A growth stock I'd buy alongside this Neil Woodford favourite

In some ways, I see upcoming pharmaceuticals and biotechnology companies as being very similar to oil and gas explorers. They're risky and some will surely fail, but if you spread your money across a selection of them, you really only need one or two to come good and you could be nicely in profit.

That seems to be Neil Woodford's approach as he holds a decent handful of them in his CF Woodford Equity Income Fund, in addition to big pharmaceutical stocks like the fund's top holding, AstraZeneca.

One of them is BTG(LSE: BTG), which develops products targeting critical care, cancer, neurological and other disorders. 

BTG shares went through a rapid growth phase in the couple of years leading up to the end of 2014, in what looked like a classic growth-share pile-on. Since a peak of around 830p, the shares went into a slide, as often happens. They've picked up again, but at 752p as I write they're still down after nearly three years -- and investors have had no dividends as compensation.

Strong forecasts

But I like the look of BTG now, and I think we're seeing an attractive growth valuation. From a P/E that exceeded 45 in early 2015, we're now looking at a more reasonable forward multiple of 24 based on March 2018 forecasts, dropping to 21 a year later. That's higher than the FTSE averages, but I think not bad for a company with double-digit earnings per share growth on the cards.

A pre-close update reported "a good performance in the first half of the year," with produce sales growth in double-digits at constant exchange rates -- and expected sales growth looked good across all product divisions.

Interim results are due on 14 November. The company is still in a phase of investing its strong cash flow in expansion and pipeline development, but I'll be keen to see if there's any word on future dividends.

Blue sky potential

Certainly riskier, but with possibly great potential, is Oncimmune Holdings(LSE: ONC), which is developing early cancer detection.

With a current market capitalisation of £59m, it only floated on AIM in May 2016 and is still in its cash-burn phase, so it's not for the faint-hearted. The year to May 2016 saw a pre-tax loss of £9m -- but that should fall this year, and in September 2017 the firm raised an additional £5m through a share placing.

That should leave it on a comfortable financial footing for now -- but further fundraising does seem inevitable before the company achieves profitability.

European expansion

It could be one step closer to that, having just signed a distribution agreement with SmartGene of Poland for its EarlyCDT-Lung test. The deal covers "screening and indeterminate pulmonary nodule applications" and has a minimum sales commitment of around £900,000 over an initial term of three years -- first sales should start in early 2018.

Poland, with more than 10m smokers and over 1m CT scans performed annually, apparently has the highest incidents of lung cancer in Europe, and is seen by Oncimmune as a key market.

On top of three existing distribution agreements, the firm now has committed sales of £1.4m, and chief executive Geoffrey Hamilton-Fairley says he expects more agreements to be signed in the coming months.

Full-year results are due on 20 October, and any hint of when profit might be expected would be welcomed.

A million by retirement

I reckon stashing some shares like these in your SIPP should greatly enhance your chances of enjoying a comfortable life for years after you retire, and there are more top stocks out there that can do the same.

The Motley Fool's experts have scoured the FTSE 100 to bring you their very best picks, and they've settled on five top choices which they reckon are capable of bringing in the retirement cash.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended AstraZeneca and BTG. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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