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3 Big Biotech Stocks With Major Catalysts on the Way

By Cory Renauer - Updated Jan 31, 2018 at 1:23PM

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Expect intense hand-wringing as we wait for some important announcements ahead.

Once a company grows to the size of AbbVie Inc. (ABBV 0.73%), Celgene Corporation (CELG), or Gilead Sciences, Inc. (GILD 1.08%), moving the needle forward gets a lot harder. That doesn't stop their management teams from trying, though.

Despite their immense size, each of these biotech stocks could make big moves soon. In the days and weeks ahead, we should hear announcements concerning potential new blockbuster drugs getting close to the finish line. Here's what you need to know.

Person handing $100 bills to a doctor.

Image source: Getty Images.

1. AbbVie Inc.: Under review

April could be an exciting month for AbbVie and its development partner, Neurocrine Biosciences, Inc. (NBIX -2.19%). Late last October, the Food and Drug Administration (FDA) granted Elagolix a priority review for the treatment of pain associated with endometriosis, a basket term for excess tissue growth outside the uterus.

Hundreds of thousands of endometriosis cases get reported each year, but there aren't any drugs specifically approved to treat the often painful condition. This huge unmet need is a big reason why the FDA agreed to a shortened six-month review that should wrap up near the end of April, or sooner. 

Although AbbVie and Neurocrine are developing Elagolix to treat pain, it's really a hormone therapy that inhibits runaway cell growth. Aiming for the root cause of the pain seems to be the trick. During a study that tested Elagolix as a treatment for endometriosis pain, patients treated with a high dose were more than three times as likely to report a significant improvement with regard to severe menstrual pain as those given a placebo.

Solid efficacy results, plus a dearth of effective pain-management options that don't involve addictive opioids, are key factors expected to eventually drive annual Elagolix sales above $1.5 billion if the drug earns approval. While we're waiting for the FDA's approval decision concerning endometriosis pain, AbbVie and Neurocrine are expected to report results for a late-stage study designed to expand Elagolix to treat heavy menstrual bleeding associated with non-cancerous growths in the uterus. Keep an eye open for the results expected sometime in the first quarter.

Nervous looking person in a suit biting their thumb.

Image source: Getty Images.

2. Celgene Corporation: Crohn's concerns

Celgene made lots of investors nervous when it abruptly ended a late-stage trial with a new drug candidate for which it paid $710 million a few years earlier. The anti-inflammation hopeful, called mongersen, was intended to treat Crohn's disease, but investigators recommended shutting the trial down early because they couldn't measure a significant clinical benefit.

About a year after the ill-fated purchase of mongersen, Celgene shelled out a whopping $7.2 billion for another anti-inflammatory candidate aimed at several conditions, including Crohn's disease. Ozanimod works differently than mongersen, so the latter's failure should have no bearing on the former. That said, anything less than a rousing success could result in downward pressure on the stock.

The company's lead drug, Revlimid will probably begin losing ground to generic competition in 2022, which means it needs to launch tomorrow's blockbusters today in order to keep growing total sales over the long run. Ozanimod is a big part of Celgene's plan to eventually offset impending Revlimid losses as a treatment for inflammatory bowel disease and multiple sclerosis.

Ozanimod is in the same class as an available oral multiple sclerosis (MS) drug called Gilenya from Novartis. Although the two haven't been compared in a head-to-head trial, their performances compared to a standard MS treatment appears too similar to support management's belief that ozanimod is a best-in-class drug that can generate peak annual sales in the $4 billion to $6 billion range. That means investors will want to keep their eyes peeled for results from ozanimod's pivotal trial with Crohn's disease patients, which Celgene began late last year and another pivotal study with ulcerative colitis patients which should be fully enrolled by the end of the year.

3. Gilead Sciences: Big expectations

Celgene isn't the only big biotech racing to replace falling sales of existing products. Unfortunately, for Gilead Sciences, competition from the likes of AbbVie has hammered annual sales of its hepatitis C treatments from a peak of $19.1 billion in 2015 to a range expected to fall between $8.5 billion and $9 billion when the company reports 2017 results on Feb. 6.

That raises the stakes for a potential new HIV cocktail that's awfully important to Gilead's long-term outlook. Unlike hepatitis C virus, keeping HIV at bay requires lifelong treatment. Annual sales of Gilead's bictegravir containing triple combo are expected to pass $5 billion by 2022, which makes this a must-win for Gilead.

Gilead expects the FDA to announce an approval decision on or before February 12. A thumbs up seems likely, but the combo's ability to compete with GlaxoSmithKline's recently launched Juluca remains an important question mark. If Gilead's drug is approved, investors still need to keep their eyes peeled for signs of a successful launch into a competitive environment.

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Stocks Mentioned

Celgene Corporation Stock Quote
Celgene Corporation
Gilead Sciences, Inc. Stock Quote
Gilead Sciences, Inc.
$64.35 (1.08%) $0.69
AbbVie Inc. Stock Quote
AbbVie Inc.
$149.11 (0.73%) $1.08
Neurocrine Biosciences, Inc. Stock Quote
Neurocrine Biosciences, Inc.
$84.60 (-2.19%) $-1.89

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

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