Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) had its cystic fibrosis drug approved by the FDA on Jan. 31, 2012. By the end of 2012, Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) reported net product revenues for Kalydeco of $171.6 million, andKalydeco will generate good revenue over the next few years. The company has a market cap of $11.8 billion dollars. It is close to its 52-week high of $66.10 per share, but with its other drug Incivek for hepatitis C it still can go higher from here. Hepatitis C has a potential $20 billion market. Long term investors should check this biotech out for inclusion in their portfolios.
Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN)
Another rare disease drug maker is Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN). This company only has one approved drug, Soliris, but is approved for two indications. The FDA first approved Soliris for paroxysmal nocturnal hemoglobinuria (PNH) in 2007. PNH is a life-threatening disease that destroys red blood cells.
In 2011 Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) was approved for Soliris treating aHUS, or Hemolytic Uremic Syndrome. This disease is life threatening, and can damage vital organs leading to stroke, heart attack, kidney failure, and death.
Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) is a great company to invest in. Soliris is expected to keep generating more revenue over the next few years. For 2013, the company gives amazingly positive guidance–the company states that it will end 2013 with earnings per share in the range of $2.82 to $2.92 per share. Net product sales for its products are expected to be between $1.49 billion to $1.5 billion.
Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) pharmaceuticals has a market cap of $18.8 billion. The stock currently trades at $96 per share, and has plenty of room to grow with its Soliris drug. It is trading at a high price-to-earnings ratio of 75, but given the fact that its approved drug has no competition it is still in good shape. It trades a little below its 52-week high of $119 per share, and therefore I think it is a good buy given the current price.
Final thoughts
Orphan drug companies are biotechs that are worth investing in for the long term. As described above, the risk is much less compared to other biotech stocks. This is because these biotech stocks get more leniency from the FDA. As we have seen over the last few years, orphan drug biotech stocks trade higher compared to other biotech stocks.
When considering a speculation play for your portfolio, I feel that you can’t go wrong in choosing one of the stocks above. They are already established, and the treatments they sell face hardly any competition, allowing them years of product revenues, and many years of market exclusivity. Plus, other drugs in their pipelines now have a chance to obtain accelerated approval, meaning that drugs can be approved earlier than ever. Orphan drug biotechs do it best in the biotech sector.
The article Orphan Drug Biotechs Do It Best originally appeared on Fool.com and is written by Terry Chrisomalis.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
