A U.S. FDA advisory panel on Wednesday unanimously recommended the agency approve the first "biosimilar" drug in the U.S., which could be good news for publicly traded companies invested in this area of pharmaceuticals.

A biosimilar version of the anti-infective cancer drug Neupogen from Novartis (NVS - Get Report)  was approved this week by the FDA. Biosimilar drugs are generic drugs produced by living cells but aren't necessarily precisely identical to the brand drug. Under provisions in the 2010 Affordable Care Act, the Obama administration has created a simplified pathway for biosimilar drugs to be approved. 

Express Scripts (ESRX) , the big prescription-benefit manager, has estimated that the first two biosimilars likely to get FDA approval, versions of Neupogen and Remicade, could save $22.7 billion in costs to patients and insurers over their first 10 years.

Here are three stocks that in the "biosimilar" drug business:

1. Coherus Biosciences (CHRS - Get Report)  -- A late-stage clinical biologics platform company, it focuses on developing and commercializing biosimilar products worldwide. Its clinical stage pipeline consists of CHS-0214, an etanercept biosimilar candidate, which is in two Phase III clinical trials for the treatment of rheumatoid arthritis and psoriasis; CHS-1420, an adalimumab biosimilar candidate that has completed a Phase I study to treat psoriasis or rheumatoid arthritis; and CHS-1701, a pegfilgrastim biosimilar candidate, which has completed a Phase I study for the treatment of breast cancer patients exhibiting chemotherapy-induced neutropenia. The company was formerly known as BioGenerics and changed its name to Coherus Biosciences in April 2012. Coherus Biosciences was founded in 2010 and is headquartered in Redwood City, Calif.

CHRS recently went public and three analysts have put targets of $20 , $22, and $45 respectively. CHRS has approximately 32 million shares outstanding and a trading float of approximately 13 million shares. 

Coherus Biosciences had already made a nice move so I am watching that stock for a pullback before I consider an entry.

2. EPIRUS Biopharmaceuticals (EPRS)  -- A commercial-stage biotechnology company, it focuses on developing, manufacturing, and commercializing biosimilar therapeutics worldwide. Its lead product candidate is BOW015, a monoclonal antibody against tumor necrosis factor alpha for the treatment of autoimmune diseases. The company has obtained manufacturing and marketing approval in India for BOW015 as a treatment for rheumatoid arthritis. Its pipeline of biosimilar product candidates also includes BOW050, a biosimilar version of adalimumab for the treatment of inflammatory diseases; and BOW030, a biosimilar version of bevacizumab (Avastin) to treat various cancers.

EPRS has one analyst with a price target of $12.  EPRS  has approximately 13 million shares outstanding and a trading float of approximately 6 million shares.

I went long Epirus Biopharmaceuticals on January 8, 2015 at $6.45 cost average. I planned on using a stop loss in the mid to low $7's and a profit taking range (where I would take partial to full profit) $9-$15 based on how much traction and interest the sector draws based on the NVS approval and articles like this.

3. Pfenex (PFNX - Get Report)  -- A clinical-stage biotechnology company, it is engaged in the development of biosimilar therapeutics. Its lead product candidate includes PF582, a biosimilar candidate to Lucentis that is in Phase Ib/IIa trials in patients with wet, age-related macular degeneration. The company also develops PF530, an interferon beta-1b biosimilar candidate to the Betaseron to reduce the relapses in patients with relapsing forms of multiple sclerosis; PF694, an interferon alpha-2a biosimilar candidate to the reference product Pegasys; and other biosimilar candidates. In addition, it develops PF708, a teriparatide generic peptide product candidate to the reference listed drug Forteo; Px563L, an anthrax vaccine candidate based on a recombinant modified form of the protective antigen; and Px533, a prophylactic vaccine candidate to protect against malaria infection.

PFNX went public in 2014  and two analysts have put targets of $12, and $15 respectively. PFNX  has approximately 20 million shares outstanding and a trading float of approximately 10 million shares.

I went long Pfenex on January 8, 2015 at $8.40 cost average. I planned on using a stop loss in the mid to low $7's and a profit taking range (where I would take partial to full profit) $10-$15 based on how much traction and interest the sector draws based on the NVS approval.  

As with any biotech there is always execution risk as trial drugs may not work. Also, EPRS and PFNX have small trading floats that could be subject to extreme and rapid moves.

Disclaimer: This is not investment advice. The stocks in this article may never appreciate in price and may depreciate in price. Do not make investment decisions based on this article. This article is for information only as I document my own personal trading. I am not an investment advisor. I am not responsible for your investment decisions. I may sell my position in EPRS and PFNX at any time. Low float stocks can be risky and you could lose all of your investment.

This article is commentary by an independent contributor. At the time of publication, the author was long EPRS and PFNX.