Major large cap pharmaceutical firms often dominate the headlines. However, small cap drug companies also contribute significantly to scientific advancements. Drug stocks with ongoing clinical trials usually experience significant stock movement based on trial results. So, it’s vital for investors to stay informed about these trials. The top drug stocks to watch usually have imminent successful trials.
Next, understanding the science behind the drugs is crucial. Knowledge about the disease, the drug’s mechanism, and previous similar treatments can help assess the drug’s success likelihood. It can also offer insights into the drug’s potential market revenue.
Finally, remember that not all clinical trials are the same. Early trials primarily test the drug’s safety for human use. It’s only the later trials that establish efficacy. Nevertheless, each trial phase is critical. Top drug stocks can surge on a successful phase 1 trial just as much as a phase 3 one.
So, before trial results are out and data gets published, here are three top drug stocks to watch.
Novocure (NVCR)
Chemotherapy has for decades been a difficult and sometimes deadly process. Novocure (NASDAQ:NVCR) is trying to change that, and bring more of a therapy that’s no more dangerous than a massage. It may seem crazy, but it may also work.
Novocure is conducting a Phase 3 clinical trial set to conclude in September 2023. They’re exploring a new cancer treatment method. Patients use a small device that generates Tumor Treating Fields (TTFs), which might combat cancer. Plus, Novocure assures this treatment won’t disrupt daily routines.
The idea of a cancer-curing device using electrical currents may seem like science fiction. But the science behind it is robust. Tumor treating fields target highly charged proteins essential for cell division. These fields hinder these proteins and halt cell division. Since cancer cells divide uncontrollably, inhibiting division aids the body in fighting them.
Novocure’s recent earnings revealed a net revenue of $112 million, a net loss of $53 million, and cash plus short-term investments totaling $958 million. While they’re losing money, they have ample resources to complete their current trials. If the Phase 3 trial succeeds, FDA approval might be on the horizon. Novocure could then see significant growth. Therefore, if you trust Novocure’s science, invest now. These factors make it one of those top drug stocks to watch.
Sarepta Therapeutics (SRPT)
Gene therapy has long been sought for curing intractable, inheritable diseases. And Sarepta Therapeutics (NASDAQ:SRPT) is trialing a gene therapy that might cure Duchenne Muscular Dystrophy (DMD).
DMD is a genetic disease in which a specific muscle protein called dystrophin is mutated and doesn’t work correctly. Because of this mutation, the muscles of the body quickly get worn down and die. The life expectancy for someone with DMD is only around 30 years.
But while Sarepta hasn’t yet cracked fixing the dystrophin mutation, it may have something just as good. Their SRP-9001 drug provides the patient’s body with the DNA to make a smaller protein which can replace the mutated dystrophin. So while the patient would still lack dystrophin, they wouldn’t need it as the new protein would keep their muscles alive just as well. This theory is being tested in a clinical trial scheduled to end October 2023.
But approval could come even more quickly than that. Sarepta may get accelerated approval as early as June 22nd. In May, the FDA narrowly voted to allow the drug to be considered for accelerated approval. And if it were approved, SRP-9001 would be the first gene therapy approved to treat DMD.
Financially, Sarepta is a good company that could become a great company very soon. Their Q1 2023 earnings showed $254 million in total revenue, $517 million in net loss, and cash-plus-short term investments of $1881 million. It should be noted that the majority of the net loss came from debt extinguishment, their net loss in Q1 2022 was just $105 million. They’ve got enough cash to finish their current trials. And if SRP-9001 is approved, they’d be the absolute best drug stock for investment in.
Blueprint Medicines (BPMC)
When looking at high potential drug stocks, it’s important to have an understanding of the science that they are working on. Blueprint Medicines (NASDAQ:BPMC), for instance, has a little drug with a whole lot of potential.
Our body’s cells act based on signals they receive. Hormones like Epidermal Growth Factor (EGF) can instruct cells when to grow or remain inactive. However, a mutated EGF receptor (EGFR) often results in cancer.
Currently, Blueprint Medicines is conducting a combined Phase 1/Phase 2 clinical trial. They’re testing the safety and tolerance of BLU-701. This drug inhibits EGFR and could be a significant treatment for various EGFR-mediated cancers. The ongoing trial focuses on patients with non-small cell lung cancers.
Blueprint Medicines should reach the trial’s conclusion in June 2024. Their latest earnings report shows $822 million in cash and securities, total revenue of $63 million, and a net loss of $130 million. A successful Phase 2 result will facilitate financing for Phase 3. If BLU-701 proves successful in trials, it could affect a wide range of cancers profoundly.
On the date of publication, John Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
