Source: Flickr user Steve Jurvetson
The biotech industry may have lost a bit of its luster with investors lately, but some biotech stocks are still generating eye-popping returns that suggest people remain willing to bet on game-changing medicine. For instance, these three biotech stocks have delivered envy-inspiring returns in the past month. Let's find out why and whether there's still time to buy.
No. 1 Acceleron Pharma (XLRN +0.00%): Up 55.5% past four weeks
Acceleron Pharma shares have been on a tear since the company hosted its R&D day back on October 23 and highlighted goals for 2020, including approvals in five indications and multiple late stage clinical trials under way.
Luspatercept for myelodysplastic syndromes (MDS) and beta thalassemia is the most advanced drug in Acceleron's pipeline and luspatercept is currently in phase 3 trials that are being conducted in partnership with Celgene Corp (CELG +0.00%), one of biotech's most successful drugmakers.
Acceleron is also developing sotatercept for chronic kidney disease (trials in pre-dialysis patients could begin in 2016), ACE-2494 and ACE-3891 for systemic muscle loss, and ACE-083 focal muscle loss. ACE-083 is particularly intriguing because it's being studied to boost muscle mass in patients with muscular dystrophy (MD), including patients diagnosed with facioscapulohumeral MD, which affects 19,000 patients in the the U.S., and Duchenne MD (DMD).
Acceleron expects to begin phase 2 studies of its MD therapies soon and if those studies are successful, then it could mark a major breakthrough for MD patients and additional share price gains for Acceleron's investors.
Investors could also benefit if luspatercept succeeds because there are few treatment options to battle anemia in MDS and beta thalassemia patients and current standard treatment with blood transfusions present a significant burden on both patients and payers.
Because Acceleron is well capitalized with enough cash on the books to support it into 2017 and it boasts one of America's most successful companies at commercializing drugs as a partner, I think that there may still be room for Acceleron shares to run higher.
No. 2 Cellectis SA (CLLS +1.02%): Up 54.2% past four weeks
After announcing in late October that it has implemented its manufacturing process for its lead product candidate, UCART19, a chimeric antigen receptor T-cell (CAR-T) therapy, shares in Cellectis SA have shot higher.
Excitement is high for UCART19 because it's under development as a frozen, off-the-shelf CART solution for acute lymphoblastic leukemia and chronic lymphocytic leukemia that could be used in a large patient population. If successful, then UCAR19 could offer advantages over other CAR-T approaches that are custom engineered specifically to each patient and therefore are more expensive and time-consuming.
Developing such an off-the-shelf solution won't be easy, but Cellectis' has a strong partner on UCAR19 in the French drugmaker Servier. Servier signed on to co-develop UCAR19 in 2014 and that deal could be worth as much as $1.11 billion in milestones, plus royalties, to Cellectis if UCAR19 makes it to market someday.
In addition to working with Servier on UCAR19, Cellectis is also partnered with Pfizer (PFE +1.24%) on 15 Pfizer and 12 Cellectis owned oncology targets and as part of that alliance, Pfizer owns a 10% equity stake in Cellectis.
Further, Cellectis is researching gene editing approaches that may be able to create T-cells that are resistant to chemotherapy and thus, may significantly improve chemotherapy patients quality of life by reducing the toxic effects of chemotherapy on healthy cells.
However, while Cellectis has a novel approach to CAR-T and some intriguing R&D in the works, human trials haven't yet begun and thus, a lot can go wrong from here. Historically, 93% of cancer drugs entering human trials fail and for that reason, Cellectis is a bit risky -- at least at this stage -- for me to consider buying it after this move higher.
No. 3 Amicus Therapeutics (FOLD +0.21%): up 47.3% past four weeks
In early October, Amicus Therapeutics shocked investors when it reported that it is delaying its timeline to file for FDA approval of Galafold, its promising new therapy for Fabry disease, until it collects additional data.
The revelation created uncertainty regarding Galafold's peak sales potential that knocked shares down substantially, but investors appear to be warming back up to Amicus' potential; particularly in Europe where a filing for approval earlier this year of Galafold could lead to a decision soon.
If approved, then Galafold could become an important new weapon used to combat Fabry disease, a tough-to-treat disease caused by an enzyme deficiency. Currently, Fabry disease is treated with enzyme replacement therapies (ERT) that are costly and thus generate hundreds of millions of dollars in annual sales for their drugmakers.
Unfortunately, ERTs aren't a cure for Fabry disease and as a result, Fabry disease patients' average life expectancy is lower than the average person. However, up to 50% of Fabry disease patients still produce some of the enzyme that is the cause of Fabry disease and in those patients, Amicus' Galafold may offer some new hope.
Unlike ERTs, Galafold helps the enzymes that are still being produced by some patients work more effectively and because Galafold has a different mechanism of action than ERTs, it's possible that it could one day become part of a standard of care that is used alongside ERTs, rather than instead of them.
If so, then Galafold could have nine figure sales potential, however, investors need to remember that the EU hasn't approved Galafold yet and there's no telling when an FDA filing may happen, if it happens at all. As a result, Amicus Therapeutics, while an intriguing investment, remains a high risk bet.
Tying it together
Investors appear to be bargain-hunting clinical stage biotech stocks again and investors that are willing to take on the risk of a clinical or regulatory failure could be rewarded if efforts at these three companies result in new treatments. Of these three companies, Amicus Therapeutics is closest to having an approved product on the market and Acceleron's got a top-shelf partner in Celgene, so I prefer those two companies over Cellectis, which has the youngest drug pipeline. However, that being said none of these companies is for the faint of heart. Amicus Therapeutics could fail to win over EU regulators and Acceleron's luspatercept could whiff in phase 3 and if either of those things were to happen, then shares in these companies would likely fall sharply.
