The 3 Most Promising Pharma Stocks to Own Now

Gabriel Osorio-Mazzilli

August 30, 2023 4 min read

It is remarkable that day after day there are pharmaceutical companies working hard, researching and developing high-tech medicines for the improvement of human health and the treatment of severe diseases. These companies not only do a good job of researching and developing cures, but they also have an incredible financial performance. If you are interested in the sector here are 3 promising pharma stocks, let’s take a look.

Eli Lilly (LLY)

Eli Lilly and Company World Headquarters. Lilly makes Medicines and Pharmaceuticals XI

Source: Jonathan Weiss / Shutterstock.com

Eli Lilly (NYSE:LLY) is a pharmaceutical company that works hard to create medicines that improve people’s lives. Their reputation in the financial world is solid and they are considered one of the top promising pharma stocks. The reason? Well, they’re doing amazing things.

In the second quarter of 2023, their revenue was up an impressive 28%. This was because more people were using drugs like Mounjaro, Verzenio, Jardiance and Taltz, which totaled $579 million. If we take those details out, the increase is still impressive, up 22%!

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In addition to earnings, they are marking important milestones. They have had positive results in Alzheimer’s and weight loss studies, and are seeking approvals for new drugs in Europe and the U.S. They have also acquired companies like Versanis Bio to expand their treatment portfolio.

In financial terms, EPS rose a whopping 86%, thanks to the Baqsimi rights sale and other factors. But beyond the numbers, they are doing real and exciting things. A study on a drug called Retevmo showed great promise in treating certain types of thyroid cancer. This means they are making tangible advances in fighting serious diseases.

Reata Pharmaceuticals (RETA)

Source: Matej Kastelic / Shutterstock

Reata Pharmaceuticals (NASDAQ:RETA) has a team of scientists and medical experts working together with the goal of creating wonder drugs. Their mission is to find amazing new drugs to help people who have really difficult diseases.

Recently, they accomplished something amazing, they created a drug called SKYCLARYS. And the exciting thing is that SKYCLARYS is the first drug to be approved to treat a rare neurodegenerative disorder called Friedreich’s ataxia. This drug has earned approval from the U.S. Food and Drug Administration (FDA), meaning the government is confident that the drug is both safe and effective.

Financially, the company had some interesting results in the last quarter. They reported a significant increase in revenues, up 2,847.5% compared to the previous year. However, they also reported an adjusted loss per share of $4.65 for the quarter, which is higher than analysts had expected.

And here comes an even more exciting surprise, another large company called Biogen (NASDAQ:BIIB) is very interested in Reata. Biogen thinks the ideas and drugs that Reata has created are so valuable that they want to buy the company. And they are willing to pay a lot of money for it, around $172.50 per share, which values Reata at approximately $7.3 billion. This is an important step for the growth of both companies and could have a positive impact on Biogen’s financial results from 2025 onwards.

Madrigal Pharmaceuticals (MDGL)

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Madrigal Pharmaceuticals (NASDAQ:MDGL) is a medical company that is working on innovative treatments for a disease called non-alcoholic steatohepatitis (NASH). This disease affects the liver and currently has no approved treatment. Madrigal is developing a drug called resmetirom, which is designed to address the root causes of NASH in the liver.

Recently, they achieved a major milestone by completing the staged submission of their new drug application (NDA) to the FDA. Basically, they are asking for permission for resmetirom to be approved and used in adults with NASH and liver fibrosis. In addition, they requested that the NDA review be prioritized due to the importance of their drug.

The company has conducted several clinical studies to test the effectiveness and safety of resmetirom. They have conducted studies at different stages, from early to advanced phases, involving a large number of patients. In one of the most important studies, resmetirom was shown to improve liver health by reducing inflammation and fibrosis, two key problems in NASH.

Financially, as of June 2023, they had about $298.4 million in cash and available financial assets, which is down slightly from the $358.8 million they had at the end of 2022. The decrease is mainly due to operating expenses and investments in drug development. They also obtained financing through agreements with investors and a loan with a company called Hercules (NYSE:HTGC).

As of this writing, Gabriel Osorio-Mazzilli did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Gabriel Osorio is a former Goldman Sachs and Citigroup employee. He possesses discipline in bottom-up value investing and volatility-based long/short equities trading.