Before Black Friday, the biotech industry was seriously outperforming the S&P 500. In fact, aside from a solid correction in early 2014 (which it subsequently topped a few months later), the biotech sector has been one of the bright spots in 2015.
The iShares Nasdaq Biotechnology (NASDAQ:IBB) ETF climbed 25% between January 1st and August 3rd. During the same timeframe, the NASDAQ Biotechnology Index increased 25.4%. The S&P 500 on the other hand was down roughly two percent while the Dow Jones Industrial Average was essentially flat.
Sure, Black Friday took some of the sheen off the biotechnology sector, but it wiped billions off the valuation of every sector. Despite the broad-based sell-off, the biotech rally, now in its seventh year, remains solid.
Admittedly, biotechnology stocks do not trade in step with the broader market. Biotech stocks rise and fall on scientific advances or approvals from the U.S. Food and Drug Administration (FDA).
If you’re looking at biotech stocks, consider those that are well established with revenue-generating products or undervalued biotech stocks with products in advanced stages of development.
Top 3 Biotech Stocks to Watch in 2015
Northwest Biotherapeutics, Inc.(NASDAQ:NWBO)
Northwest Biotherapeutics, Inc. (NASDAQ:NWBO) is a clinical-stage biotech company focused on developing vaccines to treat a broad range of cancers that do not have the same side effects of chemotherapy drugs.
The company’s lead product, DCVax-L, for newly diagnosed glioblastoma multiforme (the most aggressive and lethal brain cancer) is in Phase III trial. Over 300 patients have been recruited for the trial. The total enrollment is expected to be 348 patients. (Source: nwbio.com, August 21, 2015.)
Northwest’s second product, DCVax-Direct, is currently in a 60-patient Phase I/II trial for direct injection into all types of inoperable solid tumor cancers. The company has also conducted a Phase I/II trial with DCVax for late-stage ovarian cancer together with the University of Pennsylvania. (Source: nwbio.com, last accessed August 27, 2015.)
The company previously received clearance from the FDA for a 612-patient Phase III trial with its third product, DCVax-Prostate, for late-stage prostate cancer.
ZIOPHARM Oncology, Inc. (NASDAQ:ZIOP)
ZIOPHARM Oncology, Inc. (NASDAQ:ZIOP) is a biotech company that develops DNA-based drugs for different types of cancer. The company currently has two cancer drugs in various stages of clinical development. (Source: ziopharm.com, last accessed august 27, 2015.)
On July 24, ZIOPHARM announced that the FDA granted Orphan Drug Designation for Ad-RTS-hIL-12 + veledimex in the treatment of patients with malignant glioma. Ad-RTS-hIL-12 is a novel gene therapy candidate for the controlled expression of IL-12, a critical protein for stimulating an anti-cancer T cell immune response. (Source: ziopharm.com, July 24, 2015.)
The FDA’s Office of Orphan Products grants orphan drug status to support development of medicines for underserved patient populations or rare disorders affecting fewer than 200,000 people in the U.S.
Orphan Drug Designation provides eligibility for a seven-year period of market exclusivity in the United States after product approval, an accelerated review process, accelerated approval where appropriate, grant funding, tax benefits, and an exemption from user fees.
BioMarin Pharmaceutical Inc.(NASDAQ:BMRN)
With a market cap of $21.1 billion, BioMarin isn’t exactly a development-stage company. The company develops and commercializes pharmaceuticals for serious and rare diseases and medical conditions.
Biomarin has developed five FDA-approved drugs and has multiple clinical and pre-clinical product candidates. Approved products include Vimizim, Naglazyme, Aldurazyme, Kuvan, and Firdapse.
On August 24, BioMarin and Medivation, Inc. (NASDAQ:MDVN) entered into an asset purchase agreement whereby Medivation will acquire worldwide rights to BioMarin’s BMRN talazoparib. (Source: bmrn.com, August 24, 2015.)
Medivation will make an upfront payment of $410 million to BioMarin. In addition, the company will pay up to $160 million on the achievement of regulatory and sales-based milestones along with mid-single-digit royalties for talazoparib.
Once the deal closes (expected this year), Medivation will take on all financial obligations related to the development and commercialization of the candidate.
BioMarin, on the other hand, will be able to take the money and focus its efforts on its core therapeutic area of rare and ultra-rare genetic diseases.
As a side note, on August 19th, BioMarin announced it was ranked 10th on Forbes magazine’s 2015 list of the “World’s Most Innovative Companies.” This marks the second consecutive year the company has received this recognition. (Source: bmrn.com, August 19, 2015.)