3 Top Biopharma Stocks of 2012
Cecil is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
As we head to the end of the year, let’s take a look at some stocks in the biopharma sector that have managed to do extremely well in 2012. I’ll also take a look at what their outlook is for next year.
Arena Pharmaceuticals (NASDAQ: ARNA) is a clinical-stage biopharmaceutical company focused on discovering, developing, and commercializing oral drugs that target G protein-coupled receptors (GPCRs) in four therapeutic areas: cardiovascular, central nervous system, inflammatory, and metabolic diseases.
As per their last earnings release in the beginning of November, the company reported EPS of $0.07 for the quarter. The company had revenue of $1.50 million for the quarter, compared to the consensus estimate of $3.72 million. During the same quarter in 2011, the company posted ($0.16) earnings per share.
It is best to think of Arena’s high ranking on this year’s Top 10 list as a momentary suspension of reality-based investing. One of the key drugs in the company’s portfolio is Belviq, which is expected to go on sale next year. Belviq’s approval in Europe, widely expected by Arena bulls, is also far from certain. If the stock continues to run up before the launch of the drug, Arena could be one of the best shorts of the coming year.
Celsion (NASDAQ: CLSN) traded flat for the first six months of the year, but has picked up considerable momentum this fall now that results from the phase III study of its liver cancer therapy ThermoDox have been confirmed for release in January. Celsion's claim to fame is ThermoDox, a drug based on the company's Lysolipid Thermally Sensitive Liposomes (LTSL) platform being tested in a variety of cancers. The results won't be released until early next year, so consider this the beginning of the speculative fury, with things only intensifying into January.
Make no mistake -- there is significant upside for investors if the liver cancer trial results are good, but the downside is equally massive if ThermoDox were to fail. And those who invest in Celsion while ignoring that risk do so at their own peril. If the phase III study should fail, Celsion will be on the list of worst performing biotech stocks for 2013.
Sarepta Therapeutics (NASDAQ: SRPT) is a stock that is trading around the $28 mark, and the company is arguably the best performer in the sector for 2012. This performance is mainly thanks to the company’s lead drug Eteplirsen, which shows tremendous promise as a groundbreaking treatment for Duchenne muscular dystrophy (DMD), a rare genetic disorder that forces patients into wheelchairs in their teens and can be fatal shortly after.
Initial results in April from a phase II study of Eteplirsen in DMD patients were tantalizing, but essentially ignored by Wall Street. Follow-up data from the same study announced in July and presented in October were nothing short of astonishing. The Eteplirsen data is so good that Sarepta is hoping to convince the FDA to approve the drug early. DMD advocates are already mobilizing to lobby FDA on the company's behalf.
All of these stocks have inherent dangers. Just because their performance in one year was good doesn’t necessarily meant that their performance in the next will be comparable. Out of the three of these, Sarepta Pharmaceuticals seems to be the most promising, thanks to Eteplirsen. The fact that DMD advocates are lobbying the FDA on behalf of the company is good news for investors, and the results will clearly be significant. If the FDA approves the drug based on the small study, Sarepta could be one of the biggest drugs of 2013.
ceciljohn2002 has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!