The best real estate deal on the planet. Could you profit thanks to it?
Back in 1972, Congress included a special provision in the Public Buildings Amendments – otherwise known as Public Law 92-313. This overlooked law forces federal agencies to pay rent for the buildings they occupy. And thanks to a smart investment strategy, private citizens could financially benefit from this situation.
A few years ago, pharma stocks were must owns. Recently, however, they’ve had a pretty rough go of things.
One of the biggest pain points in recent years has been the increased scrutiny and outrage over rising drug prices. This has most recently been manifested in complaints facing Mylan’s (NASDAQ: MYL) emergency autoinjector for allergic reactions, EpiPen.
Mylan’s price for the branded EpiPen has faced outrage after the public learned that the company had raised prices of the life-saving drug by more than 400% over the last decade to $620 for a two-pack. In response, and in an attempt to undercut any competitors with an EpiPen alternative, the pharma giant did release an authorized generic version of the EpiPen in late 2016 at half the price of the branded version at $300 for a two-pack.
In addition to outrage over the price hikes, Mylan has also been under pressure for months-long supply shortages, and has been hit with several class action lawsuits and accusations that it has overcharged the U.S. government for EpiPens by $1.27 billion.
“This means patients with severe allergies who require constant access to life-saving epinephrine should have a lower-cost option, as well as another approved product to help protect against potential drug shortages,” said FDA Commissioner Scott Gottlieb.
While Teva didn’t provide details on timing of the availability of its generic version or its price, the company did say in a statement, “We’re applying our full resources to this important launch in the coming months and eager to being supplying the market.”
TEVA was up 6% on the news of the FDA approval and is up nearly 1% for the month after a couple of rough years for the stock.
But TEVA isn’t the only drug stock that should be on investors’ radar. These three stocks are trading at a discount and could see massive upside in the near term.
Corcept Therapeutics (NASDAQ: CORT)
Corcept Therapeutics (NASDAQ: CORT) is down nearly 26% year-to-date. The stock has been punished after coming under threat by a generic competitor for its sole approved drug, Korlym, a treatment for hyperglycemia associated with Cushing’s syndrome. But it appears that the market may have gotten a little carried away.
While the company does rely on Korlym for all of its product sales, and while that generic threat is looming, the drugmaker is still doing quite well. Its net product sales in the first half of 2018 were up 90% to $120 million from the same time a year ago, and net income saw growth of 109% to $35.6 million in the same timeframe.
Corcept did reduce its revenue guidance for 2018 to a range between $250 million to $270 million, down from the previous range of $275 million to $300 million. However, at current profit margins, that would still result in net income around $72 million which isn’t bad at all.
The drugmaker is also developing its pipeline, and has a drug candidate that could be a revenue replacement for Korlym. The drug candidate is in phase 2 trials and has so far demonstrated improved clinical results compared to Korlym.
If the treatment continues to deliver positive results in the company’s self-funded trials, and if the generic competition can be held-off for another year, Corcept could be trading at much higher prices a year from now.
Analysts’ 12-month consensus price target for CORT is $22.40, suggesting upside of 67.29%. This spring, Seaport Global Securities initiated coverage on the stock with a Buy rating with a bullish $32 price target – 138% higher than Thursday’s closing price.
Celgene (NASDAQ: CELG)
Celgene (NASDAQ: CELG) is a bit risky, but is nevertheless worth a look as the market is under appreciating the company’s pipeline and overreacting to its recent issues.
The market has been bearish on the stock for months after its Crohn’s disease treatment GED-0301 failed miserably in late-stage clinical trials late last year. Then in March, the biotech lost $6 billion in market cap after the FDA refused to review the company’s new drug application for ozanimod, a treatment for multiple sclerosis (MS).
The other big risk for Celgene is that it depends on revenue from a small number of products with its blood cancer drug Revlimid accounting for 63% of its total revenue. Revlimid is being threatened by potential competitors with generic versions of the drug, putting the company at one bad catalyst away from total disaster.
However, Celgene isn’t likely to face generic competition prior to 2023, giving the company time to develop and launch other drugs in its pipeline. And Celgene isn’t dependent on just one or two products in its pipeline for future growth. The company has five candidates in its pipeline with potential future sales in excess of $1 billion.
Despite the set-back with ozanimod this spring, it’s likely the drug will win approval for treating MS. Its luspatercept drug—which is in late stage trials for treating myelodysplastic syndromes (MDS) and beta-thalassemia, hematology indications—looks like a strong potential winner as well. The company has also picked up a few drugs through acquisitions, including Impact Biosciences’ drug fedratinib, a treatment for melofibrosis, and Juno Therapeutics’ liso-cel, a CAR-T therapy.
Analysts’ consensus price target for Celgene clocks in at $122.81, nearly 37% higher than the price as of this writing. However, last month analysts at Cowen reiterated their Buy rating on the stock giving it a price target of $150 – 68.5% higher than today’s price.
Sarepta Therapeutics (NASDAQ: SRPT)
Sarepta Therapeutics (NASDAQ: SRPT) has been beaten up recently after trials of its Duchenne muscular dystrophy candidate were halted by the FDA as a result of a manufacturing-related issue just days after the company announced exciting early-stage data for its first human study of the drug.
However, the company’s Exondys 51 treatment is already on the market and is reportedly doing well.
“Launch trends [for Exondys] continue to be positive as SRPT continues to progress and add-on to its now deep, diversified pipeline of neuromuscular gene therapies,” wrote analyst Ritu Baral at Cowen & Co. Baral also praised the “astonishing rapidity” of Sarepta’s drug development and wrote that “We expect this pipeline to continue to drive value for a number of years.”
The consensus 12-month price target for Sarepta is $152.68, suggesting possible upside of 13.37%. However, analysts at JMP Securities recently boosted their price target on the stock to $275 – 105% higher than today’s price.