4 Favorite Biotech Stock Picks for 2020

John McCamant chose The Medicines Company as his top pick in last year's annual MoneyShow Top Picks report. The stock rose 357% -- making it the #1 performer out of over 100 ideas. Below, John and his fellow analyst Jay Silverman from The Medical Technology Stock Letter review four favorite biotech bets for 2020. Ionis Pharmaceuticals The R&D pipeline at Ionis Pharmaceuticals is unsurpassed, we believe, by most leading biotechs and even many global drug companies. With 2019 sales of its leading blockbuster drug -- SPINRAZA -- for treating SMA (spinal muscular atrophy) expected to exceed $2 billion for its partner Biogen , Ionis' emergence as a top-tier biopharmaceutical company is becoming obvious. With more than 40 clinical trials under way and over $2 billion in cash on the balance sheet, in our view, 2020 will be the year that Ionis is further recognized not only for its antisense dominance, but also for the sustainable growth that the pipeline, the company's multiple partners and IONS itself is demonstrating. Sometimes IONS gets chastised for only getting upfront and royalty payments, but what investors are just beginning to realize is how financially fruitful those deals can be (e.g., the Spinraza deal) while relying on the multinational partners marketing power to maximize sales. SPINRAZA generated over $1.5 billion in worldwide net sales through third-quarter 2019, an increase of nearly 25% year-over-year and we forecast ~$2 billion in full-year sales. The total number of patients on SPINRAZA treatment is now more than 9,300 patients worldwide. While young children make up the majority of use, adult patients are now a significant driver of growth and as the largest SMA patient segment. Additionally, the global opportunity for SPINRAZA appears to be larger than initial estimates, with more than 45,000 patients in markets where Biogen has a direct presence. While Zolgensma -- an SMA gene therapy from Novartis -- is new to the market and some competition is expected, BIIB/IONS first-to-market, longer-term data and even next-generation compounds, we believe, will help sustain growth and leadership in this big field. With four Phase III compounds about to be reported on plus a myriad of exciting Phase II programs in sizable markets (Parkinson's, Alzheimer's Huntington's HBV etc.), we believe 2020 will the best year yet for IONS and its shareholders. While the stock remains well below its 2019 highs due to what we believe is overdone concerns of SPINRAZA competition, the company has embarked upon its first stock buyback program ($125 million to start) with its abundant and growing cash hoard. Myovant Sciences Ltd. Myovant Sciences offers a new drug pipeline in a pill. Relugolix is a small molecule, gonadotropin-releasing hormone (GnRH) receptor antagonist, and an oral drug candidate for the treatment of uterine fibroids (UF), endometriosis, and advanced prostate cancer. More than 2,150 study participants have received treatment with relugolix in successful Phase I, Phase II, and Phase III clinical trials. Myovant's partner Takeda Pharmaceutical has obtained marketing authorization in Japan for Relumina (relugolix 40 mg tablets), while Myovant has retained ROW rights. Several clinical and regulatory catalysts are due in 2020 that, in our view, will increase the NPV of relugolix, propel the shares and also increase the company's potential takeover value. GnRH modulation has been validated in studies in prostate cancer, breast cancer, endometriosis, uterine fibroids, and additional indications where regulation pituitary hormones may play a role. There are already a series of GnRH agonists on the market, as well as a few antagonists. With a broad clinical profile, in our view, Relugolix could offer advantages over existing agonists and antagonists through an improved safety profile and more convenient dosing options. Myovant will most likely be the second GnRH inhibitor to gain FDA approval, with an NDA submission for relugolix in uterine fibroids (UF) due by April 2020. Orlissa from AbbVie was approved in July 2018 for pain in endometriosis and the company submitted a NDA for in uterine fibroids in August 2019. Uterine fibroids are extremely common among adult women. The standard of care treatment includes GnRH agonists, NSAIDS, and oral contraceptives and are not effective enough for a significant proportion of patients. In many cases uterine fibroids can progress to require surgery; we see GnRH antagonists as having the potential to fulfill an important gap in the market. Given its competitive efficacy profile, we believe relugolix could help a number of patients with uterine fibroids. Though AbbVie's Orilissa entered the market in 2018, we believe Myovant will benefit from AbbVie's powerful marketing to develop and educate the market for oral GnRH inhibitors. Myovant's lead indication is uterine fibroids and is about 9-12 months behind Orilissa. Meanwhile, in its first trial in prostate cancer, men receiving once-daily, oral relugolix achieved sustained testosterone suppression; the results support an NDA submission to FDA upcoming in Q2 2020 and future regulatory submissions in Europe and Japan. Orilissa is not currently in development for prostate cancer, and is not being developed in a co-formulation with add-back therapy, which could give relugolix a commercial advantage in terms of convenience for patients. The potential for patients to rapidly come on and off of oral relugolix therapy makes intermittent treatment a new option. Recent surveys of men with prostate cancer suggest a preference to a pill versus frequent injections. As a novel pipeline in a pill with de-risked clinical data, ease of use and safety advantages over other GnRH inhibitors/agonists, in our view, relugolix is a next-generation blockbuster for endometrial disorders. As a wholly owned asset, we also believe Myovant is an attractive takeover candidate. Nektar Therapeutics Nektar Therapeutics is positioned for a flow of significant catalysts in 2020 from their broad diversified pipeline of drug development candidates for pain management, cancer and inflammation. Its drug candidate for pain management, NKTR-181, is expected to have an FDA Ad Com panel in early 2020, which in our view, will be followed