3 Healthcare Stocks to Keep an Eye On
Chris is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Editor's Note: This article has been modified to correct the spelling of Soliris.
The healthcare industry is slowly becoming what the pre-crash technology industry was of the early 2000's. The emergence of new technologies in medicine, an aging working population, and retiring baby boomers are all expected to provide tremendous growth to the industry over the next several decades.
Many companies will inevitably capitalize on this growth, creating excellent investing opportunities for investors. For the next 20 years, nearly 10,000 people will turn 65 everyday -- a rate never seen in history, and by 2050, the number of people over the age of 60 will increase by nearly 300%, according to the US Census Bureau. The following healthcare stocks are positioned to take advantage of this change in demographics and are showing promising signs of growth in both, the near and short-term.
On June 3, Clovis Oncology's (NASDAQ: CLVS) stock doubled after the announcement that it's cancer drug, rucaparib, blew Phase I expectations out of the water. The experimental drug that treats ovarian cancer showed a clinical benefit in 89% of its users, and is targeted towards patients who have resistance towards current disease treatments. Currently, there are no options available to treat this mutation, making rucaparib a potential cash cow for Clovis. Because of the results, Clovis wants to start Phase II trials in the next couple of months.
Clovis recently announced a plan to offer $170 million in common stock in an effort to pay for more drug development programs and other general corporate purposes. Clovis is in the process of developing many other anti-cancer drugs, most of which are already contracted out to national pharmaceutical companies.
Alexion Pharmaceuticals (NASDAQ: ALXN) is the proud owner of the world's most expensive drug, Soliris. At nearly $410,000 per year for treatment, this remedy that treats paroxysmal nocturnal hemoglobinuria ("PNH"), a chronic disease which destroys red blood cells and causes anemia, is certainly not cheap. However, from an investor's perspective, this stock is very appetizing.
The FDA has given the Soliris drug "fast-track status;" a label that the FDA gives to potential break-through drugs. Over the last five years, Alexion has also proved to be one of the fastest growing healthcare stocks. Its EPS alone has grown at 87.72% on average annually during the past five years.
Keep a keen eye on the status of the Soliris drug in the near future. If all goes as expected, this health care stock could shoot to the moon.
Another one to watch
Sarepta Therapeutics (NASDAQ: SRPT) recently received requests from the FDA to provide more information on the clinical drug eteplirsen -- a potential surrogate marker in Duchenne Muscular Dystrophym -- and information about the clinical outcomes from Phase II. Sarepta is still hopeful that it will have communication about accelerated approval this summer, possibly in August, potentially driving the stock price to new heights.
The main reason for possible FDA acceleration is that Eteplirsen is the the only drug that has proven to increase the level of dystrophin: the protein whose deficiency is currently considered the main cause for the muscular dystrophy.
With that said, investor interest is likely to spike in the back half of this year when the Phase III trials of the drug begin and the FDA makes a decision on the outlook of the drug. Definitely keep an eye out for Sarepta Therapeutics in the coming months.
Even when the rest of the country struggled with the recession just a few years ago, the health care industry grew over 50%. Healthcare is still growing faster than the rest of the economy and National Health Expenditures (NHE) as a share of GDP is expected to reach 19.6% by 2019. The above mentioned stocks show signs of potential near-term growth, and investors should definitely keep an eye on them.
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