Palatin Technologies, Inc. (PTN) has faced significant share declines, coupled with negative analyst estimates and limited profitability. However, the biotechnology industry as a whole is steadily expanding due to rapid drug development, technological innovations, and robust government support.
In light of these industry dynamics, investors might want to consider investing in more fundamentally sound biotech stocks Protalix BioTherapeutics, Inc. (PLX), Exelixis, Inc. (EXEL) and Jazz Pharmaceuticals plc (JAZZ) for potentially better returns. Let’s understand this in detail.
PTN's stock has plunged 46.6% over the past six months and 71.2% over the past year, closing the last trading session at $1.65. Analysts expect the company’s revenue to grow 107.8% year-over-year to $9.28 million for the fiscal year ending June 2024. However, the company is also expected to report a loss per share of $1.78 for the same period.
Furthermore, PTN's trailing-12-month ROCE, ROTC, and ROTA stands at negative 157.10%, negative 112.50%, and negative 115.57%. Additionally, PTN's trailing-12-month asset turnover ratio of 0.11x is 70.5% lower than the industry average of 0.38x.
Conversely, the biotech industry is flourishing due to its innovative drug development efforts. The increasing prevalence of personalized medicine and the expanding availability of orphan drug formulations are opening up new opportunities in the biotech industry.
Year-to-date, the FDA's Center for Drug Evaluation and Research (CDER) has approved 38 new molecular entities and therapeutic biological products, underscoring the industry's strong research and development momentum.
Significant technological advancements are also propelling the biotech sector forward. AI is augmenting medical devices, and Big Data analysis is unraveling complex biological queries and identifying patterns within intricate datasets like DNA, proteins, and clinical records.
Moreover, the industry is receiving significant government support, which is further fortifying its growth. The 2023 Budget designates $5 billion for the Advanced Research Projects Agency for Health (ARPA-H) to accelerate biomedical innovations that encompass molecular to societal aspects, ultimately providing groundbreaking solutions for patients.
The global biotechnology market is expected to be worth approximately $3.21 trillion by 2030 and poised to grow at a substantial CAGR of 12.8% between 2023 and 2030.
Considering the outlined factors, PLX, EXEL, and JAZZ may offer more favorable investment opportunities compared to PTN, capitalizing on the prevailing industry growth trajectories. To that end, let us dive into the fundamentals of these three Biotech industry picks, beginning with number three.
Stock #3: Protalix BioTherapeutics, Inc. (PLX)
PLX pioneers the advancement, production, and commercialization of recombinant therapeutic proteins using its exclusive ProCellEx plant cell-based protein expression system. Furthermore, the company provides Elelyso, addressing Gaucher disease, while also advancing PRX-102, a therapeutic protein for Fabry disease treatment.
On May 18, PLX revealed its eligibility to receive a $20 million milestone payment from Chiesi Global Rare Diseases, a segment of the Chiesi Group, following the U.S. Food and Drug Administration's (FDA) approval of ELFABRIO for treating adult patients with Fabry disease. This marks a crucial advancement for PLX, fortifying its financial standing.
On March 21, PLX announced the initiation of its phase I First in Human (FIH) clinical trial for PRX-115, the company's innovative recombinant PEGylated uricase product candidate aimed at potentially addressing severe gout. The dosing of the first patient underscores the company's dedication to expanding and reinforcing its product pipeline.
For the second quarter that ended June 30, 2023, PLX’s total revenue increased 300.7% year-over-year to $35.08 million. Its operating income stood at $20.42 million, compared to an operating loss of $5.52 million in the prior year’s quarter.
In addition, the company’s net income for the period and earnings per share of common stock came in at $19.34 million and $0.21, compared to a net loss and loss per share of $5.33 million and $0.11 in the previous year’s period, respectively.
For the fiscal year ending December 2024, PLX’s revenue is expected to increase 22.1% year-over-year to $74.06 million. The company’s EPS for the next year is estimated to grow 130% from the previous year to $0.23. Also, the company surpassed the consensus revenue estimates in all four trailing quarters.
Shares of PLX have gained 61.9% over the past year to close the last trading session at $1.70.
PLX’s sound fundamentals are apparent in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
PLX has an A grade for Value and a B for Growth and Quality. It is ranked #16 in the 359-stock Biotech industry.
In addition to the POWR Ratings I’ve just highlighted, you can see PLX’s ratings for Momentum, Stability, and Sentiment here.
Stock #2: Exelixis, Inc. (EXEL)
EXEL explores, develops, and markets novel cancer treatments. The company provides CABOMETYX tablets for advanced renal cell carcinoma patients with previous anti-angiogenic therapy, and COMETRIQ capsules for progressive and metastatic medullary thyroid cancer treatment.
