Back to top

Image: Bigstock

Forget Valeant, Invest in These Attractive Drug Stocks Instead

Read MoreHide Full Article

Once an acquisition giant, Canada-based Valeant Pharmaceuticals has been in the spotlight since the second half of 2015 for all the wrong reasons like a price hike of specialty drugs, erroneous financial reporting, and termination of contracts with Philidor Rx Services. The going got worse in the first half of 2016 leading to a massive decline in its share prices.

Further, Valeant delayed its first-quarter earnings release due to the review of certain accounting practices, which led to a notice of default from its debtors. As if the delayed results and the ensuing notice were not enough, the company slashed its annual guidance when it announced its first-quarter results earlier this month, dampening investor sentiments even more. In addition, management transition issues, heavy debt levels and persistent organizational distractions continue to plague the company.

VALEANT PHARMA Price and Consensus

VALEANT PHARMA Price and Consensus | VALEANT PHARMA Quote

Even though the new CEO, Joseph Papa has set out to rebuild the company in the wake of the catastrophe, regaining investor trust is going to be a Herculean task. In this scenario, it’s probably best to forget Valeant and instead invest in some other drug stocks with a favorable Zacks Rank. They also have healthy pipelines/products and strong growth potential.

Our Picks

Massachusetts-based ArQule, Inc. ARQL is a biopharmaceutical company engaged in the research and development of innovative therapeutics for the treatment of cancers and rare diseases. The company’s lead candidate, tivantinib (ARQ 197), is being evaluated for the treatment of liver cancer. It is currently conducting two phase III trials on the candidate with its partners, Daiichi Sankyo Co., Ltd. and Kyowa Hakko Kirin Co., Ltd.

The company’s pipeline also includes candidates like ARQ 092, which is being developed for multiple oncology indications as well as for Proteus syndrome; ARQ 087 for the treatment of intrahepatic cholangiocarcinoma (iCCA) as well as for multiple oncology indications; and another oncology candidate, ARQ 761. ArQule’s pipeline looks pretty interesting at this point, with the company progressing on tivantinib. The company currently carries a Zacks Rank #2 (Buy).

ARQULE INC Price and Consensus

ARQULE INC Price and Consensus | ARQULE INC Quote

Coral Gables, FL-based Catalyst Pharmaceuticals, Inc. CPRX is a biopharmaceutical company focused on the development and commercialization of therapies targeting rare neurological diseases and disorders such as Lambert-Eaton myasthenic syndrome (LEMS), epilepsy (initially infantile spasms) and Tourette syndrome. The company has three drug candidates in development – Firdapse, CPP-115 and CPP-109. Catalyst in-licensed rights to Firdapse from BioMarin.

Firdapse has already suffered its share of setbacks, but things look relatively better now. The recent meeting with the FDA on a confirmatory phase III study protocol for Firdapse should reduce any additional delay in Firdapse’s development. The stock currently has a Zacks Rank #2.

CATALYST PHARMA Price and Consensus

CATALYST PHARMA Price and Consensus | CATALYST PHARMA Quote

Washington-based OncoGenex Pharmaceuticals, Inc. OGXI is a developmental-stage biopharmaceutical company that focuses on developing therapies for cancer. The company’s pipeline, which comprises custirsen, apatorsen and OGX-225, looks pretty interesting. Among these, the focus is on custirsen, a late-stage candidate that is being developed for the treatment of metastatic castrate-resistant prostate cancer (CRPC) and non-small cell lung cancer (NSCLC).

Custirsen has been granted Fast Track designation by the FDA for the second-line treatment of both metastatic CRPC and advanced NSCLC. The stock currently carries a Zacks Rank #2.

ONCOGENEX PHARM Price and Consensus

ONCOGENEX PHARM Price and Consensus | ONCOGENEX PHARM Quote

Headquartered at Henderson, NV, biotechnology company Spectrum Pharmaceuticals, Inc. SPPI develops and commercializes oncology and hematology drug products. The company has six approved oncology/hematology products targeting various types of non-Hodgkin's lymphoma (NHL), advanced metastatic colorectal cancer, acute lymphoblastic leukemia (ALL) and multiple myeloma (MM). 

The company also has three late stage candidates in its pipeline - SPI-2012 for chemotherapy-induced neutropenia in patients with breast cancer, Eoquin for immediate intravesical instillation in post-transurethral resection of bladder tumors in patients with non-muscle invasive bladder cancer and poziotinib for breast cancer.

The company’s progress on its pipeline candidates is impressive. In Mar 2016, the FDA approved its oncology drug, Evomela, two months ahead of the PDUFA date. The company expects a response from the FDA on its NDA for Eoquin later this year.  The stock currently carries a Zacks Rank #2.

SPECTRUM PHARMA Price and Consensus

SPECTRUM PHARMA Price and Consensus | SPECTRUM PHARMA Quote

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Published in