You might think that biotech stocks are risky and volatile. And they often are. But biotech stocks overall have handily beaten the S&P 500 index over the last 10 years. With exciting new drugs potentially on the way, the next decade could be just as profitable for biotech investors.

Which biotech stocks are among the best picks to buy right now? I'd put Vertex Pharmaceuticals (NASDAQ:VRTX), Amarin (NASDAQ:AMRN), and Celgene (NASDAQ:CELG) at the top of the list. 

Female scientist holding two test tubes

Image source: Getty Images.

1. Vertex Pharmaceuticals

Vertex Pharmaceuticals is counting down the days until March 19, 2020. That's the magic date for when the U.S. Food and Drug Administration (FDA) is scheduled to announce its approval decision for a triple-drug combo featuring VX-445 (elexacaftor) in treating cystic fibrosis (CF). EvaluatePharma picked this combo as its No. 1 most valuable pipeline program with estimated sales of $4.3 billion by 2024.

The biotech's three currently approved CF drugs, Kalydeco, Orkambi, and Symdeko, combined for sales totaling a little over $3 billion last year. Approval for the VX-445 combo would dramatically expand the number of patients eligible for Vertex's therapies -- and almost certainly turbocharge Vertex's revenue growth.

Although I think the CF opportunity alone is a good reason to buy Vertex, the biotech has other avenues for growth as well. Vertex has early-stage clinical programs focused on other rare genetic diseases including alpha-1 antitrypsin deficiency (AATD), beta-thalassemia, Duchenne muscular dystrophy, and sickle cell disease. It's also close to advancing an experimental drug to late-stage testing targeting pain management.

Investors who buy Vertex also get a lottery ticket of sorts on another front that could be a game changer if successful. Vertex recently announced that it's acquiring privately held Semma Therapeutics for $950 million. Semma has a promising therapy in development that would cure type 1 diabetes. There's a long way to go, with Semma's experimental drug only in preclinical testing at this point. But if Vertex manages to cure type 1 diabetes, its previous achievements in CF will pale in comparison.

2. Amarin

Amarin is anxiously awaiting a major FDA decision as well. The company expects the FDA will render its verdict before the end of this year on approval of an expanded label for Vascepa in reducing cardiovascular risk.

Originally, the FDA had set a date of Sept. 28, 2019, to conduct a priority review of the expanded label for Vascepa, which is already approved for lowering triglyceride levels. However, the agency decided to convene an advisory committee meeting to review Amarin's regulatory filing, a move that extended the timeline for a final decision.

I expect that Amarin will win the expanded label for its drug. The only question is what the company will actually be able to say on the label. Amarin found that Vascepa reduced cardiovascular risk by 25% compared to placebo in a large cardiovascular outcomes study. However, the company used mineral oil as the placebo, and there's some concern that the mineral oil wasn't inert and could have skewed the results somewhat.

My view is that Amarin remains a top acquisition candidate. Vascepa would be a great addition to the lineups of several big drugmakers. With Amarin's market cap currently only at around $5.4 billion, I suspect this biotech could be gobbled up in 2020.

3. Celgene

Speaking of getting gobbled up, Celgene isn't very far away from being acquired by Bristol-Myers Squibb (NYSE:BMY). The transaction should finalize by early 2020 at the latest. Celgene's share price already received a big boost when the BMS deal was announced, so why is this biotech stock still one to buy? 

I don't expect Celgene's share price to go up a lot before the BMS acquisition finalizes. However, there's a nice sweetener with the deal that is likely to provide investors an extra gain. Celgene shareholders will receive one contingent value right (CVR) share for every share of Celgene they own. This CVR pays $9 per share if the FDA approves ozanimod and liso-cel by Dec. 31, 2020, and ide-cel (bb2121) by March 31, 2021.

My view is that the odds of receiving the payout for these approvals looks quite good. The FDA is scheduled to make a decision on ozanimod in treating relapsed multiple sclerosis by March 25, 2020. Celgene expects to file for approval of liso-cel within the next few months. The company also should submit ide-cel for approval in the first half of 2020 in time for an FDA decision by the CVR deadline.

In addition to the CVR, I think that Celgene shareholders will win by holding on to the BMS stock they get with the acquisition. BMS already claims two of the top five biggest blockbusters projected for 2024 -- Eliquis and Opdivo. With Celgene, it gets multiple other big winners including Revlimid and Pomalyst as well as a fantastic pipeline that's chock-full of potential blockbusters.