The specialty pharmaceutical sector is transforming healthcare innovation, addressing conditions that often go untreated due to the lack of effective therapies. The companies in this sector focus on developing drugs for rare diseases, and other unmet medical needs, providing hope to patients while creating lucrative opportunities for investors.
As the quest for innovation and cures continues, it might be wise to consider investing in robust specialty pharma stocks Ipsen S.A. (IPSEY), ACADIA Pharmaceuticals Inc. (ACAD), and Neurocrine Biosciences, Inc. (NBIX), poised for potential gain.
The key growth factor in this sector is the increasing prevalence of chronic diseases, coupled with advancements in biotechnology, genetic research, and personalized medicine. These innovations have enabled specialty pharma companies to develop targeted therapies, ensuring higher efficacy and fewer side effects than traditional treatments. The market is highly dynamic, with rapid advances in technology and medicine requiring continuous adaptation to the evolving scientific landscape.
Further, supportive regulatory policies have also played a pivotal role in the sector's expansion. By mid-2024, the U.S. Food and Drug Administration (FDA) had approved 23 novel drug therapies, with specialty drugs representing about 75%. The rise in approvals shows the increasing demand for patients with complex and chronic conditions or rare diseases.
Moreover, the specialty pharmaceutical market is anticipated to reach $55.61 billion by 2029, exhibiting a CAGR of 36.5%. Also, strategic partnerships with larger pharma firms bolster specialty pharma companies' market presence.
With that in mind, let’s delve into the fundamentals of the three Medical - Pharmaceuticals stock picks, starting with the third choice.
Stock #3: Ipsen S.A. (IPSEY)
Headquartered in Boulogne-Billancourt, France, IPSEY operates as a biopharmaceutical company worldwide that offers drugs in the areas of oncology, neuroscience, and rare diseases. The company provides Somatuline, Dysport, Decapeptyl, Cabometyx, Onivyde, and Tazverik.
On December 3, IPSEY and Biomunex Pharmaceuticals announced a global licensing agreement for BMX-502, a bispecific antibody engaging MAIT cells that targets the GPC3 tumor antigen to kill cancer cells. In this exclusive agreement, IPSEY secured global rights to develop, manufacture, and commercialize BMX-502. This partnership will allow IPSEY to expand its pipeline across the ecosystem.
On September 23, IPSEY received approval from the European Commission for Kayfanda® (odevixibat) to treat cholestatic pruritus in Alagille Syndrome (ALGS) in children six months or older. This approval further expands IPSEY’s rare cholestatic liver disease portfolio.
IPSEY, for the first half period (ended June 30, 2024), reported total revenues of €1.75 billion ($1.82 billion), indicating a 7.9% growth from the prior-year period. Its core operating income increased 2.8% year-over-year to €538 million ($560.25 million).
The company’s IFRS consolidated net profit came in at €232.30 million ($415.92 million), reflecting an increase of 19.1% from year-ago value, and IFRS EPS amounted to €2.78 per share, up 18.3% year-over-year.
Building on this quarter’s momentum, the company’s guidance for 2024 anticipates that the full-year IPSEY’s total sales growth to be greater than 7%. It also forecasts the core operating margin to be greater than 30% of total sales.
Analysts expect IPSEY’s revenue for the fiscal year (ending December 2024) to grow 8.9% year-over-year to $3.67 billion.
The stock has gained 3.1% intraday to close the last trading session at $28.13.
IPSEY’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
IPSEY has an A grade for Value and Stability. It is ranked #35 out of 150 stocks in the Medical - Pharmaceuticals industry. Click here to see the additional ratings for IPSEY (Growth, Momentum, Sentiment, and Quality).
Stock #2: ACADIA Pharmaceuticals Inc. (ACAD)
ACAD is a biopharmaceutical company focused on the development and commercialization of medicines that address unmet medical needs in central nervous system (CNS) disorders and rare diseases.
