The biotech market is rapidly expanding, transforming industries such as healthcare, agriculture, and industrial processing through innovative technologies and approaches. Therefore, investors could consider investing in top biotech stocks UroGen Pharma Ltd. (URGN), Foghorn Therapeutics Inc. (FHTX), and Galapagos NV (GLPG).
This year, the biotech and healthcare sectors are expected to focus on efficiency and conservative strategies, expecting fewer but higher-value acquisitions. Also, the surge in telehealth, growing AI adoption, and rising demand for brain health diagnostics and treatment are set for a revolution in the biotech industry driven by increased demand and innovation.
Besides, the biopharma industry started 2024 with guarded optimism, buoyed by market rebounds and increased merger activity, alongside prospects for new drug approvals and innovative treatments.
In addition, the rising prevalence of chronic diseases and regulatory approvals will drive growth in the biopharmaceutical market, supported by investments in clinical trials and the presence of contract organizations. The global biopharma market is poised to grow at a CAGR of 14.8% to reach $1.42 trillion by 2032.
Moreover, the US bioeconomy, valued at more than $950 billion, is well-placed for significant growth due to federal policies focusing on development and commercialization, including the Inflation Reduction Act and Biden’s Bioeconomy Executive Order, which aim to accelerate bioenergy technologies and streamline regulatory pathways.
Rapid technological advancements, particularly in areas like genomics, proteomics, and bioinformatics, have led to significant breakthroughs in drug discovery, development, and manufacturing. Recent innovations in biotech are moving toward trends like AI, machine learning, data analytics, and automation to optimize production.
The global AI in the biopharmaceutical market is projected to total about $14.07 billion by 2032, exhibiting a CAGR of 32.3%.
Considering these conducive trends, let’s discuss the fundamentals of three Biotech stock picks, beginning with the third choice.
Stock #3: UroGen Pharma Ltd. (URGN)
URGN is a biotechnology company that develops and commercializes novel solutions for specialty cancers and urothelial diseases. The company provides RTGel, a polymeric biocompatible and reverse thermal gelation hydrogel to enhance the therapeutic profiles of existing drugs; and Jelmyto for pyelocalyceal solution.
On January 24, 2024, URGN submitted the Chemistry, Manufacturing, and Controls (CMC) section of the New Drug Application (NDA) for UGN-102 (mitomycin) for the intravesical solution to the US FDA. The submission marks a major milestone for URGN, underscoring its dedication to advancing innovative therapies for individuals grappling with muscle-invasive bladder cancer.
URGN’s trailing-12-month gross profit margin of 87.92% is 53.5% higher than the industry average of 57.27%. Likewise, the stock’s trailing-12-month cash per share of 3.87 is 199.5% higher than the industry average of 1.29.
During the third quarter, which ended September 30, 2023, URGN’s revenue and gross profit grew 29.5% and 31.3% year-over-year to $20.85 million and $18.49 million, respectively. The company’s total operating expenses dropped marginally year-over-year to $31.99 million.
As of September 30, 2023, the company’s total assets amounted to $193.63 million, compared to its total assets of $135.62 million as of December 31, 2022.
Street expects URGN’s revenue to grow 33% year-over-year to $108.70 million for the fiscal year ending December 2024. Its EPS for the same period is estimated to improve 26.3% year-over-year. Moreover, the company surpassed consensus revenue estimates in three of the trailing four quarters.
URGN’s shares have gained 42.8% over the past three months and 83.9% over the past nine months to close the last trading session at $18.33. Also, it surged marginally intraday.
URGN’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, translating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
URGN has a B grade for Growth. Within the Biotech industry, it is ranked #34 among 360 stocks.
In addition to the POWR Ratings stated above, one can access URGN’s additional Value, Momentum, Stability, Sentiment, and Quality ratings here.
Stock #2: Foghorn Therapeutics Inc. (FHTX)
FHTX is a clinical-stage biopharmaceutical company focused on developing medicines targeting genetic dependencies within the chromatin regulatory system. Through its proprietary Gene Traffic Control platform, the company aims to advance treatments for cancers such as metastatic uveal melanoma and acute myeloid leukemia.