On September 12, EXEL and Insilico Medicine unveiled an exclusive license agreement, conferring global rights to EXEL for the development and commercialization of ISM3091. This promising small molecule inhibitor of USP1 holds potential as a leading candidate in the treatment of BRCA-mutated tumors through synthetic lethality.
ISM3091's exceptional preclinical data, showcasing robust anti-tumor activity, tolerability, and pharmacokinetics, could solidify its significance as a valuable asset within EXEL's expanding clinical-stage portfolio.
On August 24, the Alliance for Clinical Trials in Oncology's independent Data and Safety Monitoring Board (DSMB) unanimously recommended prematurely concluding the phase 3 CABINET pivotal trial due to an exceptional surge in efficacy observed at an interim analysis.
With no established standard of care for advanced pancreatic or extra-pancreatic neuroendocrine tumor patients post-therapy, EXEL's cabozantinib offers improved outcomes, positioning the company as an oncology innovator, and bolstering its reputation and growth prospects in the field.
For the second quarter that ended June 30, 2023, EXEL’s total revenues increased 12% year-over-year to $469.85 million. Its income before income taxes rose 13.4% from the year-ago value to $100.39 million. Also, the company’s non-GAAP net income and non-GAAP net income per share stood at $100.30 million and $0.31, up 11.8% and 10.7% year-over-year, respectively.
For the fiscal year December 2023, analysts expect EXEL’s revenue to increase 14.1% year-over-year to $1.84 billion. The company’s EPS for the ongoing year is expected to grow 29.2% from the prior year to $0.72. Moreover, EXEL surpassed the consensus revenue and EPS estimates in three of the four trailing quarters.
The stock has gained 39.6% over the past year, closing the last trading session at $22.19.
EXEL’s positive 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.
EXEL has an A grade for Value and Quality and a B for Sentiment. It is ranked #7 out of 359 stocks within the Biotech industry.
Click here to access the additional EXEL ratings (Growth, Momentum, and Stability).
Stock #1: Jazz Pharmaceuticals plc (JAZZ)
Based in Dublin, Ireland, JAZZ identifies, develops, and commercializes pharmaceutical products to address unmet medical needs. The company's portfolio centers on neuroscience, encompassing sleep medicine and movement disorders, and oncology, such as hematologic and solid tumors.
On September 21, the European Commission (EC) granted marketing authorization for Enrylaze® as part of a multi-agent chemotherapy regimen for acute lymphoblastic leukemia (ALL) and lymphoblastic lymphoma (LBL) patients with hypersensitivity to E. coli-derived asparaginase.
Healthcare professionals in the European Union can now access Enrylaze, expanding JAZZ's portfolio and enhancing its reputation as a leader in tailored treatment solutions for diverse patient needs, ultimately driving growth and market prominence.
Also, JAZZ's focused execution has propelled strong momentum across all three primary growth drivers in its commercial business in the fiscal second quarter. As a result, the company has revised its full-year 203 guidance, anticipating revenues between $3.73 billion and $3.88 billion, up from the previous range of $3.68 billion to $3.88 billion.
Additionally, non-GAAP net income and non-GAAP net income per share are expected to reach $1.29 billion to $1.34 billion and $18.15 to $19.00, respectively, compared to the earlier projections of $1.24 billion to $1.31 billion and $16.90 to $17.85. This upward revision reflects JAZZ's robust performance and outlook for sustained growth.
For the second quarter that ended June 30, JAZZ’s total revenues increased 2.6% year-over-year to $957.32 million. Its income from operations rose 84.3% from the year-ago value to $157.64 million. Also, the company’s adjusted net income and adjusted EPS stood at $325.13 million and $4.51, up 6.4% and 4.9% from the previous year’s quarter, respectively.
The consensus revenue estimate of $3.82 billion for the fiscal year ending December 2023 indicates a 4.5% year-over-year improvement. Likewise, the consensus EPS estimate of $18.57 exhibits a 40.6% rise from the previous year. Over the past year, the stock has gained 3.7%, closing the last trading session at $131.23.
JAZZ’s strong outlook is apparent in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
JAZZ has an A grade for Value and a B for Growth and Quality. It is ranked #2 within the same industry.
Click here to access additional JAZZ ratings for Momentum, Stability, and Sentiment.
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JAZZ shares were trading at $131.63 per share on Thursday afternoon, up $0.40 (+0.30%). Year-to-date, JAZZ has declined -17.37%, versus a 13.47% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
3 Biotech Stocks to Buy Instead of Palatin Technologies (PTN) StockNews.com
