The biotech industry has seen considerable growth, propelled by significant strides in drug development, lucrative government support, and technology advancements. Therefore, investors could add fundamentally strong biotech stocks ProQR Therapeutics N.V. (PRQR), Regeneron Pharmaceuticals, Inc. (REGN), and Corcept Therapeutics Incorporated (CORT) to their portfolio now.
The biotech industry’s growth prospects appear promising thanks to the heightened use of advanced technology, expansion in research pipelines, and multibillion-dollar agreements. These factors have collectively invigorated investor confidence in biotech stocks in recent months, as evidenced by the iShares Nasdaq Biotechnology Index Fund’s (IBB) 18.8% return over the last three months.
Demand for drugs and vaccines is being driven up by a rise in chronic diseases and highly contagious diseases like measles, thereby stimulating the biotech market. Furthermore, the industry has seen a significant investment funneled into medical research and development. The incorporation of advanced technologies is also enhancing the development of drugs, as well as progress in personalized medicine.
Innovative trends in bioprinting and tissue engineering have significantly fueled the biotech industry. The tissue engineering market, reflecting robust growth, is forecasted to reach $8.90 billion by 2028, expanding at a CAGR of 15.3%.
Moreover, the industry is also experiencing burgeoning demand from agricultural applications such as tissue culturing, molecular breeding, and micro-propagation.
Furthermore, the “whole-of-government approach” put forward by the Biden administration to advance biotechnology and biomanufacturing critically associated with health, climate change, energy, food security, agriculture, and supply chain resilience should keep the biotech industry buoyed in the foreseeable future.
Consequently, the global biotechnology market is projected to reach $4.25 trillion, growing at a CAGR of 11.8% by 2033.
In light of these encouraging trends, let's look at the fundamentals of the three Biotech stocks, beginning with number 3.
Stock #3: ProQR Therapeutics N.V. (PRQR)
Headquartered in Leiden, the Netherlands, PRQR discovers and develops novel therapeutic medicines. The company's products pipeline includes AX-0810 for cholestatic diseases targeting Na-taurocholate cotransporting polypeptide; and AX-1412 for cardiovascular diseases targeting Beta-1,4-galactosyltransferase 1.
On January 5, PRQR collaborated with the Rett Syndrome Research Trust (RSRT) that will focus on the design and development of editing oligonucleotides using PRQR’s Axiomer technology platform targeting the transcription factor Methyl CpG binding protein 2 and correcting mutations of interest.
RSRT awarded PRQR approximately $1 million as a research grant for the initial phase of the project, which will encompass editing oligonucleotide design and optimization, including evaluation in in-vivo models for editing efficacy and MECP2 protein recovery.
PRQR’s trailing-12-month CAPEX/Sales of 15.23% is 273.5% higher than the industry average of 4.08%, while its trailing-12-month gross profit margin of 100% is 75.3% higher than the industry average of 57.05%.
For the fiscal third quarter that ended September 30, 2023, PRQR’s revenue and cash and cash equivalents at the end of the period increased 68.3% and 20% year-over-year to €1.37 million ($1.49 million) and €120.55 million ($130.79 million), respectively.
As of September 30, 2023, PRQR’s borrowings and trade payables stood at €2.34 million ($2.54 million) and €117 thousand ($126.94 thousand), compared to €2.50 million ($2.71 million) and €392 thousand ($425.30 thousand) as of December 31, 2022, respectively.
Street expects PRQR’s revenue for the fiscal first quarter ending March 2024 to increase 293.6% year-over-year to $2.98 million. The company surpassed consensus EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained 55.2% over the past three months to close the last trading session at $2.10. Over the past six months, it has gained 35.2%.
PRQR’s robust prospects are reflected in its POWR Ratings. The stock has an overall B rating, equating to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has an A grade for Growth and a B for Sentiment. It is ranked #24 within the 357-stock Biotech industry.
Click here for the additional POWR Ratings for PRQR (Value, Momentum, Stability, and Quality).
Stock #2: Regeneron Pharmaceuticals, Inc. (REGN)
REGN discovers, invents, develops, manufactures, and commercializes medicines for treating various diseases worldwide. The company's products include EYLEA injection to treat wet age-related macular degeneration and diabetic macular edema; myopic choroidal neovascularization; diabetic retinopathy; neovascular glaucoma; and retinopathy of prematurity.
On February 16, REGN and Sanofi announced that the Ministry of Health, Labor and Welfare (MHLW) in Japan granted marketing and manufacturing authorization for Dupixent – invented using Regeneron's proprietary VelocImmune® technology – for the treatment of chronic spontaneous urticaria (CSU) in people aged 12 years and older whose disease is not adequately controlled with existing therapy.
