The biotechnology industry is rapidly evolving, with innovative companies pushing the boundaries of science and medicine. Several biotech firms are making headlines this year for their groundbreaking research and impressive market performance.
Amid this, fundamentally robust biotech stocks such as Vertex Pharmaceuticals Incorporated (VRTX), Regeneron Pharmaceuticals, Inc. (REGN) and Gilead Sciences, Inc. (GILD), with their revolutionary pipelines, could offer significant return potential owing to their dominance in high-demand areas and transformative treatments.
This year, several key factors are propelling the industry’s growth. Increasing global healthcare expenditures are driving investment in innovative treatments and technologies. Advances in gene editing, such as CRISPR and bioinformatics, are further enabling more precise and effective therapies.
Additionally, the rising demand for personalized medicine is pushing the development of tailored treatments based on individual genetic profiles. These elements are collectively fostering an environment ripe for biotech innovation and expansion.
Year-to-date, the U.S. Food and Drug Administration (FDA) has approved 22 new drugs for conditions such as Alzheimer’s disease, bladder cancer, hypertension, and more. The year is expected to see additional approvals, potentially accelerating the industry’s expansion and highlighting the ongoing progress in biotechnology.
Precedence Research reports that the U.S. biotechnology market, valued at $246.18 billion in 2023, is expected to expand at a CAGR of 11.9%, reaching approximately $763.82 billion by 2033.
Considering these factors, let’s discuss the fundamentals of three leading Biotech stocks, starting with the #3.
Stock #3: Vertex Pharmaceuticals Incorporated (VRTX)
VRTX is dedicated to investing in scientific innovation to create transformative medicines for people with serious diseases. It has four approved drugs that treat the underlying cause of cystic fibrosis (CF), and one approved therapy for severe sickle cell disease (SCD) and transfusion-dependent beta-thalassemia (TDT).
On July 2, VRTX announced that the FDA had accepted its New Drug Application (NDA) for the investigational once-daily vanzacaftor/tezacaftor/deutivacaftor triple combination therapy (Avanza triple).
This therapy targets people with CF aged six years and older who have at least one F508del mutation or another responsive mutation in the cystic fibrosis transmembrane conductance regulator (CFTR) gene.
The vanza triple builds on VRTX's legacy of pioneering CFTR modulators, expanding its therapeutic footprint and enhancing its competitive edge in the biopharmaceutical industry.
Additionally, on April 23, VRTX and TreeFrog Therapeutics announced that VRTX has obtained an exclusive license to TreeFrog’s proprietary cell manufacturing technology, C-Stem™, to optimize the production of VRTX's cell therapies for type 1 diabetes (T1D).
The partnership marks a significant step in VRTX's strategy to advance its cell therapy pipeline and improve treatment options for T1D patients.
In the first quarter of fiscal 2024, which ended on March 31, 2024, VRTX’s net product revenues increased 13.3% year-over-year to $2.69 billion. Its non-GAAP operating income grew 48.1% from the prior year’s quarter to $1.34 billion.
Furthermore, the company’s non-GAAP net income stood at $1.24 billion, indicating a 56.43% year-over-year growth, while its non-GAAP EPS amounted to $4.76, a 56.1% year-over-year increase. As of March 31, 2024, the company’s total assets were $23.92 billion, compared to $22.73 billion as of December 31, 2023.
For the fiscal year ending in December 2024, analysts expect VRTX’s revenue to increase 16.7% year-over-year to $10.76 billion. Meanwhile, its EPS is expected to grow 19.7% from the previous year to $17.03. Over the next five years, VRTX’s EPS is estimated to grow at a CAGR of 12.5% per annum.
The stock has gained 15.1% over the past six months and 40.7% over the past year to close the last trading session at $495.26.
VRTX’s robust 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 considering 118 different factors, each weighted optimally.
VRTX has a B grade for Quality, Value, and Sentiment. It is ranked #16 out of 341 stocks in the Biotech industry.
In addition to the POWR Ratings we’ve stated above, we also have VRTX ratings for Momentum, Growth, and Stability. Get all VRTX ratings here.
Stock #2: Regeneron Pharmaceuticals, Inc. (REGN)
REGN develops and commercializes medicines for people with serious diseases. Its products and candidates in development aim to help patients with eye problems, allergic and inflammatory conditions, cancer, cardiovascular and metabolic diseases, neurological disorders, hematologic conditions, infectious diseases, and more.
