Given the shift toward personalized medicine amid an aging population and rising disease burden globally, continued advancements such as gene editing technologies, synthetic biology, and molecular diagnostics, and regulatory support and fast-track approvals by agencies like the FDA and EMA, the biotech industry is well-placed for long-term growth.
Considering the industry’s bright outlook, it could be wise to invest in fundamentally sound biotech stocks Genmab A/S (GMAB), Halozyme Therapeutics, Inc. (HALO), and Vertex Pharmaceuticals Incorporated (VRTX) for potential gains.
According to an IQVIA Institute report, world spending for medicines is expected to grow over the next five years to about $2.3 trillion by 2028. The biotech segment will represent 39% of global spending and include both breakthrough cell and gene therapies and a maturing biosimilar segment, with expected spending on global biotech to exceed $892 billion by 2028.
In December 2023, the approval of the first CRISPR gene therapy, Casgevy, opened more possibilities to realize the full potential of CRISPR-based therapies in 2024. Looking ahead, as per projections, up to 21 cell therapies and over 31 gene therapies may be launched this year, making cell and gene therapy one of the highest growth-focused segments.
Supportive government initiatives, standardization of clinical studies, high demand for personalized medicine, and an increasing number of orphan drug formulations are fostering the biotech market growth. The global biotechnology market was estimated at $1.55 trillion in 2023 and is projected to expand at a noteworthy CAGR of 14% from 2024 to 2030.
Artificial intelligence (AI) is further opening new avenues for the biotech market through its ability to evaluate better possible treatments, innovative drug discovery, enhance procedures, foster innovation, and discover new business models.
Besides, biotech has revolutionized agriculture, enabling the development of genetically modified crops with improved traits like pest resistance and enhanced nutritional content, thereby increasing yields and reducing reliance on chemical inputs. The adoption of precision farming technologies optimizes resource use, influencing the agricultural biotech market positively.
The global agricultural biotechnology market is expected to grow at a CAGR of 9.5% during the forecast period, resulting in a volume of $64.70 billion by 2031.
Investors’ interest in biotech stocks is evident from the VanEck Vectors Biotech ETF’s (BBH) 6.2% returns over the past year.
With these encouraging trends in mind, let’s delve into the fundamentals of the three best Biotech stock picks, beginning with the third choice.
Stock #3: Genmab A/S (GMAB)
Headquartered in Copenhagen, Denmark, GMAB develops antibody therapeutics for the treatment of cancer and other diseases. The company markets DARZALEX, a human monoclonal antibody for treating multiple myeloma (MM); teprotumumab for treating thyroid eye disease; and Amivantamab for metastatic gastric or esophageal cancer.
On February 27, 2024, GMAB and AbbVie Inc. (ABBV) announced that the U.S. FDA granted priority review for the supplemental Biologics License Application (sBLA) for epcoritamab-bysp for the treatment of adult patients with relapsed or refractory (R/R) follicular lymphoma (FL) after two or more lines of systemic therapy.
The sBLA submission demonstrates GMAB’s commitment to exploring the potential utility of epcoritamab across B-cell malignancies. If approved, it may offer significant improvements in the safety or effectiveness of the treatment.
On February 2, GMAB and Pfizer, Inc. (PFE) announced that the European Medicines Agency (EMA) validated for review the marketing authorization application (MAA) of tisotumab vedotin, an antibody-drug conjugate (ADC), developed for the treatment of adult patients with recurrent or metastatic cervical cancer.
“The validation of our application is an important milestone supporting our commitment to bringing a new therapeutic option for recurring or metastatic cervical cancer to more patients,” said Jan van de Winkel, Ph.D., Chief Executive Officer, Genmab.
GMAB’s revenue increased 13.6% year-over-year to DKK 16.47 billion ($2.41 billion) during the fiscal year 2023, which ended December 31, 2023. The company’s operating profit for the year was DKK 5.32 billion ($779.57 million). Its net profit came in at DKK 4.35 billion ($637.43 million) and DKK 66.02 per share, respectively.
In addition, as of December 31, 2023, the company’s total assets stood at DKK 35.29 billion ($5.17 billion), compared to DKK 30.12 billion ($4.41 billion) as of December 31, 2022.
As per the fiscal year 2024 outlook, GMAB expects revenue between DKK 18.70 billion ($2.74 billion) – DKK 20.50 billion ($3 billion). Its gross profit is expected to range from DKK 18 billion ($2.63 billion) to DKK 19.50 billion ($2.86 billion).
Street expects GMAB’s revenue and EPS for the first quarter (ending March 2024) to increase 38.8% and 306.7% year-over-year to $584.45 million and $0.21, respectively. Moreover, the company has surpassed the consensus revenue estimates in each of the trailing four quarters.
Shares of GMAB have surged 12.5% over the past month to close the last trading session at $31.43.
GMAB’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates 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.
GMAB has a B grade for Value and Quality. It is ranked #13 out of 367 stocks in the Biotech industry.
In addition to the POWR Ratings we’ve stated above, we also have GMAB’s ratings for Growth, Momentum, Sentiment, and Stability. Get all GMAB ratings here.
Stock #2: Halozyme Therapeutics, Inc. (HALO)
HALO operates as a biopharma technology platform company that researches, develops, and commercializes proprietary enzymes and devices internationally. The company offers Hylenex recombinant, rilpivirine, cabotegravir, N6LS BNAB, ocrelizumab, XYOSTED, and ATRS-1902.
