The 3 Best Biotech Stocks to Buy at Today's Discounted Prices

Best biotech stocks

Best biotech stocksThe biotech market sold off last week, with the Nasdaq Biotechnology Index dropping 4.5% since April 23. That means some of the best biotech stocks have dipped as well.

Now, investors are wondering if they should take their money to the sideline. But Money Morning's Bioscience Investing Specialist Ernie Tremblay says this type of move is normal for the biotech market.

"The sell-off we're seeing now seems to happen every year at about this time, like clockwork," Tremblay said on March 27. "There are always things going on in the news that seem to explain the drop, but the meta-picture is simply this: The market breathes in, and the market breathes out."

Instead of selling, this is the time to go shopping for the best biotech stocks.

Here are three biotech stocks we're recommending now as they trade at discounted prices...

Best Biotech Stocks to Buy Now No. 1: Biogen Inc. (Nasdaq: BIIB)

The first biotech stock we're recommending is Biogen Inc. (Nasdaq: BIIB). That stock has gone "on sale," dipping 7.9% since April 23.

Biogen Inc. (Nasdaq: BIIB)

Recent Price: $389.45

Market Cap: $87.6 billion

Institutional Ownership: 92.9%

2015 EPS Estimate: $16.75

Operating Margin: 40.9%

Biogen is best known for Betaseron, the first FDA-approved drug that treated multiple sclerosis (MS). But the company has other drugs in its MS pipeline. In Q1, sales from the company's MS division totaled $2.1 billion compared to $1.7 billion last year.

Biogen is now getting a chance to explore MS more thoroughly. In early 2015, Biogen announced a partnership with Google Inc. (Nasdaq: GOOG, GOOGL). The two firms have created futuristic labs that use sensors, software, and data analysis to conduct better treatment research.

"Earlier, Biogen had initiated a project with Fitbit, using the company's activity trackers to gather data on MS patients," Money Morning's Defense and Tech Specialist Michael Robinson said. "The Google partnership is an extension of that kind of thinking - using sensors to track the real-time medical data and also analyze all the Big Data to look for clues in treating and getting ahead of MS."

Biogen is developing a drug called Aducanumab to treat Alzheimer's. More than 75 million people worldwide are expected to be impacted by Alzheimer's by 2030.

In March, the company reported Aducanumab was the first drug to show evidence of significantly slowing the signs of Alzheimer's. The drug will begin phase 3 trials this year, so there's no guarantee it will be approved. But this month's news did show the drug's enormous potential.

BIIB stock is now trading around $375 per share after this week's decline.

And that's not the only biotech stock that's trading at a discount this week. Here are two more of the best biotech stocks we're recommending now...

Best Biotech Stocks to Buy Now No. 2: Gilead Sciences Inc. (Nasdaq: GILD)

Gilead Sciences Inc. (Nasdaq: GILD) is down 0.6% since early February.

Gilead Sciences Inc. (Nasdaq: GILD)

Recent Price: $105.65

Market Cap: $148.9 billion

Institutional Ownership: 94.3%

2015 EPS Estimate: $9.68

Operating Margin: 62.8%

Gilead's biggest revenue generator is Sovaldi, a Hepatitis C drug that costs $1,000 per pill. A full course of treatment on Sovaldi can cost up to $84,000 per patient.

The drug has been chided by insurance companies and Congress members for its high price, but it has also been lauded for its effectiveness. The drug is 90% effective and has very few side effects compared to competing drugs.

Sales of Sovaldi reached $10.3 billion in 2014, its first full year on the market.

"Sovaldi is almost certainly going down in history as one of the more successful drugs ever launched," Robinson said in December.

That drug, and Gilead's newest Hepatitis C treatment Harvoni, will be huge catalysts for GILD stock. The market for Hepatitis C drugs is exploding right now...

An April 2014 report from Express Scripts found that spending on Hepatitis C drugs is expected to increase by more than 200% in both 2015 and 2016. Newer and more convenient treatments in the coming years will drive sales.

That's where Harvoni comes in. It combines compounds from numerous pills, including Sovaldi, meaning patients only take one drug over 12 weeks of therapy. It also costs roughly $94,500 per patient.

Gilead is now working to bring down the prices on both of these drugs, which will make them available to a wider audience. And that gives the stock major upside, especially as the market grows by 200% annually.

GILD stock is now trading near $106 per share.

Best Biotech Stocks to Buy Now No. 3: Orexigen Therapeutics (Nasdaq: OREX)

Orexigen Therapeutics Inc. (Nasdaq: OREX) trades near $6.50 after dropping nearly 8.3% in the last week. It's the most speculative play on this list, with a market cap of just $846 million.

Orexigen Therapeutics (Nasdaq: OREX)

Recent Price: $6.78

Market Cap: $817 million

Institutional Ownership: 79.6%

2015 EPS Estimate: -$0.54

Operating Margin: -55%

OREX is a play on the United States' $20 billion-a-year weight-loss industry. More than two-thirds of adults and one-third of children in the United States are overweight. And despite those high numbers, there are still very few weight reduction medications.

Many diet drugs come with severe side effects, and others aren't covered by insurance companies. That's where Orexigen comes in.

Instead of producing side effects, its new weight-loss drug Contrave showed long-term health improvements independent of weight loss. Contrave was shown to reduce heart attacks by 30%, strokes by 37%, and heart-related deaths by 74% in its interim trials.

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"If these numbers hold up, there is no doctor who would balk at effecting substantial cardiovascular health improvement in his patients, while helping them keep their weight under control," Tremblay said. "And it's unlikely that any insurance company wouldn't put the drug on its formulary [the list of drugs it covers]."

Tremblay cautions investors from getting too caught up in interim results, because the drug still hasn't received full FDA approval. But the potential for the drug, and its impact on OREX stock, is still massive.

OREX shares are up 22.8% in the last year, even with last week's sell-off.

The Bottom Line: The biotechnology market has sold off in the last week, which is presenting discount opportunities on some of the best biotech stocks. Instead of leaving the market, we recommend investors add to their positions in BIIB, GILD, and OREX now.

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