Since the biotech industry was born in 1976 with the founding of Genentech, hundreds of biotech firms have been started by investors hoping to capitalize on the newest scientific research.

It shouldn't be surprising, with the lightning-fast rate of scientific advancement over these last 35 years, opportunities for potential profits have been countless.

The idea behind the biotech industry was for large pharmaceutical companies, like Merck or Johnson & Johnson, to outsource the cutting-edge scientific research to smaller biotech firms that benefit from less bureaucratic tape and greater autonomy. Larger pharmaceutical firms and smaller biotech firms often work together or merge.

The biotech industry remains in a high-growth phase, which actually translates to "recession proof" in some ways. Because pharmaceutical products are bought regardless of economic environment, investors are as optimistic as ever about the industry.

Here we report five biotech firms that have just received great news -- either in the form of an FDA approval or positive clinical trial results. (Click here to access free, interactive tools to analyze these ideas.)

1. Acura Pharmaceuticals (Nasdaq: ACUR): Market cap at $201.74M. On June 17, the FDA formally approved opioid painkiller Oxecta. As a result, shares of Acura rose more than 50% the following trading day. The marketing rights to Oxecta are held by Pfizer, which stands to benefit from the news. The painkiller is designed to be an abuse-resistant form of oxycodone.

2. Curis (Nasdaq: CRIS): Market cap at $253.48M. Pharmaceutical giant Roche and subsidiary Genentech in collaboration with biotech firm Curis announced positive phase II clinical trial results of their cancer drug vismodegib. There was an overall 55% response rate for patients with basal cell carcinoma, viewed as promising enough to continue forward. Researchers said the drug "substantially shrank tumors or healed visible lesions."

3. Bristol-Myers Squibb (NYSE: BMY): Market cap at $47.44B. Although Bristol-Myers Squibb is more of a large pharmaceutical company then a small biotech firm, the company just received FDA approval on June 16 for its medication Nulojix to prevent rejection of newly transplanted kidneys. This follows its recent FDA approval for drug Yervoy to treat skin cancer. Sales estimates for Nulojix range from $350 million to $500 million.

4. Valeant Pharmaceuticals (NYSE: VRX): Market cap at $15.19B. Valeant and GlaxoSmithKline won conditional FDA approval for their epilepsy drug Potiga. The approval is contingent on developing a risk-evaluation and mitigation strategy for doctors to use with patients. GSK paid $120 million upfront to Valeant to partner on Valeant's drug in 2008.

5. Micromet (Nasdaq: MITI): Market cap at $497.92M. The company announced positive phase II clinical mid-trial results with its experimental antibody blinatumomab, which drove out cancer cells in 9 out of 12 patients with relapsed acute lymphoblastic leukemia (ALL). The study is now to enroll 25 more patients. ALL is a rare form of cancer for which no new drugs have been approved in the past 30 years.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.


Kapitall's Alexander Crawford does not own any of the shares mentioned above.

The Motley Fool owns shares of Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of and creating a diagonal call position in Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.