Japan became the first country to approve Dupixent for CSU, emphasizing the value of Dupixent as a novel treatment option to manage this disease in patients with unmet needs. This should bode well for REGN.
On January 30, REGN announced the formation of Regeneron Cell Medicines based on the acquisition of full development and commercialization rights of 2seventy bio, Inc.’s pipeline of investigational novel immune cell therapies, along with its discovery and clinical manufacturing capabilities.
2seventy bio employees who support the acquired programs will join Regeneron Cell Medicines, a newly formed research & development (R&D) unit to advance cell therapies and combination approaches in oncology and immunology.
REGN’s trailing-12-month cash per share of $25.49 is significantly higher than the industry average of $1.28. Also, its trailing-12-month levered FCF margin of 21.11% is significantly higher than the industry averages of 0.12%.
For the fiscal fourth quarter that ended December 31, 2023, REGN’s revenues increased marginally year-over-year to $3.43 billion, while income from operations stood at $972.90 million. For the same quarter, its non-GAAP net income and non-GAAP net income per share stood at $1.37 billion and $11.86, respectively.
Moreover, for the fiscal year that ended December 31, 2023, its free cash flow stood at $3.88 billion.
Street expects REGN’s revenue for the fiscal first quarter ending March 2024 to increase 1.7% year-over-year to $3.21 billion. Its EPS is expected to be $9.95 for the same quarter. The company surpassed consensus revenue and EPS estimates in each of the trailing four quarters.
The stock has gained 37% over the past nine months to close the last trading session at $993.35. Over the past year, it has gained 31.1%.
REGN’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to Buy in our proprietary rating system.
REGN has a B grade for Value and Quality. Within the same industry, it is ranked #14.
Beyond what we’ve stated above, we have also rated the stock for Growth, Momentum, Stability, and Sentiment. Get all ratings of REGN here.
Stock #1: Corcept Therapeutics Incorporated (CORT)
CORT discovers and develops drugs for the treatment of severe endocrinologic, oncologic, metabolic, and neurologic disorders in the U.S. It offers Korlym tablets medication for the treatment of hyperglycemia secondary to hypercortisolism in adult patients with endogenous cushing's syndrome; and who have type 2 diabetes mellitus or glucose intolerance and have failed surgery or are not candidates for surgery.
On January 8, CORT’s Board of Directors approved a program authorizing the repurchase of up to $200 million of the company’s common stock. The program does not require the company to repurchase any specific number of shares of its common stock.
CORT’s trailing-12-month asset turnover ratio of 0.80x is 104.2% higher than the industry average of 0.39x, while its trailing-12-month levered FCF margin of 26.62% is significantly higher than the industry average of 0.12%.
For the fiscal fourth quarter that ended December 31, 2023, CORT’s net product revenue and income from operations increased 31.4% and 40.8% year-over-year to $135.41 million and $31.67 million, respectively.
For the same quarter, its net income attributable to common stockholders and net income per common share stood at $31.14 million and $0.28, up 88.1% and 100% from the prior-year quarter, respectively.
Street expects CORT’s revenue and EPS for the fiscal first quarter ending March 2024 to increase 33.3% and 61.4% year-over-year to $140.80 million and $0.23, respectively. The company surpassed consensus revenue estimates in each of the trailing four quarters and consensus EPS estimates in three of the trailing four quarters.
The stock has gained 15.3% over the past year to close the last trading session at $24.15. Over the past month, it has gained 11.5%.
CORT’s POWR Ratings reflect its positive prospects. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
CORT has an A grade for Value and Quality and a B for Growth. Within the same industry, it is ranked #4.
To see additional POWR Ratings for Momentum, Stability, and Sentiment for CORT, click here.
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REGN shares were unchanged in premarket trading Wednesday. Year-to-date, REGN has gained 13.10%, versus a 6.65% rise in the benchmark S&P 500 index during the same period.
About the Author: Neha Panjwani
From her school days, Neha harbored a profound fascination for finance, a passion that steered her toward a career as an investment analyst following the completion of her bachelor's degree in commerce. Currently enrolled in the CFA program, Neha is dedicated to further enriching her comprehension of investment fundamentals. Neha's primary objective is to aid retail investors in discerning optimal investment opportunities by diligently evaluating crucial aspects of financial instruments, with a primary focus on stocks and ETFs. Her commitment lies in empowering individuals to make informed and strategic investment decisions in the dynamic world of finance.
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