Investors make big money in biotechnology stocks when they focus on areas that cut across a wide swath of the population. From obesity to food allergies to prostate cancer, the top companies often try to narrow their focus to be a leader in a category that either affects a large part of the population, has a high barrier to entry or has limited treatments approved and the cost to treat is very expensive.
We spent time recently reviewing research from across Wall Street, looking for the biotechnology stocks that will be making a huge difference in the patient population going forward. We found, almost without exception, that certain companies are poised to take the lead, or already hold the lead, in treatments that fall within the categories that can generate the highest amount of revenue. New research from Credit Suisse and Lazard confirm the thesis that huge money is there to be made by the companies that stay highly focused. We have broken out the categories and the top stocks to buy in them.
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Lazard highlighted stocks that will benefit from treatments that target the Th2 immune pathway. The immune system is divided into Th1 and Th2 responses, with dysfunction of the latter being associated with allergic conditions and high levels of eosinophils. In its report, Lazard examined a group of diseases driven by the Th2 immune pathway and often characterized by eosinophilia. These include asthma, atopic dermatitis, eosinophilic esophagitis, food allergies and more, representing a sizable unmet need and commercial opportunity. Here are the stocks likely to benefit from this huge opportunity.
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Regeneron Pharmaceuticals Inc.'s (REGN) dupilumab, an IL-4R antibody, has shown exciting results in Phase II in asthma and atopic dermatitis. This program stands out among emerging biologics as having the strongest profile so far. Lazard thinks it is possible that revenue generated from this drug class could help sustain a 20% earnings per share (EPS) compounded annual growth rate (CAGR) by the end of the decade. The firm raised its price target on the stock from $298 to $325. The Thomson/First call estimate for it is at $298.
Also noted in the report, Sanofi (SNY) will partner with Regeneron on dupilumab. GlaxoSmithKline PLC (GSK) and Array BioPharma Inc. (ARRY) also figure into the equation of this Th1 and Th2 immune response sector, which is expected to generate huge profits in the not too distant future.