We asked our team of Motley Fool contributors to highlight a small pharma stock that they believe should be on a healthcare-focused investor's radar right now. Read on to judge for yourself if you agree with their suggestions.
Although Depomed engages in buying approved drugs -- four of its five marketed therapies came via acquisitions -- its pricing scheme is arguably quite different from that of other companies in the news.
Brian Feroldi: While most investors tend to shy away from small-cap pharmaceutical companies, as they tend to be years away from generating their first dollar of revenue, I've got my eye on one that's been generating revenue for years and is on the cusp of reaching profitability.
IGI Laboratories (NASDAQ:TLGT) is a specialty generic pharmaceutical manufacturer that creates generic version of specialty pharmaceutical products. The company finds drugs that are losing patent protection in the topical, injectable, complex, and ophthalmic markets, and then creates a generic version and sells it through pharmacies at a discount.
IGI currently has only seven products on the market in 12 different formats that are producing revenue, but that number is poised to grow quickly. The company has a pipeline of 30 products that are already pending FDA approval, and as they hit the market, IGI's revenue should continue to soar.
The company is still losing money, but it should be able to reach operating breakeven in the fourth quarter. If it can get there, it should help to make an investment in this company less risky, which I think that market will reward with a higher valuation.
IGI is still quite a tiny pharmaceutical company, as its market cap is currently under $350 million, so if the company successfully executes on its strategy, it could provide investors with terrific returns from here. Given the recent selloff in all healthcare-related stocks, now might be a good time to give this little pharma stock a look.
Brian Feroldi has no position in any stocks mentioned. George Budwell owns shares of Johnson & Johnson. Todd Campbell owns shares of DepoMed,. The Motley Fool recommends 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.