Image source: Getty Images.

Widespread selling following the U.K.'s decision to walk away from the EU is taking a toll on U.S. biotech stocks, despite the fact that many clinical-stage biotechs will feel little or no negative impact from the Brexit. Because Novavax (NASDAQ:NVAX), Kite Pharma (NASDAQ: KITE), and Flexion Therapeutics (NASDAQ:FLXN) are concentrating on the U.S. drug market first, they're more insulated from uncertainty overseas. Read on to learn why you should think about buying these stocks on sale.

Boosters for baby boomers

Respiratory syncytial virus, or RSV, causes about 180,000 admissions to U.S. hospitals every year, and there's currently no approved vaccination to prevent it.

Novavax, Inc. (NASDAQ:NVAX) could change that if data from late-stage trials of its RSV-F vaccine are positive. The company expects to report data from a large phase 3 study soon, and depending on the data, this vaccine could become a standard that's given to tens of millions of seniors in the U.S. every year. 

The company's management has estimated that its addressable market could exceed 100 million people in the by 2020 -- and that's in the U.S. alone. The sheer size of this market has Novavax predicting that sales of RSV-F could eventually top out at more than $6 billion. 

While there's no guarantee that the phase 3 trial results will be good enough to warrant an application for FDA approval, RSV-F did prove itself to be effective during midstage trials involving more than 1,000 patients. Given RSV-F's midstage success and the size of this market opportunity in the U.S., buying shares ahead of the phase 3 data on a Brexit sell-off might pay off.

Image source: Kite Pharma, Inc.

Curbing cancer

Kite Pharma (NASDAQ: KITE) is at the forefront of research into chimeric antigen receptor T-cell therapy, or CAR-T, a novel cancer-killing approach that could net U.S. approval in 2017.

Later this year, Kite Pharma should unveil results from mid-stage trials of its CAR-T therapy, KTE-C19, which is being evaluated in tough-to-treat patients diagnosed with aggressive non-Hodgkin lymphoma (NHL).

The company has been regularly updating industry watchers on its progress in treating patients with KTE-C19, and recently management reported that 22 of 41 KTE-C19 patients responded to therapy in trials. One of seven chemorefractory NHL patients remains a complete responder at nine months, and two other patients remain complete responders at the six-month mark. Median overall survival for this patient population has historically been less than four months, so this data adds credence to the idea that the FDA could approve this drug without phase 3 data in hand.

Assuming patient response to KTE-C19 remains this good, Kite Pharma plans to file for such an accelerated approval before the end of 2016. If it meets that timeline, then KTE-C19 could get a U.S. regulatory green light in 2017.

In anticipation of approval, Kite Pharma has already built up the infrastructure to produce between 4,000 and 5,000 KTE-C19 therapies per year. Given that cancer curbing drugs typically fetch over $10,000 per month and there's a massive need for aggressive NHL therapies, Kite could be racking up hundreds of millions of dollars in sales within a year or two.

Image source: Flexion Therapeutics.

Preventing pain

If you're one of the 5 million people in the U.S. receiving corticosteroid injections to treat your osteoarthritis knee pain, then you'll understand immediately why Flexion Therapeutics (NASDAQ:FLXN) may have a billion-dollar blockbuster on its hands: The company's lead product candidate is Zilretta, a novel, long-lasting therapy that can reduce knee pain for up to three months.

In clinical trials, Zilretta reduced knee pain by 50% from baseline over weeks 1 through 12, and recently the FDA told the company that those results were enough to support a filing for U.S. approval.

Currently, patients with knee pain requiring therapy are often treated with quarterly corticosteroid shots, but the benefits of those shots can wear off quickly, so Zilretta has a good shot at displacing them as standard of care.

Of course, there's no guarantee that the FDA will OK Zilretta, but if it does, then management thinks it can price Zilretta at about $2,000 per patient per year. If so, Zilretta wouldn't have to win over that many U.S. doctors to become a top-selling therapy.

Looking forward

Novavax, Kite Pharma, and Flexion Therapeutics all hope to launch their drugs in overseas markets someday, but their success is far more closely tied to the U.S. right now than it is to Europe. Therefore, while the Brexit raises uncertainty regarding the approval of drugs for sale in the U.K., a sell-off in these companies because of the Brexit seems a bit unwarranted. Assuming I'm right, then a drop in these stocks could prove to be temporary, and buying them ahead of their big U.S. catalysts could prove a smart play.



This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.