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"Right To Try" Brings Good News for Biotech Sector: 5 Picks

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After President Donald Trump successfully repealed and replaced the Obamacare Healthcare Bill or the Affordable Care Act last year, his focus shifted to the passage of the “Right To Try” bill this year. On May 30, the President signed the 'Right To Try' bill into a law. This law will help patients suffering from terminal diseases to undergo experimental treatments and use drugs that are not yet approved by the Food and Drug Administration (FDA).

The passage of this law is definitely good news for patients and is expected to benefit the biotech industry. Additionally, the World Health Organization (WHO) is now assessing the quality of biosimilar drugs, which will improve the quality parameter of these drugs and at the same time ensure hassle-free availability in the United States. This is why investing in biotech stocks with significant exposure in the U.S. market could be one of the most suitable investment options at present.

Trump Signs “Right To Try” Law

President Trump said that "it takes a long time" for a drug to get FDA approval and a terminally ill patient "don't have an abundance of time." Addressing this concern, Trump finally signed the “Right To Try” law on May, 30, which will help patients use experimental drugs that are not yet approved by the FDA. Additionally, Scott Gottlieb, commissioner of FDA said that the “Right to Try Act” will help “patients and families who are facing life-threatening diseases or conditions.”

A lot of arguments can be made on to what extent this law could actually benefit these terminally ill patients. The FDA’s job is to assess and certify a drug’s quality and safety. But in doing so, the FDA sometimes blocks a drug or adds so many regulations that either the consumer fails to afford it or sometimes the company stops its development altogether. In this respect, the passage of the “Right to Try” law is definitely a win for patients as it gives them the flexibility to choose their preferred mode of medical treatment.

WHO To Assess Bio-Similar Drugs

Drugs for serious diseases like cancer, leukemia, and AIDs are comparatively expensive. However, cheaper copies of such drugs — known as bio-similars — are now circulating in global markets. According to Emer Cook, Head of Regulation of Medicines and other Health Technologies, WHO, these bio-similar drugs have become an “important part of the treatment armamentarium for many countries, including low- and middle-income countries.” 

However, lack of proper regulation for these bio-similars outside the United States and European markets is a concern. In order to address this issue, WHO has decided to invite drug-making companies in June to provide a report on their various bio-similar drugs. It is essential to check these bio-similars to determine whether these drugs have the same beneficial result like the original.

Our Choices

The passage of the “Right To Try” law is expected to ease medical treatments for patients suffering from terminal diseases. Additionally, WHO’s focus on assessing the quality of bio-similar drugs will improve the safety factor of these drugs and in turn benefit the biotech market.

In this context, we have selected five biotech stocks that are expected to gain following these developments. These stocks also flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Illumina, Inc. (ILMN - Free Report) is a provider of sequencing and array-based solutions for genetic analysis.

This San Diego-based company has expected earnings growth of 21.5% for the current year. The Zacks Consensus Estimate for the current year has improved 0.6% over the last 30 days. Illumina has gained 21.6% so far this year. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Athersys, Inc. (ATHX - Free Report) is a biotechnology company that focused on the research and development activities in the field of regenerative medicine.

This Cleveland-based company has a Zacks Rank #2. The expected earnings growth rate for the current year is 17.24%. The Zacks Consensus Estimate for the current year has improved 29.4% over the last 30 days. Athersys has gained 34.8% year to date.

EyePoint Pharmaceuticals, Inc. (EYPT - Free Report) is a specialty biopharmaceutical company engaged in developing and commercializing ophthalmic products.

This Watertown-based company has a Zacks Rank #2. The expected earnings growth rate for the current year is 7.69%. The Zacks Consensus Estimate for the current year has improved 4% over the last 30 days. EyePoint Pharmaceuticals has gained 77.9% so far this year.

Rhythm Pharmaceuticals, Inc. (RYTM - Free Report) is a biopharmaceutical company that develops peptide therapeutics for the treatment of rare genetic disorders of obesity.

This Boston-based company has a Zacks Rank #2. The expected earnings growth rate for the current year is 35%. The Zacks Consensus Estimate for the current year has improved 22.7% over the last 30 days. Rhythm Pharmaceuticals has gained 9.5% year to date.

Ligand Pharmaceuticals Incorporated (LGND - Free Report) is a biopharmaceutical company focused on developing technologies that help pharmaceutical companies to discover and develop medicines.

This San Diego-based company has a Zacks Rank #2. The expected earnings growth rate for the current year is 33.90%. The Zacks Consensus Estimate for the current year has improved 6.9% over the last 30 days. Ligand Pharmaceuticals has gained 38.7% so far this year.

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