016. Harmony Biosciences has an exclusive license to commercialize Pitolisant in the U.S. The drug first needs to receive commercial use approval in the U.S. Then, it can receive further approval for certain indications including treatment of excessive daytime sleepiness in people with Prader Willi syndrome. The company expects to begin Phase 3 studies in that regard in the second half of this year.
BioMarin (BMRN)
BioMarin (NASDAQ:BMRN) is the least-risky of all the companies listed in this article. Shares of BMRN stock trade for less than $100 per share, but has the potential to run as high as $200, according to the analysts covering it.
The company has developed therapeutics that address rare disorders, and several of these drugs have been successfully commercialized. Commercialization, of course, leads to revenue. In the case of BioMarin, total revenues increased by 15% in the most recent quarter, eclipsing $596 million. Those results were record-breaking for the firm in the first quarter. But it’s the firm’s future growth potential that causes outsized investor interest.
The company is experiencing rapid growth and uptake in global markets as diverse as Japan, Brazil, and Germany. In Germany, BioMarin should soon begin to get a clearer picture of eligibility for its hemophilia drug, Roctavian. And in the U.S., Roctavian is preparing for launch.
Thus, now may indeed be the time to invest in BMRN stock ahead of those launches. Increased uptake in global markets could lead BMRN to surge toward analyst high water marks. Thus, this is a gamble I think is worth taking right now.
— Alex Sirois
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Source: Investor Place