The biotech industry can aptly be described as Wall Street's roulette wheel. The odds are against drugmakers succeeding in clinical trials, but if they do, the rewards can be enormous.

Keeping in mind the risks involved with investing in biotech stocks, as well as the huge potential gains they can bring to the table, we asked three of our biotech-focused Foolish contributors for one biotech stock that they believe could be worth adding to your portfolio this February. Making the list were Sarepta Therapeutics (NASDAQ:SRPT), Cara Therapeutics (NASDAQ:CARA), and Xencor (NASDAQ:XNCR)

Lab researcher holding a DNA double helix.

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Rare value from a rare-disease drugmaker

Sean Williams (Sarepta Therapeutics): For savvy investors with a penchant for high-risk, high-reward biotech stocks, my suggestion for February would be to consider Sarepta Therapeutics.

For a short time, at least, Sarepta was the story stock of 2016. Exondys 51, the company's exon 51-skipping drug designed to treat 13% of all Duchenne muscular dystrophy (DMD) patients, wound up being approved by the Food and Drug Administration (FDA) after it demonstrated success in the six-minute walk test versus a placebo in a very small cohort of phase 2/2b patients.

However, in return for its conditional market approval, Sarepta was told it would have to run a phase 3 confirmatory study to demonstrate to the FDA that its drug does indeed work as advertised. Furthermore, Sarepta has faced pushback from insurers given Exondys 51's cost of around $300,000 per year. Concerns that insurers may leave Sarepta's drug off their formularies, as well as uncertainties about the success of a phase 3 study, have dragged Sarepta's share price from north of $60 to under $30 in just a few months.

Yet there are two factors that could make Sarepta a stock worth buying. First, the approval of Exondys 51 essentially validated Sarepta's entire exon-skipping pipeline, which hopes to tackle about half of all DMD patients with its preclinical and clinical pipeline. It's true that the confirmatory phase 3 study still needs to find the mark, but if it does, one possible assumption is that its remaining exon-skipping pipeline would be in great shape.

Secondly, worries over Exondys 51's price may have been overplayed. During a presentation at the JP Morgan Healthcare Conference in January, CEO Edward Kaye announced that sales of the drug totaled $5.4 million on an unaudited basis, suggesting initial uptake of the drug has been stronger than expected. Similarly, my Foolish colleague Cory Renauer points out that about 60% of patients are being covered by private insurance. With no other options available for DMD patients, it's hard to see a majority of insurers denying coverage.

Sarepta could very easily have $1 billion in product sales within the next five to seven years if its phase 3 trial succeeds and its exon-skipping platform receives that final push of validation. Long-term biotech-savvy investors with a stomach for volatility would be wise to give Sarepta a closer look.

Two lab researchers examining a test tube.

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A no-brainer

Cory Renauer (Cara Therapeutics): America's enormous chronic-pain market has been ripe for an effective drug with low potential for abuse, and my biotech stock pick for February could be on the doorstep of delivering one. Cara's lead candidate, CR845, is a novel opioid that acts on peripheral nerves -- where pain signals begin -- but doesn't cross the blood-brain barrier. Without access to the brain, the candidate can't cause the euphoria that makes opioids terribly addictive.

Physicians have been clamoring for abuse-proof chronic pain relievers, and we'll know more about whether CR845 will be able to fill the unmet need soon. During the present quarter, the company expects to report top-line results from a trial with chronic kidney disease patients with chronic itching, a population of perhaps 3 million in the U.S. alone.

In a previous study, Cara's candidate significantly reduced itch intensity in a smaller group of these patients. This biotech stock has more than doubled over the past year, but repeating previous success in the larger trial would probably send the stock climbing even higher.

An approval for the kidney disease indication alone would justify the company's recent market cap of around $416 million, but there's more. Before the end of the first half, the company also expects readouts from a trial for acute post-op pain and osteoarthritis pain. Success in these indications could make this one of the best-performing biotech stocks of the year.

Laboratory researcher examining a test tube.

Image source: Getty Images.

Friends in high places

Brian Feroldi (Xencor): While I vastly prefer biotech stocks that are already cranking out profits, I can't help but feel bullish on Xencor. The bull thesis for owning Xencor stems from its XmAb antibody engineering platform. Xencor claims that this technology allows the company to quickly churn out drug candidates that promise better stability and potency than currently available drugs. 

While I think it's smart to be skeptical of any clinical-stage company that claims to have created a better drug-development platform, I can't help but be impressed by the number of companies that have signed up to get their hands on Xencor's technology. This includes Alexion Pharmaceuticals, Merck, Amgen, Johnson & Johnson, Boehringer Ingelheim, and more.

Better yet, Novartis is so excited about Xencor's XmAb technology that it signed a co-development agreement that netted the company a $150 million upfront payment. What's more, this deal only includes two drugs, and it only grants Novartis commercialization rights to the drugs outside the U.S. If all goes well with these two compounds, it could net the company another $2.4 billion in milestone payments.

Make no mistake -- Xencor is a high-risk stock, and it will be years before this company brings a drug to market -- if at all. Still, Xencor's platform looks intriguing, and the company has enough cash on hand to keep the doors open beyond 2020. That makes this a clinical-stage biotech that might be worthy of a nibble today.

Brian Feroldi owns shares of Alexion Pharmaceuticals. Cory Renauer owns shares of Johnson and Johnson. Sean Williams has no position in any stocks mentioned. The Motley Fool recommends Johnson and Johnson. The Motley Fool has a disclosure policy.