The biotech industry is known for extreme innovation that can
frequently lead to huge gains for early investors.
Pfizer Inc. (
for example. When the company released its groundbreaking
cholesterol medicine Lipitor in 1996, the best-selling drug in the
history of the pharmaceutical industry,shares proceeded to climb
more than 300% in the following three years. Investors who knew
Pfizer was on the cusp of a hot, new mega drug that made alot
ofmoney in a very short amount of time.
Take a look at the incredible gains thestock saw...
But historically, finding the next hot thing in biotech and
pharmaceuticals has been extremely difficult. Not only are there
thousands of companies across the world pursuing thousands of new
drugs and therapies, but most are subjected to strict regulatory
standards that can delay or even prevent them from ever putting
their drugs into themarket .
But thanks to a new program the Food and Drug Administration
(FDA) just implemented, finding hot new drugs with high probability
of reaching commercialization just became a lot easier.
The federal agency passed a new "breakthrough" product
designation in July of 2012 that enables the most promising new
drugs to move directly from Stage 1 testing to commercialization,
allowing it to skip very time-consuming testing of Stages 2 and 3.
"A breakthrough drug is one that mayoffer important new benefits
for patients with serious or life-threatening disease who are
especially in need of new safe and effective treatments," said
Janet Woodcock, director of FDA's Center for Drug Evaluation and
This new designationwill compliment three other programs the FDA
has developed to speed promising new drugs to the market -- Fast
Track, Priority Review and Accelerated Approval. Although each
program is unique, each is designed to deliver groundbreaking
therapies to patients who are most in need in a short period of
But make no mistake; this is a huge accomplishment in the
biotech and health care industries. Not only is it great news for
sick patients waiting for new therapies to cure life-threatening
ailments, but it leads to a virtual cornucopia of hot new
biotechstocks into the market. And that's an incredibly valuable
resource for investors looking for the best stocks and drugs.
The FDA's program is already off to a fast start.
Vartex Pharmaceuticals Inc. (Nasdaq: VRTX)
announced in early January that two of its drugs for cystic
fibrosis had earned the breakthrough designation. They gave the $9
billion biotech's share price a nice little pop, jumping more than
10% in the first week of the year as the Street absorbed the good
news. Looking forward, Vartex still needs to achieve
commercialization of its new medicines, but it's a very clear
signal to the market that the company has a promising new drug with
special communication channels into the FDA to help catalyze a
potential approval and commercialization.
In some cases, the mere prospect of a drug being designated with
the breakthrough status is enough to send share soaring. That's
exactly what happened to
Sarepta Therapeutics Inc. (Nasdaq: SRPT)
. After the company revealed extremely promising results for a new
muscular dystrophy therapy in early October 2012, shares more than
tripled in just one day, surging above $45 from $15. Although
Sarepta has since pulled back, shares are still up an amazing 175%,
another great indication for the capacity of future gains should
the company's drug receive breakthrough designation and
Risks to Consider:
Acceptance into the FDA's new "breakthrough" designation is
noguarantee the drug will reach commercialization. The success of
one drug in a company with many drugs can sometimes only represent
a small amount of totalrevenue .
Action to Take -->
The FDA's new "breakthrough" program is a great place for investors
to find the hottest biotech stocks and drugs. Vartex
Pharmaceuticals was the first company to be accepted into the
program, giving shares a nice boost early in the year, while the
merespeculation that Sarepta could earn the designation led to
shares tripling in just one day. Although the program is in its
early stages, it should serve as an excellent tool for finding
great stocks in the ultra-competitive and technical field of
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