Dan Moskowitz: Top 10 Biotech Stocks for 2015

CELGENE CORP is currently trading in the $120 range, not far from its 52-week high of $129.06. It has appreciated by roughly 70% over the past year, and approximately 47% over the past three years. The beauty of Celgene is simple – a deep pipeline (there’s always potential for a pop), consistent revenue growth and profitability, and no concern of one bad drug trial dragging the stock down to zero. Celgene has delivered for its shareholders for decades. There is no reason for that to change. It’s not only likely to be one of the best long-term investments in biotech, but throughout the broader market.

BIOGEN IDEC is similar to Celgene in many respects. It has a deep pipeline, it has delivered top-line and bottom-line growth, and its stock performance has been exceptional. Over the past year, it has appreciated 45.58% (as of 3/24/15). Over the past three years, it has appreciated 56.61%. Both Celgene and Biogen should continue to deliver for shareholders over the long haul. Remember, the winners keep winning.

GILEAD SCIENCES has gained 62.36% over the past three year. Compared to the above stocks, it has lagged over the past year, “only” appreciating 39.11%. Whereas Celgene and Biogen are trading at 51 and 33 times earnings, respectively, Gilead is trading at just 14 times earnings. This is despite a deep pipeline, consistent top-line and bottom-line growth, and operational cash flow generation of $10.52 billion over the past twelve months. Gilead looks undervalued compared to its peers.

BIOMARIN PHARMACEUTICALhas delivered year-over-year revenue growth, but it’s not profitable. It has also been burning through cash ($58 million over the past twelve months). However, as long as there’s top line growth and the potential for exciting news within the next year, there’s going to be potential.

PHARMACYCLICS INC. can claim top-line growth and profitability. Two, the company recently reported stellar sales for IMBRUVICATM. On Jan. 1, 2015 PCYC was trading at $122.25. Since then, investment bank Nomura upgraded its price target to $196 from $195. That call was made at $172, and the stock is now trading at around $260 (as of 3/24/15). This small-molecule/immune-system-treatment company seems to be doing everything right. On the other hand, not everyone is a believer given its lofty 11.80% short position.

VERTEX PHARMACEUTICAL, Top-line growth? No. Profitable? No. However, recent approvals could lead to positive changes. Investors are certainly betting on these positive changes – Vertex Pharmaceuticals, Inc. (VRTX) is up approximately 70% over the past year.

XENOPORT INC. is not profitable, and revenues have been declining. On the other hand, it recently beat quarterly estimates by $0.07 with revenues in-line with expectations. More importantly, its pipeline includes potential treatments for multiple sclerosis, psoriasis, Parkinson’s disease, and more. Xenport has a clean balance sheet, with $113.37 million in cash versus no long-term debt.

SAGE THERAPEUTICS is not profitable and it burns through cash. But OrbiMed Advisors — one of the most respected hedge funds in this space with access to $12 billion and 80 employees — has made a bet on Sage. SAGE-547 is the key here, which is an exclusive/no-competition elliptic seizure treatment.

AMGENis the only company on this list that pays a dividend. Currently, Amgen Inc. (AMGN) offers a yield of 1.57%. Amgen has also delivered consistent top-line and bottom-line growth, its pipeline is deep, and it has been growing organically and inorganically. For instance, it purchased Onyx Pharmaceuticals for $10.4 billion. As long as a company has the capital to grow inorganically, it has potential. Amgen fits the bill. Better yet, it’s also capable of growing organically.

ACORDA THERAPEUTICS targets multiple sclerosis, spinal cord injuries, and nervous system disorders. It also looks to grow organically as well as inorganically. In regards to the latter, it recently acquired Civitas Pharmaceuticals, which gives it global rights to CVT-301 — a Parkinson’s disease treatment. This purchase was much more expensive than Amgen’s purchase on a relative basis.