Aging baby boomers and an increasingly insured population are driving healthcare utilization higher, and that has made stocks in this industry some of the market's best performers over the past three years. A number of healthcare stocks are soaring higher again in 2015, too, including these three top performers. Read on to learn more about them.
No. 1: Eagle Pharmaceuticals (NASDAQ:EGRX): up 258% year to date.
In February, Teva Pharmaceutical (NYSE:TEVA) inked a licensing deal to provide all commercial activities for Eagle Pharmaceuticals' blood cancer therapy bendamustine hydrochloride. This month, the Food and Drug Administration accepted the filing for approval for this treatment, clearing the way for an agency decision in December.
If approved, the therapy will be used to treat chronic lymphocytic leukemia or indolent B-cell non-Hodgkin lymphoma patients whose disease has progressed following treatment with Rituxan.
Investors seem to believe Teva's marketing might can turn this therapy into a top-seller, similar to how Johnson & Johnson helped launch Pharmacyclics' Imbruvica, a top-seller that is also approved for this indication. That could be true given that Teva already markets Treanda, a bendamustine hydrochloride therapy that takes longer to infuse than Eagle's variation and had sales of $767 million last year.
If Teva can leverage its Treanda experience to fuel sales of this potential new treatment, then Eagle Pharmaceuticals stands to benefit handsomely. Eagle already received a $30 million up-front payment from Teva, and it could receive up to $90 million more in milestone payments tied to regulatory and commercial success, as well as double-digit royalties on any U.S. sales of the treatment.
No. 2: Esperion Therapeutics Inc. (NASDAQ:ESPR): up 149% year to date.
Battling high cholesterol levels remains a key focus of healthcare providers eager to stem increasing cases of heart disease.
Although statins have been used for the better part of two decades, they fail to control cholesterol in many patients. As a result, new therapies including Esperion's ETC-1002 are being developed for use alongside statins to further reduce bad cholesterol levels.
In March, Esperion reported that a phase 2 study showed that taking ETC-1002 alongside statins saw bad cholesterol levels in participating patients fall by up to an additional 24%. Since 71 million Americans suffer from high cholesterol, that clinical performance has investors thinking Esperion could have a blockbuster drug on its hands.
No. 3: Horizon Pharma plc (NASDAQ:HZNP): up 121% year to date.
Horizon Pharma has been on a roll since acquiring and reinvigorating the all-but-forgotten Vimovo from AstraZeneca in 2013. Horizon spent just $35 million for the drug, which generated sales of $20 million for AstraZeneca in 2013 but posted a whopping $163 million for Horizon in 2014.
Now, Horizon hopes that it can leverage that experience to increase demand for Ravicti and Buphenyl, two drugs acquired via its $1.1 billion acquisition of Hyperion Therapeutics. Horizon thinks those drugs will add $100 million to its EBITDA in 2016, but investors hope cross-selling opportunities and cost savings can improve upon that forecast. Given Horizon's success with Vimovo, that enthusiasm might not be misplaced.
These stocks have already doubled sharholders' money this year, and that ought to give investors reason to pause. Each has an intriguing reason for soaring higher, but when it comes to investing in drug companies any number of things can -- and often do -- go wrong. Regardless, investors might want to put these three companies on their watchlist in hopes of getting an opportunity to buy them on a pullback.