The biotechnology market is well-positioned for robust growth, owing to increased investments in personalized medicine, numerous advancements in genetic engineering, regulatory support, and the pervasive adoption of AI in biopharmaceuticals.
Given the industry’s bright prospects, it could be wise to invest in fundamentally strong biotech stocks Alnylam Pharmaceuticals, Inc. (ALNY), Dynavax Technologies Corporation (DVAX), and Innoviva, Inc. (INVA) for solid gains.
Amid surging medical needs, there is an increased focus on personalized medicine and novel therapies, driving the biotech industry’s growth. Also, government initiatives promoting regulatory modernization and enhanced reimbursement policies further augment the market expansion. The global biotechnology market is projected to grow at a CAGR of 14% until 2030.
Moreover, IQVIA reports global spending on medicines is set to reach $2.30 trillion by 2028, growing at a CAGR of 5% to 8%, with oncology and obesity driving growth while immunology spending slows due to biosimilars. Biotech will represent 39% of spending, exceeding $892 billion by 2028, with cell and gene therapies showing high growth rates.
The integration of AI in drug discovery and development has emerged as a game-changer, revolutionizing traditional approaches and bringing efficiency to the pharmaceutical research and development (R&D) lifecycle. The global AI in drug discovery & development market is expected to reach $ 8.32 billion by 2031, growing at a CAGR of 30.4%.
Additionally, investors’ interest in biotech stocks is evident from the SPDR Series Trust SPDR S&P Biotech ETF’s (XBI) 21.9% returns over the past six months.
Furthermore, rapid technological advancements, particularly in areas like genomics, proteomics, and bioinformatics, have led to significant breakthroughs in drug discovery, development, and manufacturing. Biotech companies 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%.
Given these encouraging trends, let’s look at the fundamentals of the top Biotech stocks, beginning with the third choice.
Stock #3: Alnylam Pharmaceuticals, Inc. (ALNY)
ALNY is a biopharmaceutical company that discovers, develops, and commercializes novel therapeutics based on ribonucleic acid interference. Its marketed products include ONPATTRO for treating the polyneuropathy of hereditary transthyretin-mediated amyloidosis, GIVLAARI for adults with acute hepatic porphyria, and OXLUMO to treat primary hyperoxaluria type 1.
On April 7, 2024, ALNY announced positive results from the KARDIA-2 Phase 2 study evaluating the efficacy and safety of a single subcutaneous dose of zilebesiran when added to one of three standard-of-care antihypertensives including a thiazide-like diuretic (indapamide), calcium channel blocker (amlodipine) or angiotensin receptor blocker (olmesartan).
Zilebesiran is an investigational RNAi therapeutic targeting liver-expressed angiotensinogen (AGT) in development for the treatment of hypertension with the potential for biannual dosing.
ALNY’s trailing-12-month levered FCF margin of 8.01% is 973% higher than the industry average of 0.75%, and its trailing-12-month gross profit margin of 83.02% is 46.9% higher than the industry average of 56.51%.
For the fiscal fourth quarter that ended December 31, 2024, ALNY’s net product revenues increased 32.3% year-over-year to $346.29 million. Its royalty revenue rose 525.7% from the year-ago value to $17.02 million. As of December 31, 2023, its total current assets stood at $2.98 billion, compared to $2.69 billion as of December 31, 2022.
Analysts expect ALNY’s revenue to increase 33.4% year-over-year to $425.99 million for the first quarter that ended March 2024. For the fiscal year ending December 2025, its revenue is expected to grow 22.3% year-over-year to $2.26 billion. Moreover, the company surpassed consensus EPS estimates in three of the trailing four quarters, which is impressive.
Shares of ALNY have plunged 1.7% over the past month to close the last trading session at $146.72.
ALNY’s solid 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 POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
ALNY is ranked #33 among 362 stocks in the Biotech industry.
Click here to access additional ALNY’s ratings (Momentum, Value, Growth, Quality, Sentiment, and Stability).
Stock #2: Dynavax Technologies Corporation (DVAX)
DVAX is a commercial-stage biopharmaceutical company focusing on developing and commercializing vaccines in the United States. It markets HEPLISAV-B, a hepatitis B vaccine to prevent infection caused by all known subtypes of hepatitis B virus in age 18 years and older in the U.S. and Europe.
DVAX’s trailing-12-month levered FCF margin of 42.25% is significantly higher than the industry average of 0.75%.
DVAX’s HEPLISAV-B net product revenue increased 48.8% year-over-year to $51.09 million. Its total operating expenses decreased 47.2% year-over-year to $64.09 million. In addition, as of December 31, 2023, its total assets stood at $997.19 million, compared to $985.85 million as of December 31, 2022.
Per the full-year 2024 financial guidance, the company expects DVAX HEPLISAV-B net revenue between $265 million and $280 million. Its cash flow is expected to be positive for the year.
Analysts predict DVAX’s revenue for the first quarter (ended March 2024) to increase 26.6% year-over-year to $59.43 million. Street expects its revenue and EPS for the fiscal year 2024 to grow 21.4% and 67.3% from the prior year to $356.71 million and $0.43, respectively.
Moreover, the company has an excellent earnings surprise history, surpassing consensus revenue estimates in each of the trailing four quarters.
DVAX’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
DVAX has a B grade for Value and Quality. It is ranked #31 in the same industry.
In addition to the POWR Ratings we’ve stated above, we also have DVAX ratings for Momentum, Sentiment, Growth, and Stability. Get all DVAX ratings here.
Stock #1: Innoviva, Inc. (INVA)
INVA engages in developing and commercializing pharmaceutical products in the U.S. and internationally. The company’s products include RELVAR/BREO ELLIPTA, ANORO ELLIPTA, and TRELEGY ELLIPTA.
INVA’s trailing-12-month gross profit margin of 84.09% is 48.4% higher than the 56.67% industry average. Likewise, its 45.43% trailing-12-month EBIT margin is significantly higher than the 0.53% industry average. Also, its 38.85% trailing-12-month levered FCF margin is substantially higher than the 0.67% industry average.
INVA’s total revenue for the fourth quarter that ended December 31, 2023, increased 30.4% year-over-year to $85.84 million. The company’s net product sales rose 34.9% over the prior-year quarter to $19.68 million.
In addition, net income attributable to INVA’s stockholders and net income per share came in at $61.53 million and $0.76, respectively, compared to a net loss and net loss per share of $68.31 million and $0.98, respectively, in the year-ago quarter.
Street expects INVA’s EPS for the second quarter ending June 30, 2024, to increase considerably year-over-year to $0.22. Its revenue for the quarter (ending September 30, 2024) is expected to grow 8.7% year-over-year to $73.14 million.
Over the past year, INVA’s stock has gained 20.4% to close the last trading session at $14.47.
INVA’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has an A grade for Value and Quality. Within the same industry, INVA is ranked #28 in the same industry.
Click here to access additional ratings of INVA for Stability, Growth, Sentiment, and Momentum.
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.
ALNY shares were trading at $146.32 per share on Wednesday morning, down $0.40 (-0.27%). Year-to-date, ALNY has declined -23.56%, versus a 6.48% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
3 Biotech Stocks Paving the Way for Bullish Investment Gains StockNews.com
