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Chris Hill: You mentioned Big Biotech, and I like the phrase. I've never actually heard anyone couch it that way, and it makes sense, because obviously not all biotechs are the same.

David Williamson: Well, and these are $50 billion companies. They're the four that have really grown up.

Chris: But I think a lot of people -- a lot of investors -- think about biotechs in terms of being much smaller; in some ways when you look at the stocks, a little bit more of a high-risk, high-reward scenario. When you look at smaller and mid-cap biotechs, what are you looking at for 2013?


David: I think [Sarepta Thearpeutics] is the most interesting story. It was actually the top performer of 2012, so you could call it a 2012 story as well, but they have just so much ...

Chris: This is the sequel.

David: Yes! They have so much potential in front of them. They have a muscular dystrophy drug. It works for Duchenne muscular dystrophy, and it's shown to arrest the decline in their six-minute walk test. It works by skipping exons. It's a real breakthrough.

GlaxoSmithKline is working on a competing drug, but they haven't actually talked as much about that as you would think. Sarepta has really gone from nothing to a pretty sizable market cap, but if this drug is successful -- you look at orphan drug indications. There are plenty of companies that sell drugs to just small patient populations at seemingly outrageous prices, but what price is too expensive when you're talking about your child's ability to live?

It's a small patient population, but if they get accelerated approval, which they're going to go for potentially -- it's only in phase 2 trials, so obviously there's still a lot of risk -- but if it plays out, it's definitely a potential takeover target for their technology.

As an orphan drug, charging $300,000, potentially, a year for their product, it could be a wildly profitable company as well.

The article The Most Exciting Biotech in 2013? originally appeared on Fool.com.

Chris Hill, David Williamson, and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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