Over the years biotech investors who have owned the right stocks have made some very big money on Federal Drug Administration (FDA) approval of leading drug candidates. Typically biotech firms submit final Phase 3 trial data to the FDA, which then scrutinizes results and gives an up or down vote on whether the drug is approved to be launched for sale to the public. In some cases the FDA will restrict marketing or have the company change the label verbiage.

In a new report the analysts at Cowen point out a very interesting item. Their work shows that, on average, stocks gained 84% in the 12 months prior to approval and lost 24% in the 12 months after the FDA approval. They also pointed out the companies are rarely acquired a year before or after approval. That is a data point that may surprise many investors.

Cowen highlighted seven stocks with Phase 3 data that had solid opportunity heading into the approval process.

ACADIA Pharmaceuticals Inc. (NASDAQ: ACAD) has been one of the top performing biopharmas even since its experimental treatment for Parkinson’s disease psychosis called pimavanserin met its primary endpoints in a late-stage study in 2012. The company is getting closer to a regulatory filing for the drug. The Thomson/First Call price target for the stock is $32.76. Shares closed trading Tuesday at $23.42.

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Alexion Pharmaceuticals Inc. (NASDAQ: ALXN) is still a top stock to buy at many Wall Street firms, and it has been considered by some firms as a potential acquisition target. Some analysts see likely strong accretive near-term to an acquirer, given the very impressive $1.5 billion in company revenues that are big enough to be significant to a bigger company.

The FDA has granted an orphan drug designation to Soliris, its only marketed product, for the treatment of patients with myasthenia gravis, a rare neurological disorder that reportedly affects an estimated 13,600 people in the United States. The consensus price target is $193.89. Alexion closed Tuesday at $162.79.

Intercept Pharmaceuticals Inc. (NASDAQ: ICPT) has been a gigantic name, and it recently announced that its Flint data is likely to be released in August, from July previously. Many of the top biotech analysts on Wall Street believe the data could represent a significant positive catalyst for the stock and believe the potential for breakthrough designation on positive data remains a very real possibility. The consensus price target is a staggering $482.11. Intercept closed Tuesday at $248.13.

Kythera Biopharmaceuticals Inc. (NASDAQ: KYTH) announced in May it had submitted a New Drug Application (NDA) to the FDA for ATX-101 as an injectable treatment for the reduction of submental fat, which commonly presents as a double chin. Positive and consistent results from two pivotal Phase 3 trials — REFINE-1 and REFINE-2 — were reported in late 2013 and provide the basis for the NDA submission.

In the Kythera trials, the majority of ATX-101 patients had a visible reduction in fat under the chin and reported significant improvement in the visual and emotional impact of treatment. The consensus price target is $54.80. Shares closed trading at $39.43.

InterMune Inc. (NASDAQ: ITMN) is expected to ramp up international sales of Esbriet. The drug was developed for the treatment of idiopathic pulmonary fibrosis. The key for the company will be FDA approval for sales in the United States. A randomized Phase 3 trial (the ASCEND study) is currently underway in the United States and recent trial data were very positive.

InterMune is also working with Roche on a protease inhibitor that is already in Phase 2 studies for the treatment of hepatitis C. The consensus price target is $42.69. InterMune closed Monday at $44.55.

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Merrimack Pharmaceuticals Inc.‘s (NASDAQ: MACK) top drug is MM-398, which has shown to treat pancreatic cancer in Phase 3 trials. Fully one-quarter of patients using the drug have survived, which is a high percentage when you consider that late-stage pancreatic cancer is almost always quickly lethal. Physicians have stated they plan to use 398 a fair amount and thought that a drug that had succeeded in real randomized trials could prove very successful overall.

With an FDA approved label and promotional support, Merrimack Pharmaceuticals should capture a meaningful portion of the market for second-line treatment. The consensus price target is $13.40, and shares of the stock closed Tuesday at $7.21.

Relypsa Inc. (NASDAQ: RLYP) is a small-cap name most have not heard of, but it ranks incredibly high with buy-side accounts. The company is focused on the development and commercialization of non-absorbed polymeric drugs to treat disorders in the areas of renal, cardiovascular and metabolic diseases.

Relypsa’s two-part pivotal Phase 3 trial of its lead product candidate, patiromer, for the treatment of hyperkalemia, a life-threatening condition defined as abnormally elevated levels of potassium in the blood, has been completed and the primary and secondary endpoints were met. The consensus price target is set at a whopping $53. Relypsa closed Tuesday at $24.29.

We have covered some of the stocks in the Cowen universe in the past, and other firms on Wall Street are also very positive about them. In fact, one turned up in our top insider buying coverage last week.

It is important to note that all these stocks are very speculative and not prudent for risk-averse accounts. If history is correct, they could continue a nice run to a final approval.

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