With the rising prevalence of chronic diseases worldwide, increased healthcare spending, favorable government policies and funding, and growing adoption of advanced technologies, demand for innovative drugs and treatments has been rising considerably, boosting the biotech industry’s outlook.
Given the industry tailwinds, it could be wise to invest in fundamentally sound biotech stocks Vertex Pharmaceuticals Incorporated (VRTX), Innoviva, Inc. (INVA), and Acorda Therapeutics, Inc. (ACOR) this week for solid returns.
Biotechnology-derived products or solutions have been effective in paving their way in various aspects of healthcare, including diagnoses, prevention, and treatments of diseases. Moreover, the COVID-19 pandemic increased research and development (R&D) activities among biotech and pharmaceutical companies to prepare and manufacture vaccines.
The increasing frequency of infectious and chronic diseases, a growth in healthcare spending, and strong government support will further boost continued growth in the biotech sector.
The global biotechnology market is projected to reach $3.88 trillion by 2030, expanding at a CAGR of 14% during the forecast period. Meanwhile, the U.S. biotechnology market is expected to grow at a CAGR of 12.4% from 2023 to 2030.
A significant surge in the prevalence of chronic conditions like cancer, diabetes, arthritis, asthma, and more around the globe boosted demand for personalized medicine and treatment, propelling the biotech industry’s prospects. The global personalized medicine market is expected to expand at a CAGR of 7.2% from 2023 to 2030.
Furthermore, favorable government initiatives are majorly contributing to the industry’s growth. Solid government support is aimed at the modernization of regulatory framework, advancements in approval processes & reimbursement policies, and standardization of clinical trials.
In 2030, the FDA approved more than 50 new novel drugs, supporting advances in public health care.
The rapid integration of cutting-edge technologies also provides numerous growth opportunities to biotech and biopharma companies. Digital technology such as the cloud, AI, wearables, IoT, big data, and AR&VR are being adopted by companies in their day-to-day operations to improve efficiency, accuracy, and reliability.
With these encouraging trends in mind, let’s delve into the fundamentals of the three Biotech stock picks, beginning with the third choice.
Stock #3: Acorda Therapeutics, Inc. (ACOR)
ACOR is a biopharmaceutical company that develops and commercializes therapies for neurological disorders. The company markets Ampyra (dalfampridine), an oral drug to improve walking in adults with multiple sclerosis, and Inbrija, a medicine for OFF episodes in adults with Parkison’s disease treated with regular carbidopa/levodopa regimen.
On November 6, ACOR announced the submission of new regulatory filings for the approval of INBRIJA® in six countries in Latin America by its partner Biopas Laboratories. Biopas has submitted for marketing approval of INBRIJA in Argentina, Colombia, Costa Rica, Ecuador, Panama and Peru.
Further, additional regulatory filings for approval of INBRIJA are expected in Chile in late 2023 and in Mexico and Brazil in 2024.
On August 2, ACOR announced the launch of a new INBRIJA (levodopa inhalation powder) website and brand campaign. The campaign is named "For the Fighters" and is based on direct feedback from people with Parkinson’s to honor the fighting spirit of the Parkinson’s community.
For the third quarter of 2023, which ended September 30, ACOR’s INBRIJA® worldwide net revenue increased 7% year-over-year to $9.50 million, of which $8.10 million was derived from sales in the U.S., representing an increase of 4% compared to the prior year’s quarter. Also, the company reported AMPYRA® net revenue of $15.70 million.
As of September 30, 2023, the company had cash, cash equivalents, and restricted cash of $33.60 million.
For the full year 2023, ACOR reaffirmed INBRIJA U.S. net revenue to be $34-$38 million, with its adjusted OPEX to be $93-$98 million. Further, the company expects its ending cash balance to be between $39 million to $44 million and AMPYRA net revenue guidance to be $65-$70 million.
Analysts expect ACOR’s revenue for the next fiscal year (ending December 2024) to increase 25.3% year-over-year to $138.92 million. The company’s EPS is expected to grow 46% per annum over the next five years.
Shares of ACOR have decreased 3.5% over the past month to close the last trading session at $9.80.
ACOR’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.
ACOR has an A grade for Growth and a B for Value. It is ranked #21 out of 345 stocks in the Biotech industry.
In addition to the POWR Ratings we’ve stated above, we also have ACOR’s ratings for Sentiment, Momentum, Stability and Quality. Get all ACOR ratings here.
Stock #2: Innoviva, Inc. (INVA)
INVA is involved in the development and commercialization of pharmaceutical products globally. The company’s products include RELVAR/BREO ELLIPTA, ANORO ELLIPTA, and TRELEGY ELLIPTA.
On November 1, INVA, in collaboration with The Global Antibiotic Research & Development Partnership (GARDP),announced positive results of its phase 3 clinical study of oral zoliflodacin to treat uncomplicated Gonorrhea.
