Junior pharmaceutical stocks have the potential to create huge value for shareholders if successful. These two stocks both have drugs that could create many millions of revenue in the future. Will either outperform pharma giant AstraZeneca  (LSE: AZN), though?

Respiratory focus

Synairgen  (LSE: SNG) is a drug development company founded by three University of Southampton professors, the business focusing on treating respiratory diseases such as asthma. The company has a potential asthma treatment which is being developed with AstraZeneca after signing a licensing and development deal in 2014. The deal is worth up to $232m plus royalties and the drug entered Phase IIa trials in July 2015. Synairgen hopes to release results on the trials sometime in 2017.

The inhaled treatment developed by Synairgen has the potential to be a blockbuster product. Many believe if the drug is approved then AstraZeneca may take over Synairgen to acquire full ownership of the drug. This isn’t the only project in Synairgen’s pipeline: the company recently signed a research collaboration with Pharmaxis to develop a treatment for a fatal lung disease. Chairman Simon Shaw recently commented that “our collaboration with Pharmaxis has begun to yield positive results and we anticipate a Phase I clinical trial in 2017“. 

Lupus treatment

Immupharma (LSE: IMM) is in the process of developing its Lupuzor drug which is currently in Phase III clinical trials at 43 sites across the US and Europe. The company is aiming to release “top line results” by the end of 2017. The potential of the drug is huge and the company thinks the Lupus market has the potential for multi-billion dollar sales. The company made a £3.9m loss last year mainly due to research and development costs which is perfectly normal for a junior pharma stock. Immupharama recently carried out a £8.4m funding round which should fund the company right through to 2018.  It’s clear to me that Immupharama has the potential to make huge returns for shareholders if Lupuzor is brought to the market. Investors should keep an eye on the company next year when initial trial results are expected. 

Exciting pipeline

AstraZeneca is different to the two juniors as it has a pipeline full of new and exciting drugs going through clinical trials. The company pays a chunky 4.8% dividend and trades on an attractive 14.2 times earnings. AstraZeneca has the firepower to make acquisitions in the future which should boost earnings and keep the company moving forward with new drugs and treatments. The defensive qualities of the stock should mean it holds up well after the EU referendum on the 23rd June, and investors looking to shelter cash should take a serious look at the company. Although AstraZeneca is unlikely to give you the huge gains that are possible with Synairgen and Immupharma, it could be a great core holding for the long term. 

Investing in junior pharma stocks is a risky game. The rewards could be massive, but most drugs never make it to market and companies can lose millions in research and development. 

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Jack Dingwall has no position in any shares mentioned. The Motley Fool UK has recommended AstraZeneca. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.