On February 8, 2024, FHTX announced that Lilly had selected FHD-909, a first-in-class oral BRM selective inhibitor, for clinical development. Lilly aims to file an IND for FHD-909 in the second quarter of fiscal 2024. The main target patient population is BRG1 mutated non-small cell lung cancer (NSCLC).
Also, in December 2021, FHTX entered a collaboration with Lilly to develop novel oncology medicines. The partnership comprises a US 50/50 co-development and co-commercialization deal for Foghorn’s Selective BRM oncology program and an additional undisclosed oncology target.
The collaboration also includes three discovery programs using Foghorn’s proprietary Gene Traffic Control platform.
FHTX’s trailing-12-month CAPEX/Sales of 4.47% is 10.7% higher than the industry average of 4.04%. Also, its trailing-12-month cash per share of 1.67 is 29% higher than the industry average of 1.29%.
For the third quarter, which ended September 30, 2023, FHTX’s collaboration revenue and net income increased 163.5% and 39.5% from a year-ago quarter to $17.48 million and $3.47 million, respectively. The company's total operating expenses declined 1% year-over-year to $34.56 million.
In addition, as of September 30, 2023, the company’s total liabilities were reduced to $370.81 million, compared to its total liabilities of $404.77 million as of December 31, 2022.
Analysts expect FHTX’s revenue to grow 25.1% year-over-year to $40.59 million for the fiscal year ending December 2024. The company’s EPS for the ongoing year is projected to grow 7.8% year-over-year.
The stock has gained 106.1% over the past month to close the last trading session at $7.73.
FHTX’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, translating to a Strong Buy in our proprietary rating system.
The stock has a B grade for Sentiment and Quality. In the same industry, FHTX is ranked #33.
To access additional ratings for FHTX’s Growth, Value, Momentum, and Stability, click here.
Stock #1: Galapagos NV (GLPG)
Headquartered in Mechelen, Belgium, GLPG is a biopharmaceutical company dedicated to developing innovative medicines addressing significant medical needs. Its pipeline includes filgotinib for various conditions and advanced-stage CAR-T candidates like GLPG5101 and GLPG5201 targeting lymphoma and leukemia.
On January 4, 2024, GLPG entered a strategic partnership agreement with Thermo Fisher Scientific, Inc. (TMO) for the decentralized manufacturing of Galapagos’ point-of-care CAR-T product candidate in the San Francisco area. This deal follows a previously announced collaboration with Landmark Bio for decentralized CAR-T manufacturing in the Boston area.
Dr. Paul Stoffels, CEO and Chairman of GLPG, said, “Together we will establish a decentralized CAR-T manufacturing network in the San Francisco area to support the rollout of our pivotal clinical trials and enhance our market readiness. This collaboration will advance Galapagos’ commitment to better meeting patient needs and making CAR-T therapies available to more patients through the rapid delivery of fit CAR-T cells.”
GLPG’s trailing-12-month CAPEX/Sales of 7.45% is 84.6% higher than the industry average of 4.04%. Its trailing-12-month cash per share of 2.65 is 105.7% higher than the industry average of 1.29.
GLPG reported total net revenues of €239.72 million ($259.53 million) in the fiscal year ended December 31, 2023. The company's net profit and income per share amounted to €211.70 million ($229.19 million) and €3.21, compared to the prior year’s net loss and loss per share of €217.99 million ($236 million) and €3.32, respectively.
As of December 31, 2023, the company’s total liabilities amounted to €1.56 billion ($1.69 billion), compared to €2.21 billion ($2.39 billion) as of December 31, 2022.
Street expects GLPG to report revenue of $439.74 million for the fiscal year ending December 2024. In addition, the company surpassed consensus revenue estimates in each of the trailing four quarters, which is promising.
The stock has declined 2.7% intraday to close the last trading session at $35.11.
GLPG’s POWR Ratings reflect its promising prospects. The stock has an overall B rating, translating to a Buy in our proprietary rating system.
The stock has a B grade for Growth, Value, and Sentiment. Within the same industry, GLPG is ranked #25.
Click here to see GLPG’s ratings for Momentum, Stability, and Quality.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
GLPG shares rose $0.11 (+0.31%) in premarket trading Friday. Year-to-date, GLPG has declined -13.63%, versus a 6.89% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
3 Biotech Stocks Climbing the Ranks to Watch StockNews.com
