Please ensure Javascript is enabled for purposes of website accessibility

3 Stocks That Quadrupled

By Rich Duprey - Dec 4, 2017 at 9:32AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Biotech companies Nektar Therapeutics, Esperion Therapeutics, and Sangamo Therapeutics led the market this year.

The stock market continues to put on a clinic about how to stomp all over expectations. The Dow Jones Industrial Average is up 25% this year and the S&P 500 is 20% higher, but stack them up next to Nektar Therapeutics (NKTR -0.76%), Esperion Therapeutics (ESPR -4.29%), and Sangamo Therapeutics (SGMO -1.71%), and the market index returns look quaint.

Let's look more closely at these three biotechs to see whether there's any more room to run after quadrupling so far in 2017.

SGMO Chart

SGMO data by YCharts

Nektar rewards sweet patience

The grounds for Nektar Therapeutics' stratospheric launch, virtually all of which came in November, were set back in July, when pharmaceutical giant Eli Lilly (LLY 0.91%) agreed to collaborate with Nektar Therapeutics on NKTR-358, the biotech's therapy to boost T-cell production as a means of targeting immune system imbalances associated with various autoimmune diseases.

When Nektar reported third-quarter earnings in early November, revenue soared to $152.9 million from $36.3 million a year ago, and it posted net income of $60.9 million, a dramatic U-turn from its net loss of $43.2 million. The reason for both? Recording $127.6 million of a $150 million up-front cash payment from Lilly for the collaboration. Its stock is now up over 325% this year.

Coupled with thus-far positive last-stage clinical results for other therapies and the potential for as much as $250 million more from Lilly for further advances with NKTR-358, Nektar Therapeutics could have a very bright future.

Three technicians look at a lab sample

Image source: Getty Images.

Slow and steady wins the race

Esperion Therapeutics is more like the tortoise to Nektar's hare, steadily climbing in value over the past year or so, though it has yet to regain the heights it hit back in 2015. Yet the biotech, which focuses on developing drugs to combat cardiovascular disease, continues to climb as it notches consistent wins in top-line clinical trial results for its leading therapy, a bempedoic acid/ezetimibe combination pill. With it recently announcing it was initiating a phase 3 study of the pill, Esperion's shares have gained some 370% in 2017.

Favorable results for a a triple combination of bempedoic acid, Zetia, and Lipitor also helped push the biotech higher. In August Esperion reported results from a mid-stage study that saw LDL cholesterol levels fall 64% from baseline levels among patients treated for six weeks with its triple-drug combo, compared with patients given nothing but a placebo.

Esperion is expecting that the FDA will accept a New Drug Application for the treatment based on data from the trials it was conducting, with 2019 as the expected time it will cross the finish line.

Lab technician works with a sample and microscope

Image source: Getty Images.

Going with what works

The big winner this year has been Sangamo Therapeutics, whose shares have soared 377% so far this year with nearly another month to go, and like Esperion, this biotech has been steadily climbing across 2017. Like both of its peers, Sangamo has benefited greatly from positive clinical results from therapies it has under trial, early stage though they may be.

That's because Sangamo is using an older gene-editing tool, in which one inserts, deletes, or replaces DNA in a cell or organism. Sangamo's tool, called zinc finger nucleases, or ZFN, addresses rare bleeding disorders. While there are other more advanced gene-editing tools out there, Sangamo benefits because it has the most advanced pipeline of any of the biotechs focused on gene editing. Earlier this year, Pfizer (PFE 2.15%) agreed to pay Sangamo $70 million up front for rights to SB-525, a hemophilia candidate that earned a fast-track designation from the FDA.

Outsize stock gains like these inevitably appear in long bull markets, and each of the three biotechs has a lot going for it, but investors would be wise to remember biotech stocks are notoriously volatile. Still, as long as the favorable conditions that have spurred their respective gains remain in place, they could become much bigger companies in the future if a few things continue to go their way.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Sangamo Therapeutics Stock Quote
Sangamo Therapeutics
$4.59 (-1.71%) $0.08
Pfizer Inc. Stock Quote
Pfizer Inc.
$52.75 (2.15%) $1.11
Eli Lilly and Company Stock Quote
Eli Lilly and Company
$330.15 (0.91%) $2.97
Nektar Therapeutics Stock Quote
Nektar Therapeutics
$3.90 (-0.76%) $0.03
Esperion Therapeutics Stock Quote
Esperion Therapeutics
$6.69 (-4.29%) $0.30

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.