On January 29, 2024, HALO announced that Takeda Pharmaceutical Co. Ltd. (TAK) received European Commission (EC) approval for HYQVIA® co-formulated with HALO's ENHANZE® drug delivery technology as maintenance therapy in patients of all ages with chronic inflammatory demyelinating polyneuropathy (CIDP).
As the demand for new personalized maintenance treatment options for patients with CIDP continues to grow, HALO’s partnership with Takeda will expand the HYQVIA offering to Europe.
Also, on January 18, HALO announced that argenx received approval from Japan’s Ministry of Health, Labour and Welfare for VYVDURA® injection co-formulated with HALO’s ENHANZE® drug delivery technology for subcutaneous (SC) use for the treatment of adult patients with generalized myasthenia gravis (gMG).
With this approval, argenx continues to expand its global reach of ENHANZE-enabled subcutaneous VYVGART to Japan.
For the fourth quarter that ended December 31, 2023, HALO’s total revenues increased 26.7% year-over-year to $230.04 million, and its operating income grew 35.6% from the year-ago value to $101.03 million. The company’s adjusted EBITDA was $121.73 million for the quarter, up 46.6% year-over-year.
Furthermore, HALO’s non-GAAP EPS of $0.82 indicates growth of 70.8% from the prior year’s quarter. As of December 31, 2023, the company’s total current assets were $746.42 million, compared to $739.01 million as of December 31, 2022.
As per the 2024 financial guidance, HALO expects its total revenue to range between $915 and $985 million. Its royalty revenue is expected to be $500 to $525 million, and adjusted EBITDA is expected to reach $535 to $585 million. Further, HALO’s non-GAAP EPS is anticipated from $3.55 to $3.90.
Analysts expect HALO’s revenue and EPS for the first quarter (ending March 2024) to increase 30.8% and 62% year-over-year to $212.15 million and $0.76, respectively. For fiscal year 2024, the company’s revenue and EPS are expected to grow 15.4% and 33% year-over-year to $957.20 million and $3.68, respectively.
Shares of HALO have surged 17.6% over the past month and 7.8% over the past six months to close the last trading session at $41.95.
HALO’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has a B grade for Value, Growth and Quality. Within the Biotech industry, HALO is ranked #12 of 367 stocks.
Click here to access additional ratings of HALO for Momentum, Sentiment, and Stability.
Stock #1: Vertex Pharmaceuticals Incorporated (VRTX)
VRTX is a biotechnology company that engages in the development and commercialization of therapies for treating cystic fibrosis (CF). The company markets TRIKAFTA/KAFTRIO, SYMDEKO/SYMKEVI, ORKAMBI, and KALYDECO. It sells its products to specialty pharmacies and retail pharmacies or pharmacy chains, hospitals, and clinics.
On February 23, 2024, VRTX received a positive opinion from the European Medicines Agency’s (EMA’s) Committee for Medicinal Products for Human Use (CHMP) for its label expansion of KALYDECO® (ivacaftor) to be used as a treatment of infants with cystic fibrosis (CF) ages one month to less than four months old.
If it is approved, KALYDECO® will become the first and only medicine approved in Europe to treat the underlying cause of cystic fibrosis in infants as young as one month with specific mutations in the CFTR gene.
On February 13, VRTX announced that the European Commission granted conditional marketing authorization to CASGEVY™, a CRISPR/Cas9 gene-edited therapy. CASGEVY was approved for treating patients of 12 years of age and older with severe sickle cell disease (SCD).
“With this approval, CASGEVY is now approved for sickle cell disease and transfusion-dependent beta thalassemia in multiple geographies making tens of thousands of patients eligible for this potentially transformative therapy,” said Reshma Kewalramani, M.D., Chief Executive Officer and President of Vertex.
Also, on January 16, VRTX’s CASGEVY™ got approved by the FDA. With this approval, about 1,000 patients in the U.S., 12 years of age and older, became eligible for this one-time treatment.
In the fourth quarter that ended December 31, 2023, VRTX’s net product revenues increased 9.3% year-over-year to $2.52 billion. Its non-GAAP operating income grew marginally from the prior year’s quarter to $1.15 billion. Its non-GAAP net income of $1.10 billion, or $4.20 per common share, indicates growth of 12.1% and 11.7% from the year-ago value, respectively.
As of December 31, 2023, the company’s total assets were $22.73 billion, versus $18.15 billion as of December 31, 2022.
As per the company’s full-year 2024 financial guidance, VRTX’s total product revenue is expected to range between $10.55 billion and $10.75 billion.
Street expects VRTX’s revenue and EPS for the first quarter (ending March 2024) to increase 8.4% and 32.3% year-over-year to $2.57 billion and $4.04, respectively. Additionally, the company has topped the consensus EPS estimates in all four trailing quarters, which is impressive.
Over the past six months, VRTX’s stock has surged 19% and 40.5% over the past year to close the last trading session at $412.45.
VRTX’s POWR Ratings reflect its bright prospects. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has a B grade for Value, Sentiment, and Quality. VRTX is ranked #8 of 367 stocks in the Biotech industry.
To access additional ratings of VRTX for Momentum, Growth, and Stability, click here.
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VRTX shares rose $4.82 (+1.17%) in premarket trading Wednesday. Year-to-date, VRTX has gained 1.37%, versus a 8.72% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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