On July 3, REGN and Sanofi announced that the European Commission (EC) had authorized Dupixent® (dupilumab) as an add-on maintenance medication for individuals with uncontrolled chronic obstructive pulmonary disease (COPD) characterized by elevated blood eosinophil levels.
This addition to REGN's portfolio could diversify its therapeutic offerings and strengthen its market presence in respiratory diseases.
On June 11, REGN and Sanofi announced the FDA’s approval of Kevzara (sarilumab) for the treatment of patients weighing 63 kg or greater with active polyarticular juvenile idiopathic arthritis, a form of arthritis that impacts multiple joints at a time.
This milestone could enhance the company's drug pipeline by offering an established therapy with a proven efficacy and safety profile for young patients. By expanding its therapeutic offerings, REGN can solidify its position in the pediatric market, potentially increasing market share and driving future growth.
In the fiscal 2024 first quarter, which ended on March 31, 2024, REGN’s revenues amounted to $3.15 billion. Its non-GAAP net income stood at $1.12 billion, while non-GAAP net income per share came in at $9.55. In addition, the company’s free cash flow rose 15.9% from the year-ago value to $1.38 billion.
Furthermore, as of March 31, 2024, the company’s total assets were $34.37 billion, up from $34.08 billion as of December 31, 2023.
Analysts expect REGN’s revenue for the fiscal 2024 second quarter (ended June 2024) to increase 7.2% year-over-year to $3.39 billion, while its EPS for the same quarter is expected to grow 3.7% from the prior year’s period to $10.61. Also, the company has surpassed the consensus revenue and EPS estimates in three of the four trailing quarters.
The stock has gained 14.7% over the past six months and 47.6% over the past year to close the last trading session at $1,078.63.
REGN’s solid fundamentals are reflected in its POWR Ratings. It has a B grade for Quality, Value, Sentiment, and Stability. It is ranked #11 in the 341-stock Biotech industry.
In addition to the POWR Ratings I’ve stated above, we also have REGN ratings for Momentum and Growth. You can view all REGN ratings here.
Stock #1: Gilead Sciences, Inc. (GILD)
GILD focuses on discovering, developing, and commercializing medicines in areas of unmet medical need. It operates in more than 35 countries worldwide and is engaged in advancing medicines to prevent and treat life-threatening diseases. These include HIV, viral hepatitis, COVID-19, cancer and more.
On April 26, GILD announced that the FDA approved an updated label for Biktarvy®, including additional data reinforcing its safety and efficacy for treating pregnant people with HIV-1 (PWH) who have suppressed viral loads. This update is expected to strengthen GILD's position in the HIV treatment market by addressing the needs of pregnant PWH, thereby expanding its patient base.
On March 22, GILD announced the completion of its acquisition of CymaBay Therapeutics, Inc. (CBAY) for approximately $4.3 billion in total equity value.
The acquisition adds CBAY's investigational lead product candidate, seladelpar, to GILD's portfolio for treating primary biliary cholangitis (PBC), including pruritus. This integration aligns with GILD's commitment to providing patients transformational medicines and strengthens its position in the liver disease market.
For the fiscal 2024 first quarter that ended on March 31, 2024, GILD’s total revenues increased 5.3% year-over-year to $6.69 billion. Its product sales amounted to $6.65 billion, up 5.4% from the prior year’s period.
Plus, as of March 31, 2024, the company’s total liabilities and stockholders’ equity stood at $56.29 billion, down from $62.13 billion as of December 31, 2023.
For the second quarter of fiscal 2024, which ended in June, analysts expect GILD’s revenue and EPS to increase 2.1% and 19.3% year-over-year to $6.74 billion and $1.60, respectively. The company has also surpassed the consensus revenue estimates in each trailing four quarters, which is impressive.
Shares of GILD have gained 10.6% over the past month and 6.2% over the past five days to close the last trading session at $77.01.
It’s no surprise that GILD has an overall rating of A, which translates to a Strong Buy in our POWR rating system. The stock has an A grade for Value and a B for Growth and Quality.
GILD is ranked #2 withing the same industry. Click here to see GILD’s Momentum, Stability, and Sentiment ratings.
What To Do Next?
Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these “death trap” stocks are lurking in your portfolio:
VRTX shares were unchanged in premarket trading Monday. Year-to-date, VRTX has gained 21.72%, versus a 15.27% 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 With Revolutionary Pipelines to Buy Today StockNews.com
