Today, many diseases still lack effective treatments, mainly because developing new drugs can take years and cost a fortune. But that’s changing fast, thanks to the integration of artificial intelligence (AI) and other cutting-edge technologies into biotech research. Experts believe that when properly integrated into research, AI could drastically speed up drug discovery, leading to faster and more effective patient treatments.
Given the industry’s positive prospects, it could be ideal to invest in quality biotech stocks such as Gilead Sciences, Inc. (GILD), Regeneron Pharmaceuticals, Inc. (REGN), and Biogen Inc. (BIIB), which are set to revolutionize medicine.
The biotechnology sector is buzzing with activity as several biotech firms have gained attention for their groundbreaking research and strong market performance. Moreover, the rising demand for personalized medicine drives the development of tailored treatments based on individual genetic profiles, creating an environment ripe for innovation and expansion.
So far this year, the U.S. Food and Drug Administration (FDA) has approved 35 new drugs for conditions such as breast cancer, pulmonary disease, Alzheimer’s disease, hypertension, and more. And with more approvals expected before year-end, the sector is poised for even more growth.
The global biotechnology market is projected to hit around $4.61 trillion by 2034, exhibiting a CAGR of 11.5%. Meanwhile, the U.S. market is expected to reach $830.31 billion by the same year. This growth is propelled by increasing funding, supportive government initiatives, growing industry partnerships, and M&A activities.
In addition, the potential impact of biotech and AI on healthcare is profound. AI can revolutionize drug discovery and development by enhancing medical personalization and streamlining complex healthcare data analysis. Generative AI, in particular, is transforming the field by using algorithms to design novel molecules and proteins. The generative AI market in biotech is expected to expand at a CAGR of 24.9%, reaching $472 million by 2032.
With that in mind, let’s delve into the fundamentals of the three Biotech stock picks, starting with the third choice.
Stock #3: Regeneron Pharmaceuticals, Inc. (REGN)
REGN discovers, invents, develops, manufactures, and commercializes medicines for treating various diseases. Its product portfolio includes EYLEA, Dupixent, Libtayo, Praluent, REGEN-COV, Kevzara solution, and ARCALYST, among other injections.
On September 27, the U.S. Food and Drug Administration (FDA) approved Dupixent® (dupilumab) as the first-ever biologic medicine to treat adults with inadequately controlled chronic obstructive pulmonary disease (COPD) and an eosinophilic phenotype.
In the same month, the FDA also approved Dupixent as an add-on maintenance treatment for adolescent patients aged 12 to 17 with inadequately controlled chronic rhinosinusitis with nasal polyps (CRSwNP). This approval expands the initial June 2019 FDA approval for CRSwNP for patients aged 18 years and older.
REGN’s net revenues for the second quarter (ended June 2024) increased 12% year-over-year to $3.55 billion. Its non-GAAP net income grew 14.3% from the year-ago value to $1.35 billion, while its income from operations stood at $1.07 billion, up 5.2% year-over-year. The company’s non-GAAP net income per share came in at $11.56, representing a 12.9% year-over-year growth.
The consensus revenue estimate of $3.66 billion for the fiscal third quarter (ended September 2024) represents an 8.8% improvement year-over-year. The consensus EPS estimate of $11.75 for the to-be-reported quarter represents a 1.4% increase from the same period last year. The company has a promising earnings surprise history, as it surpassed the consensus EPS estimates in three of the trailing four quarters.
Shares of REGN have gained 20.8% over the past year and 15.5% year-to-date.
REGN’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Value and Quality. REGN is ranked #10 among 331 stocks in the Biotech industry. Click here to access additional REGN ratings (Growth, Momentum, Stability, and Sentiment).
Stock #2: Biogen Inc. (BIIB)
BIIB is a global biopharmaceutical company focused on discovering, developing, and delivering advanced therapies worldwide for people with serious and complex diseases. The company has a portfolio of medicines to treat multiple sclerosis (MS), spinal muscular atrophy (SMA), Alzheimer’s disease, and amyotrophic lateral sclerosis (ALS).