by an FDA approval. '181 is a novel mu opioid that selectively avoids causing euphoria (the cause of opioid abuse) while still preventing pain. The company is currently in discussions with possible partners for '181 as it would need a large sales force to launch a novel pain drug that may help address the opioid crisis as the compound provides pain relief without euphoria. NKTR-181 currently represents zero value in most Wall Street models for the stock, despite the recent positive development with the imminent scheduling of an FDA AdCom meeting. In our view, '181 will receive FDA approval, which will serve as a significant stock catalyst in 2020. Bempeg, which targets IL-2, is NKTR's lead cancer drug development candidate and is currently in broad Phase III development in combination with their partner Bristol-Myers Squibb , which has the approved cancer drug Opdivo. The most recent updated efficacy results with longer follow-up are now approaching a median of 19 months in heavily pre-treated melanoma patients. Interestingly, some patients who had partial responses to Bempeg/Opdivo have now improved to complete response -- a classic immune oncology (I/O) sign of efficacy. Another important signal is that more than half of the patients continue in the study without evidence their tumors are growing again, suggesting that the B/O combo in newly diagnosed melanoma patients could be more effective and durable than when Opdivo is used alone or when combined with Yervoy in later stage patients. Lastly, the NKTR combo continues to have an excellent safety profile compared to the significant toxicity seen with the Yervoy combo. Bempeg is a very important cancer drug candidate being developed in combination with Opdivo. Currently only 33% of cancer patients respond to the miracle drug Opdivo, which turns immune systems back on to fight cancer. Bempeg has the potential to open door for the other 60%-70% cancer patients that cannot be currently treated with Opdivo, representing a multi-billion drug opportunity. BMY has voted strongly by giving NKTR $2 billion for the rights to co-develop Bempeg in combo with their drug Opdivo. The markets are also starting to realize the huge potential of IL-2 targeted drugs, as THOR was bought for $2.5 billion and a huge premium (172%) by Sanofi for their Phase I IL-2 drug candidate and their I/O platform. The company recently announced updated results from the first-in-human Phase 1a study of NKTR-358, a novel T regulatory (Treg) cell stimulator in development for the treatment of autoimmune and other chronic inflammatory conditions. The data support the drug candidate's expanded development by partner Eli Lilly which is being evaluated in a multiple ascending dose (MAD) study in patients with systemic lupus erythematosus and two additional double-blind, randomized, placebo-controlled Phase 1B studies in adults with psoriasis and atopic dermatitis. '358 has huge potential as it would turn off inflammation before it can cause disease and would basically represent a cure for any autoimmune disease. NKTR is positioned for numerous catalysts in 2020 with '181 and Bempeg leading the way. A positive FDA panel for '181 will begin to unlock huge value for the company as they own 100% of the potential blockbuster. The Bempeg/Opdivo combo will have multiple Phase II/III readouts in 2020 and the huge cancer meeting ASCO in May could be significant for NKTR's stock. In our view, the resurrection of NKTR's stock is just beginning and will become fully recognized by Wall Street in 2020. Sangamo Therapeutics After many years of fits and starts, 2020 will be the right year for Sangamo Therapeutics. The scope and depth of Sangamo's R&D pipeline, clinical, technological and manufacturing leadership in the gene therapy/editing/regulation arena will be on broad display this year. While SB-525 -- for hemophilia A -- is about two years behind ValRox from Biomarin in the lucrative hem A market, the overall value proposition and potential to disrupt and differentiate is becoming clearer each clinical update. The IND transfer to Pfizer is complete and they are currently enrolling a Phase III lead-in study with the Phase III to start in early 2020. Pfizer is a global powerhouse that has poured more money into gene therapy than anyone around -- and taking the lead on SB-525 based upon what they know is a strong foreshadow that it has the potential to be best in class. In our view, the 12-18 month that will be presented in 2020 will be very important as this is the time frame when ValRox has a significant drop in Factor VIII levels. The profile of SB-525 (e.g., dose, expression, manufacturing, etc.) and learning curve to date vastly de-risks SGMO's other gene therapy programs, including the approved IND in Fabry disease and in Phenylketonuria (PKU). PKU is an inborn error of metabolism that results in decreased metabolism of the amino acid phenylalanine. Untreated, PKU can lead to intellectual disability, seizures, behavioral problems, and mental disorders.) After hem A, Fabry and PKU are relatively lower-risk clinical approaches than gene editing/regulation. All three diseases are excellent markets for gene therapies as they are currently treated with expensive weekly or multi-weekly enzyme or protein infusions based that a single gene therapy treatment can replace. Sangamo is a leader in developing CAR-TREGS which have the potential to treat autoimmune disease by tackling the disease at its source with a one-time treatment. Autoimmune disease is a huge market opportunity and the company is actively pursuing both Crohn's disease and multiple sclerosis. Sangamo is also making significant progress with their CNS development programs and is currently targeting Alzheimer's, Parkinson's, Huntington's, ALS and Prion diseases. I strongly believe SGMO shares will have a remarkable comeback. We urge biotech investors to buy for a big move in 2020 as a top high risk-high reward recommendation. Click here for access to MoneyShow's 100+ page Top Picks Report featuring the nation's most respected and well-known newsletter advisors favorite investment ideas for 2020.

4 Favorite Biotech Stock Picks for 2020

The Medical Technology Stock Letter's top pick rose 357% in 2019.

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