3 Biopharmas Worth Watching in 2018

In 2017, the Nasdaq Biotechnology Index gained 18.7 percent and the NYSE ARCA Pharmaceutical index gained 11.8 percent. It wasn’t a particularly strong year for mergers and acquisitions, but it was a big year for drug approvals by the U.S. Food and Drug Administration (FDA), with a particular shout-out to three gene therapy approvals, two for CAR-T therapies for cancer and one for a rare type of blindness. Those were, respectively, Novartis’s Kymriah for acute lymphoblastic leukemia (ALL), Gilead and Kite Pharma’s Yescarta for B-cell lymphoma, and Spark Therapeutics' Luxturna for an inherited retinal disease.

Because of changes to the tax code, many investors are hoping M&A activity will pick up. Others are just hoping they can get a handle on rising stocks. Here are three biopharma stocks worth keeping an eye on.

1. Alkermes

Headquartered in Dublin, Ireland, Alkermes is a fully integrated global biopharmaceutical company specifically focused on central nervous system (CNS) disorders such as schizophrenia, depression, addiction and multiple sclerosis (MS). In late November 2017, Alkermes and Biogen inked a global license and collaboration deal to develop and commercialize ALKS 8700, a treatment for relapsing forms of MS that is currently in Phase III development.

Zacks notes, "Alkermes also has a strong late-stage pipeline representing transformative catalysts in 2018. The company could gain FDA approval by June 30 for a NanoCrystal dispersion of Aristada (schizophrenia). Meanwhile, Alkermes expects to complete filing a rolling submission for ALKS 5461 (major depressive disorder) in January with a potential advisory committee meeting and FDA decision in the second half of the year."

It also plans to submit a new drug application (NDA) for ALKS 8700 in MS in the second half of the year, and expects data on ALKS 3831 for schizophrenia in the fall of this year, with an NDA submitted in the first half of 2019.

2. XOMA Corporation

Based in Berkeley, California, XOMA has more than 20 partnered and fully funded programs that have potential milestone and royalty payments incoming, as well as multiple programs ready for out-licensing. On Dec. 7, 2017, it licensed the global development and commercialization rights for XOMA 358 to Rezolute for high blood sugar. XOMA 358 is a first-in-class fully human antibody that inhibits elevated insulin by moderating the insulin receptor.

Zacks writes, "XOMA’s shares have been on an upward trajectory from August following the signing of licensing agreements with Novartis for gevokizumab and intellectual property covering the use of IL-1 beta targeting antibodies in the treatment of cardiovascular diseases. This deal resulted in XOMA receiving upfront payments including an equity investment."

3. Eiger BioPharmaceuticals

Located in Palo Alto, California, Eiger focuses on orphan diseases. On Jan. 4, it completed enrollment in its Phase II ULTRA trail evaluating ubenimex in patients with primary and secondary lymphedema of the lower limbs. At this time, there is no FDA-approved drugs for lymphedema.

Zachs writes, "Some of the diseases being addressed by the company’s pipeline include hepatitis delta virus (lonafamib and lambda), pulmonary arterial hypertension (ubenimex), post-bariatric hypoglycemia (exendin 9-39) and lymphedema (ubenimex). Regulatory and clinical announcements for all these programs are expected in 2018."