It's no surprise that investors covet stocks which can keep climbing when everything else in the market is going down. Most businesses don't have the special sauce that it takes to reassure shareholders in times of economic uncertainty, and the few that do are likely to have looming catalysts for higher earnings or access to cash-cow market segments that competitors don't -- or both.
In that vein, below are two biomedical growth stocks that are crushing the bear market. And both of these companies are primed for future success thanks to their upcoming milestones and strong earnings performance, so they might be of interest to long-term investors.
1. Ionis Pharmaceuticals
Buoyed by a slew of favorable clinical trial data readouts and success with regulators, Ionis Pharmaceuticals (IONS 8.49%) is up by 16% this year in comparison to the market's decline of more than 13%. Though the business has three medicines on the market and its latest quarterly revenue grew 27.2% year over year, it's narrowly unprofitable. But that might be changing relatively soon thanks to a particularly lucrative program approaching the end of its pivotal trials.
On June 21, the company announced that an interim analysis of its phase 3 clinical trial investigating its drug candidate eplontersen had met both of the study's primary endpoints. That means the chances it will go on to get approved by regulators are quite good. Ionis hopes to file a New Drug Application (NDA) with the U.S. Food and Drug Administration (FDA) later in the year. Eplontersen is being investigated for its merit in treating hereditary transthyretin-mediated amyloid polyneuropathy (ATTRv-PN), a rare and severe chronic disease.
Most importantly for investors, management thinks that commercializing eplontersen would be worth billions of dollars per year at peak sales, and it's also the company's most lucrative near-term opportunity. Right now, Ionis' trailing 12-month revenue is only around $840.7 million, so eplontersen's contribution could be massive. In other words, it's no surprise that Ionis is beating the bear market as investors are pricing in a probability of increased cash inflows from a near-term approval.
At the same time, a few of its earlier-stage projects are also going swimmingly. On June 13, regulators at the FDA granted its request for an orphan drug designation for its candidate called ION582, a medication intended to treat the rare hereditary disease Angelman syndrome. The orphan designation ensures that it will get a few tax credits, a few clinical trial fee waivers, and ultimately more revenue from eventual commercialization of ION582 than it might otherwise. However, it's currently only in phase 2 clinical trials. On July 28, the company announced positive results from a phase 2b trial of one of its anti-clotting treatments called fesomersen, clearing the way for future development.
In total, it's another positive development that could lead to making more money down the line, and that sure helps when the market is skittish about growth stocks like Ionis.
2. Jazz Pharmaceuticals
With its shares up by 18% this year, Jazz Pharmaceuticals (JAZZ 0.43%) is having no problem outperforming the stock market. While it's currently unprofitable, the company expects to make $5 billion in annual sales in 2025, a significant increase to its trailing 12-month revenue of $3.3 billion.
To hit that target, it'll be relying on ramping-up revenue of its recently launched drugs like Xywav, which treats idiopathic hypersomnia, a rare sleep disorder. Jazz secured an orphan drug designation for Xywav, and it's the only FDA-approved treatment for idiopathic hypersomnia, so it'll have the market to itself for now -- and most likely for quite some time. That should be music to investors' ears.
Separately, the company is aiming to commercialize its epilepsy drug Epidiolex in additional markets in Europe, with France being the largest on the docket. Epidiolex is already approved in the U.S., and so getting it on the market in other countries will doubtlessly lead to realizing more revenue growth. In Q1, sales of the drug brought in $157.9 million, which management contends is just the start of its scale-up. It'll also be working to investigate the medicine for additional indications to potentially generate even more income from it in the future.
As if the prospect of making significantly more sales in the short term isn't enough to justify its outperformance, it'll also be reporting six different trial readouts between now and 2024, each of which is an opportunity for the stock to rise on good news. Therefore, now might be a favorable time to buy the shares, especially considering its progress to date in realizing its ambitions for the next few years.