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Investing in Blockbuster Drugs


The fact that President Donald Trump has called for lower drug prices, saying that the industry is “getting away with murder,” doesn’t mean that there is a lack of stock opportunities for investors who can identify companies that will successfully introduce new blockbuster drugs.

Overall, the Nasdaq Biotechnology Index, which includes dozens of pharmaceutical stocks, fell 21% in 2016 amid concerns over pricing pressure. And it is likely to remain volatile. But drug companies should benefit from Trump’s push for a speedier drug-­approval process and a tax break on profits brought back from overseas, which could provide cash for takeovers.

Here are three attractive companies with drugs expected to come to market within five years and to earn annual revenue of $1 billion or more…

Alkermes (ALKS) is developing a medication for depressive disorders that haven’t improved using other drugs. It’s in Phase III clinical trials, the final stage of testing before applying for FDA approval.

Madrigal Pharmaceuticals (MDGL) is in Phase II clinical trials for a drug that reduces the liver inflammation that leads to nonalcoholic ­steatohepatitis (NASH), a liver disease affecting ­millions of Americans.

Nektar Therapeutics (NKTR) has developed a nonaddictive, slow-­release painkiller that is in Phase III clinical ­trials and has been fast-tracked by the FDA for expedited study. Nearly two million people in the US are addicted to prescription opioids, which dull a person’s perception of pain but also create a euphoric feeling that can lead to abuse and addiction. The new drug acts slowly enough to scale back the feeling of euphoria, thereby preventing abuse and addiction.

Source: John McCamant, editor of Medical Technology Stock Newsletter, Berkeley, California. Its model portfolio returned an annualized 31% over the past five years, compared with 14% for the S&P 500. Date: March 15, 2017 Publication: Bottom Line Personal
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