The pharmaceutical industry is experiencing unprecedented growth and transformation. The sector is in the middle of a significant shift, leveraging advanced technologies such as digital platforms, big data analytics, cloud computing, and artificial intelligence to drive innovation and progress.
In light of the advancing pharmaceutical landscape, it seems wise to invest in robust pharmaceutical stocks CytomX Therapeutics, Inc. (CTMX), Merck & Co., Inc. (MRK), and Neurocrine Biosciences, Inc. (NBIX), which are poised to yield triumph for investors in 2024. Prior to exploring these stocks, let's assess the dynamics of the pharmaceutical industry.
The strides in genomics and biomarker discovery have enabled the creation of personalized drugs, especially potent in addressing cancer and rare diseases. Tailored treatments for individual patients prove formidable, surpassing the limitations of generic approaches that often prove inadequate in these complex medical scenarios.
Pharmaceutical manufacturers are investing in technologies facilitating the production of small batches of personalized drugs. This would necessitate flexible manufacturing facilities capable of swift adaptation to evolving formulations, anticipated to expedite the industry's progress significantly.
Moreover, 2023 marked the prominence of AI, and this trend is foreseen to persist in 2024. Generative AI, incredibly impactful in drug discovery, is empowering researchers to expedite the design and property prediction and optimize new molecules more efficiently than conventional methods, advancing the field significantly.
Beyond drug discovery, generative AI models also hold the potential to elevate manufacturing by scrutinizing vast datasets. They can oversee and refine production processes, amplifying efficiency, reducing waste, and upholding stringent quality control standards, thereby contributing to overall operational enhancement in the industry.
Additionally, cloud computing stands as one of the sector’s revolutionary technologies. Its utilization is aiding pharmaceutical companies in innovating and expediting the introduction of new treatments. The technology also ensures high-level security and confidentiality throughout the clinical trial process.
Furthermore, global regulatory agencies are adjusting to the swift innovation in the pharmaceutical sector. This year, an augmented focus on real-world evidence, accelerated pathways for breakthrough therapies, and a more collaborative regulatory-industry approach are anticipated, reflecting a dynamic response to the evolving landscape of the pharmaceutical industry.
According to IQVIA, global use of medicines is expected to rise 12% through 2028 to an annual use of 3.8 trillion defined daily doses, while spending on medicine using list prices is projected to increase by 38%. Consequently, revenue in the pharmaceuticals market is expected to reach $1.47 trillion by 2028, exhibiting a 6.2% CAGR.
In light of these encouraging trends, let’s look at the fundamentals of the three best Medical - Pharmaceuticals stocks, beginning with number 3.
Stock #3: CytomX Therapeutics, Inc. (CTMX)
CTMX is a clinical-stage oncology biopharmaceutical firm that innovates conditionally activated biologics targeted at the tumor microenvironment. Its diverse pipeline features therapeutic candidates spanning various treatment modalities, complemented by a preclinical portfolio of wholly owned assets.
On January 24, CTMX reported achieving FDA clearance for Investigational New Drug applications for Probody® therapeutics CX-2051 and CX-801. Targeting EpCAM, these conditionally activated ADCs represent a significant advancement in addressing crucial unmet oncology needs. The regulatory green light signifies medical progress and positions CTMX for considerable growth.
For the fiscal 2023 third quarter that ended September 30, 2023, CTMX’s revenues increased 136.7% year-over-year to $26.38 million. Its income from operations came in at $3.12 million, compared to a loss of $29.71 million in the previous year’s period.
In addition, the company’s comprehensive income and net income per share amounted to $2.89 million and $0.04, compared to a comprehensive loss and net loss per share of $28.70 million and $0.44 in the prior year’s period, respectively.
Analysts expect CTMX’s revenue to significantly increase year-over-year to $19.61 million for the fiscal 2023 fourth quarter that ended December 2023. Likewise, the company’s revenue for the fiscal year that ended December 2023 is expected to grow 77.2% from the previous year to $94.21 million. Also, the company surpassed the consensus revenue estimates in three of four trailing quarters.
Over the past three months, CTMX has gained 39.1% to close the last trading session at $1.53.
CTMX’s solid outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
CTMX has a B grade for Growth, Value, and Quality. It is ranked #25 out of 163 stocks within the Medical - Pharmaceuticals industry.
