The political turmoil over branded drug prices in the United States has caused healthcare stocks to take a breather in the early part of April. However, the healthcare sector should eventually return to its winning ways due to a number of favorable long-term tailwinds.

Armed with this insight, we asked three of our Motley Fool contributors which healthcare stocks have their full attention this month. They picked GW Pharmaceuticals (NASDAQ:GWPH)Illumina (NASDAQ:ILMN), and Intercept Pharmaceuticals (NASDAQ:ICPT). Read on to find out more about these promising healthcare plays. 

A holographic image of a transparent human being projected from a tablet held by a doctor in scrubs

Image source: Getty Images.

The trend is your friend

George Budwell (GW Pharmaceuticals): GW Pharmaceuticals has been one of the best-performing biopharmaceutical stocks this year. Even so, this red-hot stock should keep marching even higher as the year progresses. 

Why? GW became the first company to bring a cannabis-based drug to market with Epidiolex last year. In mid-2018, the Food and Drug Administration approved Epidiolex for Lennox-Gastaut syndrome and Dravet syndrome -- two rare and severe forms of childhood epilepsy that are often hard to treat with traditional anti-epileptic medicines.

Since its commercial launch in late 2018, Epidiolex has also gone on to garner fairly broad coverage by top third-party payers across the country. Wall Street, in turn, has been slowly warming up to the idea that this rare disease medicine might one day post blockbuster-level sales for these first two indications. Moreover, there's also a chance that a future label expansion for patients with tuberous sclerosis complex could boost this peak sales figure into the $2 billion range. That's a sizable sum for a company with a market cap of right around $5 billion at the time of writing.  

GW should also benefit from a competitor's recent regulatory miscue. Zogenix was on track to bring its experimental Dravet syndrome drug, Fintepla, to market in the U.S. within the next year. But the company's New Drug Application reportedly had two major deficiencies, causing the FDA to issue a refusal-to-file letter. With Epidiolex's biggest competitive threat sidelined for at least another year, GW now has a shot at extending its first-mover advantage to become an entrenched competitor. That fact bodes well for future share-price appreciation.    

Expensive, but worth it

Keith Speights (Illumina): Some investors might balk at a stock that trades at 42 times expected earnings, like Illumina does. However, in my view, this gene-sequencing pioneer is worth it.

Illumina doesn't have a monopoly on high-throughput gene sequencing, but the company definitely has a huge market-share advantage over its rivals. This leadership position is a big reason Illumina commands such a premium valuation. But the reason I really like Illumina is its multiple growth opportunities.

Some predict that liquid biopsy could be a $100 billion market down the road. Illumina's GRAIL spinoff is one of the contestants in the race to develop liquid biopsies -- blood tests that can detect multiple types of cancer at very early stages. But even if GRAIL doesn't win this race, Illumina will almost certainly profit as other companies use its technology for sequencing the DNA contained in liquid biopsies.  

Illumina also stands to profit from continued growth in the consumer genomics market. Its customer base includes several of the top players in this market, including Ancestry, 23andMe, and Illumina's other spin-off, Helix. Illumina is also poised to win as noninvasive prenatal testing (NIPT) becomes more widely adopted, as large-scale population genomics efforts pick up steam, and as more drugmakers develop personalized medicines that require genetic sequencing.

CEO Francis deSouza said at the J.P. Morgan Healthcare Conference in January that over time, "the ubiquity and impact of genomics will dwarf everything we've seen to date." I think deSouza is right on track, and that makes Illumina a healthcare stock worth buying in April despite its high price tag.  

Say hello to a drug company with first-mover potential 

Sean Williams (Intercept Pharmaceuticals): Although it had another miserable post-data-release reaction, I'd suggest investors consider liver-disease drug developer Intercept Pharmaceuticals a healthcare stock to buy.

In February, Intercept announced long-awaited phase 3 data from the Regenerate trial for patients with nonalcoholic steatohepatitis (NASH), a liver disease affecting up to 5% of the adult U.S. population that'll be the leading cause of liver transplants by the midpoint of the next decade. The drug being tested, Ocaliva, is already approved by the U.S. Food and Drug Administration (FDA) for the treatment of primary biliary cholangitis and, at its peak, might result in closer to $300 million in annual sales.

In the Regenerate trial, the 25 mg dose (the highest tested) led to a statistically significant improvement in fibrosis of at least 1 stage without NASH worsening in 23.1% of patients, compared to just 11.9% for the placebo. As for NASH resolution, there was a positive, but non-statistically significant favorability for the Ocaliva arms relative to the placebo. Thankfully, only one co-primary endpoint was needed for success of the Regenerate trial.

The concern, though, has been safety. Even though the severe adverse events profile was similar with the placebo, the 25 mg arm (i.e., the most effective dosage) showed a high rate of pruritus (itching), with just over half of all patients suffering mostly from mild to moderate symptoms. Treatment discontinuation due to pruritus was also much higher in the 25 mg arm (9%) than the lower 10 mg dose and placebo (both less than 1%). 

At the annual EASL Liver Congress on April 11, Intercept, a leading presenter, announced additional data from the Regenerate trial. The 25 mg dose was shown to have achieved a two-stage or greater improvement in liver fibrosis for about three times as many patients (13.3% versus 4.5%) relative to the placebo drug.

However, more importantly, we learned that liver problems (i.e., higher LDL cholesterol levels) were manageable, with no pattern attributable to Ocaliva. Even pruritus concerns seemed to fade a bit. FiercePharma noted that Jefferies analyst Michael Yee believes the reaction to liver toxicity problems are "overblown," with no questions asked on liver toxicity at the Congress. Yee expects filing and approval to complete in 2020, and I agree with that assessment. 

With up to $2 billion in peak annual sales as a first-mover in NASH, I like Intercept now.