The recent stock market sell-off has created opportunities, but it's also increased risks, especially if you invest in high-flying industries such as biotech that can pop or drop significantly on any day because of clinical trial news. To help you find the best biotech stocks to buy now, we asked three Fool contributors for their best ideas now. There's no telling what's in store next for these companies, but they think Global Blood Therapeutics (GBT)Supernus Pharmaceuticals (SUPN 1.20%), and bluebird bio (BLUE 16.40%) are top stocks that biotech investors ought to be adding to portfolios this month.

Some promising results treating a fairly widespread ailment

Chuck Saletta (Global Blood Therapeutics): Sickle cell disease is one of the most common inherited diseases in the world, with around 250,000 people born with it each year. The consequences of the illness can be devastating, including an approximately 25- to 30-year reduction in lifespan for those who suffer from it. There are only limited treatments available for it today, and the only known current potential cure, a bone marrow transplant, itself brings incredible risks . 

A man pointing upward with a wooden sculpture of an ascending arrow in the background.


Global Blood Therapeutics' lead treatment candidate for sickle cell disease, Voxelotor, looks to have some incredible potential to revolutionize treatment for the disease. In its clinical trials, the majority of patients taking the 1,500 mg dose of Voxelotor saw a significant improvement in hemoglobin levels. Given that the primary issue associated with sickle cell disease is the inability of the patient's body to make normal hemoglobin, that is a tremendous result.

But while those results look good, the FDA would need to approve the product even though it's not a clear long-run effective treatment for the disease, but rather an improvement to a biomarker of the disease. That would be similar to approving cholesterol-lowering drugs based on the fact they reduce cholesterol alone, rather than on evidence of a drop in long-run deaths from heart disease. 

That bit of uncertainty is what makes Global Blood Therapeutics' shares available at a potentially decent price today. Were the FDA to not approve Voxelotor, or were it shown to not help sickle cell disease sufferers extend the length or quality of their lives, its long-term value would be extremely limited. As the future unfolds, that uncertainty will start to clear up, and if things go well for Voxelotor, today's price for Global Blood Therapeutics could look like quite a bargain.

Profits with a growth forecast

Brian Feroldi (Supernus Pharmaceuticals): Supernus Pharmaceuticals is a small biotech focused on diseases of the central nervous system. The company has already crossed the finish line with two wholly owned drugs, Trokendi XR and Oxtellar XR, which help treat epilepsy, migraines, and seizures. When combined, these drugs are expected to pull in at least $385 million in 2018, which is a large enough figure to enable the company to produce healthy profits. That alone makes it a rarity in the land of small-cap biotechs.

Like any good biotech, Supernus also boasts a pipeline packed with potential. The company is seeking an expanded indication for Oxtellar XR in epilepsy and as a hopeful treatment for bipolar disorder. If either indication gets the thumbs-up, then double-digit revenue growth should continue for several more years. 

Supernus also has a number of other interesting compounds in development, but the two that have me most excited are called SPN-810 and SPN-812. These drugs are currently in phase 3 trials as potential treatments for impulse aggression and ADHD, respectively, which combined are multibillion-dollar market opportunities. A win for either drug could be a home run for investors. Investors can expect updated data for both of these drugs to be released in late 2018 and early 2019.

Between its marketed products and its pipeline, market watchers are projecting that the company's profits will grow in excess of 30% annually over the next five years. That's a huge number when compared with the company's forward price-to-earnings ratio of just 17

A researcher using a microscope in a lab.


A flurry of news approaches

Todd Campbell (bluebird bio): The annual American Society of Hematology (ASH) conference in December is one of biotech investors' most watched events of the year, and bluebird bio's upcoming presentations could spark investor optimism.

Researchers will present data on LentiGlobin in patients with transfusion-dependent beta thalassemia and sickle cell disease, BCL11a shRNAmiR in patients with sickle cell disease, and bb21217 in late-stage multiple myeloma.

A one-time gene therapy, LentiGlobin may remove or reduce the need for regular transfusions or bone marrow transplants in beta thalassemia patients. The therapy works by inserting a functional human beta globin gene in patients to restore their ability to produce red blood cells. Results reported earlier this year show the therapy works in beta thalassemia patients, and an application for European approval has already been filed. At ASH, researchers could provide additional details that improve the likelihood that LentiGlobin could become a blockbuster, particularly if sickle cell disease trial data suggests it could be used someday for that indication, too.

Researchers will also discuss another sickle cell disease drug, BCL11a shRNAmiR (BCL11a), at ASH. BCL11a keeps the body from switching to adult hemoglobin production from fetal hemoglobin production, to prevent triggering the gene responsible for producing irreversibly sickled cells. An abstract of bluebird bio's presentation next month says BCL11a showed "a notable absence of irreversibly sickled cells as assessed by peripheral blood smear."

The company's presentation on bb21217 will be most important to investors, though. Bb21217 is a chimeric antigen receptor T-cell therapy (CAR-T) that engineers T-cells to spot BCMA, a protein expressed primarily in multiple myeloma cells. It works similarly to bluebird bio's first-generation multiple myeloma CAR-T, bb2121, but it's specifically designed to boost T-cell persistence to improve durability of response. According to the ASH abstract, six of seven heavily pre-treated patients (each had a median nine prior lines of therapy) had at least a partial response to bb21217.

If data from these ASH presentations next month doesn't raise red flags, it could spark a rally in shares, especially since bluebird bio's shares have retreated to about $140 from a peak of over $220 earlier this year.