On November 26, ACAD entered into an exclusive worldwide license agreement with Saniona for the development and commercialization of SAN711, a first-in-class, highly selective GABAA-α3 positive allosteric modulator. This licensing will help expand ACAD’s pipeline and also initiate a Phase 2 study of SAN711 for the treatment of essential tremors.
In the same month, ACAD entered into an agreement to sell its Rare Pediatric Disease Priority Review Voucher (PRV) for $150 million. From the sales proceeds of PRV, ACAD plans to support its commercial operations and R&D program and invest in future business development.
For the third quarter of 2024, which ended on September 30, ACAD’s total revenues increased 18.3% year-over-year, amounting to $250.40 million. Its income from operations came in at $31.64 million compared to a year-ago net loss of $57.78 million. The company’s net income stood at $32.77 million compared to the prior-year quarter’s loss of $65.18 million, while its EPS came in at $0.20 versus a loss of $0.40 per share last year.
As per the updated financial guidance for the full year 2024, ACAD now forecasts total revenue to be in the range of $940 million to $960 million.
Street expects ACAD’s revenue for the fiscal year (ending December 2024) to increase 34.1% year-over-year to $974.12 million. Its EPS for the same period is expected to be $0.69. For the fiscal year 2025, its revenue and EPS are expected to grow by 8.3% and 13.5% from the prior year to $3.88 billion and $0.79, respectively.
ACAD’s stock has surged 12.2% over the past six months to close the last trading session at $17.17.
ACAD’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It also has an A grade for Value and Quality. Within the same industry, it is ranked #26 out of 150 stocks. Click here to see ACAD’s ratings for Growth, Momentum, Stability, and Sentiment.
Stock #1: Neurocrine Biosciences, Inc. (NBIX)
NBIX discovers, develops, and markets pharmaceuticals for neurological, neuroendocrine, and neuropsychiatric disorders internationally. Its portfolio includes remedies for tardive dyskinesia, Parkinson’s disease, endometriosis, and uterine fibroids, supplemented by ongoing clinical programs spanning diverse therapeutic areas.
On December 20, NBIX announced the commercial availability of CRENESSITY™ (crinecerfont) in the United States. It is exclusively available through PANTHERx Rare, a specialty pharmacy.
In the same month, NBIX announced the U.S. Food and Drug Administration approval for CRENESSITY™ (crinecerfont), the first new treatment for the classic Congenital Adrenal Hyperplasia (CAH) community. This paradigm-shifting treatment approach is a significant milestone for NBIX and the patients of the CAH community.
In the fiscal third quarter, which ended on September 30, 2024, NBIX’s total revenues increased 24.7% year-over-year to $622.10 million. The company reported operating income of $183.80 million, indicating a 30.2% growth from the prior-year quarter. NBIX’s non-GAAP net income came in at $189.20 million, up 21.2% year-over-year, while its non-GAAP EPS grew 17.5% from the year-ago value to $1.81.
According to the full-year guidance, NBIX forecasts INGREZZA's net product sales to range from $2.30 billion to $2.32 billion.
The consensus revenue estimate of $630.01 million for the fiscal fourth quarter (ending December 2024) represents a 22.3% increase year-over-year. The consensus EPS estimate of $1.87 for the same quarter indicates a 21.3% improvement year-over-year. The company has an excellent surprise history; it surpassed the consensus revenue estimates in three of the trailing four quarters.
Over the past three months, the stock has gained 16.3%, closing the last trading session at $136.99.
NBIX’s promising fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to a Buy in our proprietary rating system.
It has an A grade for Quality and a B for Value. The stock is ranked #22 in the Medical - Pharmaceuticals industry. Click here to access the additional NBIX ratings (Growth, Momentum, Stability, and Sentiment).
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NBIX shares were trading at $136.53 per share on Tuesday afternoon, down $0.46 (-0.34%). Year-to-date, NBIX has gained 3.62%, versus a 27.70% rise in the benchmark S&P 500 index during the same period.
About the Author: ShreyaRathi