In addition to the POWR Ratings I’ve highlighted, you can see CTMX’s Momentum, Stability, and Sentiment ratings here.
Stock #2: Merck & Co., Inc. (MRK)
MRK's Pharmaceutical segment provides human health pharmaceuticals, spanning oncology, hospital acute care, immunology, neuroscience, virology, and more. The Animal Health segment specializes in discovering, developing, manufacturing, and marketing veterinary pharmaceuticals, vaccines, and health management solutions.
On January 27, MRK revealed compelling outcomes from the Phase 3 KEYNOTE-564 trial assessing KEYTRUDA, MRK’s anti-PD-1 therapy, in adjuvant treatment for renal cell carcinoma. With up to 40% recurrence post-surgery, KEYNOTE-564 demonstrated a 38% improvement in overall survival compared to placebo, marking a breakthrough for CTMX's growth prospects.
On January 26, MRK unveiled pivotal findings from the Phase 3 AMBASSADOR (A031501)/KEYNOTE-123 trial, showcasing KEYTRUDA's efficacy in adjuvant treatment for high-risk patients with urothelial carcinoma. CTMX stands poised to reap substantial gains as these results indicate a 31% risk reduction in disease recurrence or death, emphasizing the lucrative potential for this groundbreaking therapy.
For the fiscal year that ended December 2023, MRK’s sales increased 1.4% year-over-year to $60.12 billion. Its income before taxes stood at $1.89 billion. Furthermore, net income attributable to MRK and earnings per common share amounted to $365 million and $0.14, respectively.
The consensus revenue estimate of $63.29 billion for the fiscal year ending December 2024 exhibits a 5.3% year-over-year rise. Likewise, the consensus EPS estimate of $8.49 for the current period reflects a 462.1% growth from the prior year. Moreover, the company topped the consensus revenue estimates in all of the four trailing quarters.
The stock has gained 20% over the past six months, closing the last trading session at $126.38.
MRK’s robust fundamentals are apparent in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.
MRK has a B grade for Stability and Quality. It is ranked #18 out of 163 stocks within the Medical - Pharmaceuticals industry.
Click here to access additional MRK ratings for Growth, Value, Momentum, and Sentiment.
Stock #1: Neurocrine Biosciences, Inc. (NBIX)
NBIX develops and markets pharmaceuticals targeting neurological, endocrine, and psychiatric disorders. Its portfolio encompasses remedies for tardive dyskinesia, Parkinson's disease, endometriosis, and uterine fibroids, supplemented by ongoing clinical programs spanning diverse therapeutic areas.
For the fiscal 2023 third quarter that ended September 30, 2023, NBIX’s total revenues increased 28.6% year-over-year to $498.80 million. Its operating income rose 60.8% from the year-ago value to $141.20 million. Also, the company’s non-GAAP net income and non-GAAP EPS grew 46.3% and 42.6% from the prior year’s period to $156.10 million and $1.54, respectively.
In its fiscal 2023 third-quarter release, the company declared an upward revision in its fiscal 2023 net sales guidance for INGREZZA. The revised forecast anticipates INGREZZA’s net product sales ranging between $1.82 billion to $1.84 billion.
Kevin Gorman, Ph.D., CEO of NBIX, said, "With INGREZZA sales continuing to grow, an expanded indication to treat chorea associated with Huntington's disease, and positive Phase 3 results in congenital adrenal hyperplasia, Neurocrine remains well positioned to build a leading neuroscience-focused company."
The consensus revenue estimate of $1.88 billion for the fiscal year that ended December 2023 indicates a 26.6% year-over-year growth. Likewise, the consensus EPS estimate of $4.10 for the same period reflects an 18% year-over-year increase. Furthermore, the company topped the consensus revenue estimates in all of the trailing four quarters.
NBIX shares have gained 37.7% over the past six months, closing the last trading session at $142.45.
NBIX’s sound prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.
NBIX has an A grade for Quality and a B for Value. It is ranked #17 within the same industry.
Click here to access the additional NBIX ratings (Growth, Momentum, Stability, and Sentiment).
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MRK shares were trading at $126.87 per share on Friday morning, up $0.49 (+0.39%). Year-to-date, MRK has gained 16.37%, versus a 3.27% 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.
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