Biotech stocks didn’t immediately take off when Trump became president. In fact, the POTUS has a complicated relationship with the industry. As a presidential candidate, he blamed big pharma for screwing consumers by charging sky-high prices. For a while, it was a bear market for investors looking for biotech stocks to buy.
Trump continued to talk tough after taking office. In January, he accused the industry of “getting away with murder” and hinted the administration might consider using price controls to protect consumers. To the delight of biotech stock investors, he apparently changed his mind.
In June, the White House started drafting an executive order to change how the government regulates pharma prices. According to reports, the order is “industry friendly.” Instead of controlling prices, the order would reduce regulations. In particular, the government would ease procedures for approving new drugs and fight harder to protect US drug patents overseas.
Also, the executive order includes a little-known change to health insurance regulations. Known as “safe harbor”, the new regulations will allow patients with high-deductible plans to buy certain medications with just a copay, even if their insurance coverage hasn’t fully kicked in.
By making it easier for patients to buy medications, the new regulation will reduce pressure on pharma companies to lower drug costs. According to Kim Monk, a pharma expert at Capital Alpha Partners, “it’s hard to view this as anything but a substantial win for pharma.”
Details are still being worked out, so the president hasn’t signed the order. Still, the Trump White House seems to have taken an industry-friendly approach to regulating pharma. As a result, biotech stocks are having a big year. Here are some biotech stocks to buy.
Gilead Sciences, Inc. (GILD)
Gilead has taken investors on a wild ride, reaching $114 in 2015. The stock eventually became overvalued and crashed back to Earth in 2016 and early 2017. It’s on the road back up, currently trading at $82.42, up 23% from six months ago.
This is surprising to some, given that Gilead’s Q2 earnings numbers fell from the year previous. That still beat projections, however. It’s also worth noting that the company spends tons on R&D, which should boost long-term performance. It has built a reputation for producing state-of-the-art HIV and Hep C treatments. Gilead recently scored FDA approval for Vosevi, a new Hep C drug.
Gilead is implementing a Hep C elimination program in the post-Soviet country of Georgia. The program is generous—Gilead is providing its Sovaldi and Havroni medications free of charge to thousands of people. If it’s successful, however, Gilead will be able to market its drugs to other developing countries, perhaps as part of a worldwide Hep C elimination program. Gilead is one of the best biotech stocks to buy right now.
Celgene Corporation (CELG)
This producer of drugs for cancer and inflammation is a world-beater. Celgene’s stock price has increased by 23% year-to-date. The company got a boost from impressive Q2 earnings. Revenue for the quarter topped $3.68 million, a 19% increase from the year before. Most of the company’s sales came from REVLIMID, a treatment for lymphoma that has gained a popularity in recent years.
Later this year, the company will submit an application for Ozanimod, a drug for treating multiple sclerosis. It successfully tested the drug in February. If and when Ozanimod wins FDI approval, expect even more gains for Celgene.
Enzo Biochem, Inc. (ENZ)
Enzo doesn’t produce medications directly. Instead, it develops technologies used in research, diagnostics, and therapeutics. It’s a more affordable stock, trading at only $10.50. Enzo has real growth potential, however. It has gained 47% year-to-date and has some new technologies coming down the pipeline.
Revenue in the most recent quarter topped $28 million, up 6% from one year ago. Most of that growth came from sales of the company’s molecular diagnostics tests. Enzo is unlikely to continue to grow as fast as it has over the past year, but it’s still a biotech stock to buy.