Advancements in personalized medicine driven by genetics, increased collaboration among life sciences companies, and a surge in digital assessment and treatment methods emerge as the standout biotech trends.
So, investors could consider investing in top biotech stocks ANI Pharmaceuticals, Inc. (ANIP), Exelixis, Inc. (EXEL), and Entrada Therapeutics, Inc. (TRDA) to build a healthy portfolio.
The biotech industry's continued growth is fueled by increased investment, decreasing costs of key technologies, and advancements in multidisciplinary approaches, fostering innovations in personalized medicine.
Revenue in the U.S. pharmaceuticals market is projected to reach $603.40 billion this year. It is expected that the revenue will expand at a CAGR of 5.8% to reach $798.20 billion by 2028.
The market's largest segment is oncology drugs, with a projected market volume of $100.30 billion in 2023. Globally, the United States is expected to contribute the highest revenue. In the global pharmaceuticals market, revenue is projected to reach $1.12 trillion in 2023, with a CAGR of 5.8% to reach $1.48 trillion by 2028.
With the growing prevalence of pharmaceuticals as chronic illnesses grow, the biotech sector is well-positioned for substantial growth. Furthermore, government support aimed at modernizing regulations, improving approval processes, and reimbursements keeps the sector buoyed.
The global biotechnology market is expected to reach $1.35 trillion by 2030, growing at a CAGR of 15.5% between 2022 and 2030.
Considering these conducive trends, let’s examine the fundamentals of the three Biotech stock picks, beginning with the third choice.
Stock #3: ANI Pharmaceuticals, Inc. (ANIP)
ANIP is a biopharmaceutical company that focuses on developing, manufacturing, and marketing prescription pharmaceuticals, including controlled substances, oncology products, and more. The company also provides contract development and manufacturing services, distributing products through various channels.
On October 2, ANIP received approval from the U.S. Food and Drug Administration (FDA) for its 1-mL vial of Purified Cortrophin® Gel, expanding the product's availability for rapid point-of-care therapy and addressing the needs of over 9 million people in the United States affected by gout.
Cortrophin Gel is the first newly commercialized drug for this indication in 12 years. ANIP plans to enhance support for the new configuration through the company’s existing sales force, reimbursement, and access hub.
For the third quarter that ended September 30, 2023, ANIP’s net revenues increased 57.3% from the previous year's quarter to $131.83 million. Its operating income amounted to $17.95 million, up significantly from the year-ago operating loss of $5 million.
Its adjusted non-GAAP net income available to common shareholders and adjusted non-GAAP EPS came in at $24.27 million and $1.27, up 155.3% and 119% from the prior-year quarter, respectively.
Street expects ANIP’s revenue and EPS to grow 29.7% and 3.1% year-over-year to $122.25 million and $0.78, respectively, for the fourth quarter ending December 2023. The company surpassed the revenue and EPS estimates in each of the trailing four quarters, which is impressive.
Shares of ANIP increased 28.7% over the past year and 28.5% year-to-date to close the last trading session at $51.71.
ANIP’s POWR Ratings reflect its positive prospects. The stock has an overall rating of B, equating 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.
ANIP has an A grade for Growth and a B for Value and Sentiment. Within the Biotech industry, it is ranked #25 out of 344 stocks.
In addition to the POWR Ratings stated above, one can access ANIP’s additional Momentum, Stability, and Quality ratings here.
Stock #2: Exelixis, Inc. (EXEL)
EXEL is a biotech firm specializing in oncology. The company develops and commercializes cancer treatments, including CABOMETYX and COMETRIQ. Its pipeline includes promising drugs like zanzalintinib and XL102.
On November 10, EXEL reported encouraging results from the STELLAR-001 trial's expansion cohort, showing a 38% objective response rate in patients with previously treated clear cell renal cell carcinoma.
Zanzalintinib demonstrated effectiveness, particularly in those who had progressed on prior treatments, including cabozantinib. The safety profile was consistent across different solid tumors. Ongoing STELLAR trials aim to explore zanzalintinib's potential in kidney cancer and other advanced solid tumors.
For the fiscal third quarter (ended September 30, 2023), EXEL’s total revenues increased 14.6% year-over-year to $471.92 million. Its non-GAAP net income and non-GAAP net income per share stood at $32.10 million and $0.10, respectively. For the nine months ended September 30, EXEL generated total revenues of $1.35 billion, up 13.8% year-over-year.
EXEL’s revenue and EPS are expected to grow 18.6% and 61.1% from the same period the prior year to $484.60 million and $0.19 for the fiscal first quarter ending March 2024, respectively.
Shares of EXEL increased 25.6% over the past year and 34% year-to-date to close the last trading session at $21.50.
EXEL’s POWR Ratings reflect this sound outlook. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
EXEL has an A grade for Value and Quality and a B for Growth. Within the same industry, it is ranked #7.
Click here for EXEL’s additional Momentum, Stability, and Sentiment ratings.
Stock #1: Entrada Therapeutics, Inc. (TRDA)
Entrada Therapeutics is a biotech company specializing in developing Endosomal Escape Vehicle (EEV) therapeutics for various neuromuscular diseases, with lead candidates targeting Duchenne muscular dystrophy and myotonic dystrophy type1.
On November 22, TRDA completed dosing for the first and second cohorts of its Phase 1 clinical trial, ENTR-601-44-101, targeting Duchenne Muscular Dystrophy (DMD) in the United Kingdom. The data from the trial is expected to be published next year. The company also reported that its cash runway is expected through 2025.
In the three months ended September 30, 2023, TRDA generated collaboration revenue of $43.74 million. The company's income from operations and net income came in at $14.01 million and $35.46 million, up significantly from the prior-year quarter’s loss from operations and net loss of $25.94 million and $25.14 million, respectively.
Its net income per share stood at $1.02 compared to a year-ago net loss per share of $0.80.
Analysts expect TRDA’s revenue to be $21.41 million for the fourth quarter ending December 2023, while its EPS is expected to improve 71.4% year-over-year for the same period.
The stock has soared marginally over the past nine months to close the last trading session at $11.36.
TRDA’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
TRDA has an A grade for Value and Sentiment and a B for Growth and Quality. Within the same industry, it is ranked #6.
To see TRDA’s additional POWR Ratings for Momentum and Stability, click here.
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.
EXEL shares were trading at $21.50 per share on Thursday morning, up $0.28 (+1.32%). Year-to-date, EXEL has gained 34.04%, versus a 20.30% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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