On August 22, BIIB and Eisai Co., Ltd. announced that the Medicines and Healthcare Products Regulatory Agency (MHRA) in Great Britain granted marketing authorization to its Leqembi®, the humanized amyloid-beta (Aβ) monoclonal antibody.
In July, BIIB, Beckman Coulter, Inc., and Fujirebio announced a collaboration to potentially identify and develop accessible, minimally invasive blood-based biomarkers specific for tau-pathology in the brain. These tools have the potential to stratify patients or monitor treatment response for a new generation of future therapies impacting tau pathology in Alzheimer’s disease.
For the second quarter of 2024, which ended on June 30, BIIB’s total revenues increased marginally year-over-year to $2.46 billion. Its non-GAAP total net income attributable for the quarter amounted to $770.90 million or $5.28 per share, representing increases of 31.9% and 31.3%, respectively, from the same period last year.
Per the updated financial guidance for the fiscal year 2024, BIIB now forecasts a non-GAAP EPS between $15.75 and $16.25, up from the previous estimate of $15 and $16.
Street expects BIIB’s revenue for the fiscal fourth quarter (ending December 2024) to increase 2.6% year-over-year to $2.45 billion. Its EPS for the same period is expected to register a 16.2% growth from the prior year, settling at $3.43. In addition, it surpassed the EPS estimates in three of the trailing four quarters, which is promising.
However, the stock has declined 2.1% over the past month to close the last trading session at $191.56.
BIIB’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It also has an A grade for Value and a B for Growth and Sentiment. Within the Biotech industry, it is ranked #6. Click here to see BIIB’s ratings for Momentum, Stability, and Quality.
Stock #1: Gilead Sciences, Inc. (GILD)
GILD is a biopharmaceutical company dedicated to advancing treatments for life-threatening diseases such as human immunodeficiency virus (HIV), viral hepatitis, COVID-19, and cancer. Its portfolio of marketed products includes Biktarvy, Genvoya, Odefsey, Truvada, Harvoni, Vemlidy, and Veklury, among others.
On October 02, the company announced that it had signed non-exclusive, royalty-free voluntary licensing agreements with six pharmaceutical manufacturers to produce and sell generic lenacapavir (pending regulatory approval) in 120 countries (mainly low- and lower-middle-income) with high HIV incidence.
These agreements aim to expedite access to lenacapavir for HIV prevention once approved and align with GILD’s goal of making HIV prevention accessible globally as part of its mission to end the epidemic.
On September 10, GILD and Genesis Therapeutics announced a strategic partnership to discover and develop new small molecule therapies targeting multiple areas. The collaboration will utilize Genesis’ advanced AI platform, GEMS, to design and optimize molecules for targets chosen by Gilead. Both companies will work together on preclinical research, with GILD holding exclusive rights for the clinical development and commercialization of any resulting compounds.
For the fiscal second quarter, which ended on June 30, 2024, GILD’s total revenues increased 5.4% year-over-year to $6.95 billion. Its operating income grew 58.8% from the prior year to $2.64 billion, while its non-GAAP net income stood at $2.52 billion, up 49.2% year-over-year. In addition, non-GAAP earnings per share attributable to the company rose 50% from the year-ago value to $2.01.
According to the full-year guidance, GILD forecasts product sales to range from $27.10 billion to $27.50 billion. The company also expects non-GAAP EPS to be between $3.60 and $3.90, an increase from the previous guidance of $3.45 to $3.85.
Analysts expect GILD’s revenue for the fiscal years 2024 and 2025 to increase marginally from the prior year, reaching $27.72 billion and $28.02 billion, respectively. Its EPS for the current year is expected to be $3.80 and register a robust year-over-year of 88.6% next year.
Over the past six months, the stock has gained 24.9%, closing the last trading session at $85.05.
It’s no surprise that GILD has an overall A rating, equating to a Strong Buy in our POWR Ratings system. It has an A grade for Value and a B for Sentiment and Quality. Of the 331 stocks in the same industry, it is ranked #5.
Beyond what is stated above, we’ve also rated GILD for Growth, Momentum, and Stability. Get all GILD ratings here.
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GILD shares were trading at $85.84 per share on Tuesday morning, up $0.79 (+0.93%). Year-to-date, GILD has gained 9.37%, versus a 24.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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