Please ensure Javascript is enabled for purposes of website accessibility

3 Top Pharma Stocks to Buy Right Now

By David Haen – May 24, 2020 at 12:25PM

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

Promising new drugs will drive these companies' stocks skyward.

Developing novel drugs for unmet medical needs remains the mission for many emerging drug developers. These pharma companies tackle a range of diseases but have one common attribute. Healthcare investors can look past the development risk. Two companies have approved drugs recently launched into the market, and the third aims to join those ranks next year. 

1. Global Blood Therapeutics

Global Blood Therapeutics (GBT 0.04%) crushed analyst estimates when it reported its first-quarter results on May 6. In its first full quarter on the market, Global Blood's sickle cell disease drug Oxbryta posted $14.1 million in net sales. That's several-fold higher than the $2.2 million to $5.5 million in sales predicted by Wall Street analysts.

Ascending stacks of white tablets atop hundred dollar bills

Image source: Getty Images.

However, Oxbryta's launch could lose steam this quarter and next. Global Blood noted a drop in prescription volume in the second half of March due to the coronavirus pandemic. This could lead to near-term weakness in the stock price for savvy investors to take advantage of.

Due to COVID-19, Global Blood is working on several initiatives to bolster the launch. First, the company coordinated with specialty pharmacies to ship the drug to patients' homes. Second, it continues to market through digital channels. In a recent survey of 50 physicians, 25% indicated that they prescribed Oxbryta following a virtual visit with a patient. Lastly, the company continues to work with payers to make sure that sickle cell disease patients have access to and reimbursement coverage for Oxbryta. As of the first quarter, 25% of U.S. patients had coverage.

According to the National Institutes for Health, sickle cell disease affects millions worldwide, including 70,000 to 80,000 people in the U.S. Oxbryta treats the underlying cause of sickle cell disease, unlike competitive treatments which focused on episodic pain due to the disease. As an oral, once-daily tablet that can be taken at home, Oxbryta provides convenience, which should gain traction over the long term.

2. GW Pharmaceuticals

GW Pharmaceuticals (GWPH) more than tripled its revenue from the same period in 2019 with $120.6 million in Q1 sales, the lion's share of which came from its flagship drug Epidiolex. The company handily beat the average analysts' projections of $109 million.

Epidiolex, approved to treat seizures associated with Dravet or Lennox-Gastaut syndromes, could notch another indication in the coming months. July 31 marks the U.S. Food and Drug Administration's (FDA) PDUFA date to make an approval decision on Epidiolex as a treatment for tuberous sclerosis complex, the leading cause of genetic epilepsy.This opens up 40,000 to 50,000 new potential patients eligible to receive Epidiolex.

GW recovered from this year's COVID-19-related sell-off and now boasts a 15% gain year to date. Expect this specialty pharma to continue to thrive, particularly with a positive FDA decision and August launch of Epidiolex for tuberous sclerosis complex.

3. Oyster Point Pharma

Even seasoned healthcare investors may not recognize the name Oyster Point Pharma (OYST -3.93%). The company successfully IPO'd at the end of last October, and this month reported positive phase 3 clinical trial results. Its inhaled drug for treating dry eye disease met the primary and key secondary endpoints in 758 patients tested who received one of two dose levels or placebo. This comes on the heels of a positive phase 2 trial with the drug reported in January. Oyster Point hopes to submit an FDA filing toward the end of this year with a potential launch in 2021.

Institutional investors like the company, owning approximately two-thirds of the outstanding shares as of the end of March. That number may actually be higher now. On the back of the positive phase 3 results, Oyster Point raised $105 million in new capital to bring the therapy to market.

While Oyster Point may be the earliest stage of the three companies, an approval and drug launch in 2021 looks to be in the cards. Investors are only just beginning to wake up to the company.

David Haen owns shares of Global Blood Therapeutics. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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

GW Pharmaceuticals plc Stock Quote
GW Pharmaceuticals plc
GWPH
Global Blood Therapeutics, Inc. Stock Quote
Global Blood Therapeutics, Inc.
GBT
$68.10 (0.04%) $0.03
Oyster Point Pharma, Inc. Stock Quote
Oyster Point Pharma, Inc.
OYST
$5.62 (-3.93%) $0.23

*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
326%
 
S&P 500 Returns
102%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/03/2022.

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.