This is a groundbreaking instance in antibiotic research and development as it paves the way for developing other antibiotics to address the impact of antimicrobial resistance (AMR).
On September 18, INVA’s wholly-owned subsidiary, Innoviva Specialty Therapeutics, launched XACDURO, co-packaged for intravenous use in patients of 18 years or above in the U.S.
This is for treating hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia (HABP/VABP) caused by susceptible isolates of Acinetobacter baumannii-calcoaceticus complex (Acinetobacter). XACDURO is the first and only pathogen-targeted antibiotic, and this launch is expected to drive the company’s sales and growth.
During the third quarter that ended September 30, 2023, INVA reported a total revenue of $67.26 million. The company’s net product sales were $13.70 million, up 168.3% from the previous year’s quarter. Also, net income attributable to Innoviva stockholders came in at $82.05 million, or $0.98 per share for the third quarter.
In addition, the company’s cash and cash equivalents stood at $180 million as of September 30, 2023.
Street expects INVA’s revenue for the fourth quarter (ending December 2023) to increase 14.8% year-over-year to $75.52 million. Further, for the fiscal year 2023, the company’s EPS is estimated to grow 534.5% year-over-year to $1.67. Additionally, INVA topped the consensus revenue estimates in three of the trailing four quarters.
Over the past month, INVA’s stock has surged 5.7% and 10.2% over the past nine months to close the last trading session at $13.57.
INVA’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 an A grade for Value and a B for Growth. Within the Biotech industry, INVA is ranked #17 of 343 stocks.
Click here to access additional ratings of INVA for Momentum, Quality, Sentiment and Stability.
Stock #1: Vertex Pharmaceuticals Incorporated (VRTX)
VRTX is engaged in developing and commercializing therapies for treating cystic fibrosis (CF). Its marketed products include TRIKAFTA/KAFTRIO, SYMDEKO/SYMKEVI, ORKAMBI, and KALYDECO. The company sells its products to specialty pharmacies and retail pharmacies or pharmacy chains, hospitals, and clinics.
On November 23, VRTX announced the approval of the label expansion of KAFTRIO® from the European Commission for the treatment of children with cystic fibrosis ages 2 through 5 years old with at least one F508del mutation in the cystic fibrosis transmembrane conductance regulator (CFTR) gene.
“In addition to data from clinical trials, long-term and real-world data have demonstrated the significant clinical benefit of KAFTRIO in eligible people living with CF, and today’s news means that young children across Europe can now benefit from this important medicine," said Carmen Bozic, M.D., Executive Vice President, Global Medicines Development and Medical Affairs, and Chief Medical Officer at VRTX.
On November 16, VRTX and CRISPR Therapeutics (CRSP) announced that the United Kingdom-based Medicines and Healthcare Products Regulatory Agency (MHRA) granted conditional marketing authorization to their CRISPR/Cas9 gene-edited therapy, CASGEVY™.
CASGEVY is indicated for the treatment of sickle cell disease (SCD) in patients 12 years of age and older with recurrent vaso-occlusive crises (VOCs) or transfusion-dependent beta thalassemia (TDT). This approval of CASGEVY by the MHRA comes as a significant breakthrough for medical science.
VRTX’s net product revenues increased 6.4% year-over-year to $2.48 billion for the third quarter, which ended September 30, 2023. The company’s non-GAAP net income came in at $1.06 billion, or $4.08 per common share, compared to $1.04 billion, or $4.01 per common share in the previous year’s period, respectively.
As of September 30, 2023, the company’s cash and cash equivalents and marketable securities were $11.93 billion, compared to $10.78 billion as of December 31, 2022.
As per its updated guidance for fiscal year 2023, VRTX’s CF product revenue is expected to be approximately $9.85 billion. Also, the company expects its adjusted EBITDA to be between $42 million and $45 million, up from the prior guidance of $38-$41 million.
Analysts expect VRTX’s revenue for the fourth quarter (ending December 2023) to increase 9.3% year-over-year to $2.52 billion. The consensus EPS estimate for the ongoing quarter of $4.07 indicates an 8.4% year-over-year growth. Moreover, VRTX surpassed the consensus EPS estimates in all four trailing quarters.
VRTX’s stock has surged 3.9% over the past six months and 22.3% year-to-date to close the last trading session at $353.23.
VRTX’s POWR Ratings reflect its robust outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
VRTX has an A grade for Quality and a B for Value and Sentiment. It is ranked first among 343 stocks in the Biotech industry.
To access VRTX’s ratings (Growth, Stability, and Momentum), click here.
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VRTX shares were unchanged in premarket trading Friday. Year-to-date, VRTX has gained 22.32%, versus a 20.30% 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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