Biotech companies are growingly contributing to the economies with latest advancement and innovations in areas like healthcare, agriculture, environment, and industrial manufacturing. There operations are rapidly widening from labs to people’s lives resulting in ample growth opportunities for biotech industry.
Given the industry’s solid prospects, investors could consider investing in high-risk, high-reward biotech stocks United Therapeutics Corporation (UTHR), Entrada Therapeutics, Inc. (TRDA), and Exelixis, Inc. (EXEL).
Last year, with 80 novel products approvals, the FDA, including the Center for Drug Evaluation and Research (CDER) and the Center for Biologics Evaluation and Research (CBER), recorded one of the highest totals in biopharma product approvals. These indicate an uptrend in the market furthered by thriving biotech startups.
IMARC Group expects the global biotechnology market to reach $1.28 trillion by 2032, growing at a CAGR of 6.5%. Factors attributable to the industry growth and expansion includes rising research and development in personalized medicine, advancements in genetic engineering, and escalating demand for sustainable agriculture.
Also, with breakthroughs across scientific disciplines, in biology, chemistry, and IT, biotech’s operations have expanded from labs to lives, inspiring a nature-led revolution. Also, modern biotech’s wide innovations, like rapidly engineered lifesaving therapeutics, and ecological replacements for traditional textiles, is widely contributing to the segment’s development.
Moreover, recent introductions by Artificial Intelligence (AI) to expedite the identification, development, and healthcare applications of drugs have led to various innovation accelerating biopharmaceutical sector. The global artificial intelligence in biopharmaceutical market is projected to value $14.07 billion by 2032, growing at a CAGR of 32.3%.
Additionally, investors’ interest in biotech stocks is evident from the SPDR Series Trust SPDR S&P Biotech ETF’s (XBI) 18% returns over the past month.
In light of these encouraging trends, let’s look at the fundamentals of the three best Biotech stocks, beginning with number 3.
Stock #3: United Therapeutics Corporation (UTHR)
UTHR is a biotechnology company engaged in the development and commercialization of products to address the unmet medical needs of patients with chronic and life-threatening diseases internationally. The company’s portfolio includes Tyvaso DPI, Tyvaso, Remodulin (treprostinil) injection, Orenitram, and Adcirca.
On July 10, UTHR announced full enrollment of the TETON 2 study evaluating the use of Tyvaso® (treprostinil) inhalation solution (nebulized Tyvaso) for treating idiopathic pulmonary fibrosis. TETON 2 is analyzing use of inhaled treprostinil in IPF in patients outside the United States and Canada.
On April 24, UTHR announced the world’s first successful transplant of a genetically modified xenothymokidney into a living person, along with a heart pump implant. The event marked a significant progress in xenotransplantation and advances in their efforts to address organ shortages.
The transplant also marked the first-ever combined mechanical heart pump and organ transplant and the first-ever xenotransplant into a living human using FDA-approved immunosuppressive medicines only.
UTHR’s total revenues for the first quarter, which ended March 31, 2024, increased 33.7% year-over-year to $677.70 million. Its operating income grew 25.3% from the year-ago value to $356.30 million. The company’s net income came in at $306.60 million, or $6.17 per common share, indicating growths of 27.3% and 26.9% from the prior year’s quarter, respectively.
In addition, as of March 31, 2024, the company’s cash, cash equivalents and marketable investments, and total assets totaled $4.20 billion and $6.49 billion, respectively.
Analysts expect UTHR’s revenue for the second quarter (ended June 2024) to grow 15.5% year-over-year to $688.96 million, and its EPS is expected to increase 20.9% year-over-year to $6.34 for the same period. Moreover, the company has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
Over the past six months, the stock has surged 53.8% and 35.4% over the past year to close the last trading session at $332.63.
UTHR’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
UTHR has an A grade for Value and B grade for Quality. It is ranked #8 out of 341 stocks in the Biotech industry.
To check other POWR Ratings of UTHR for Growth, Momentum, Stability, and Sentiment, click here.
Stock #2: Entrada Therapeutics, Inc. (TRDA)
TRDA, a clinical-stage biotechnology company, develops endosomal escape vehicle (EEV) therapeutics for the treatment of multiple neuromuscular diseases. The company’s EEV platform develops a portfolio of oligonucleotide, antibody, and enzyme-based programs.
On June 24, TRDA announced positive preliminary data from its Phase 1 clinical trial, ENTR-601-44-101. As per the results, ENTR-601-44 was well-taken by healthy volunteers with no serious or drug-related adverse events and no clinically significant changes or trends noted in vital signs, ECGs, physical exams or laboratory assessments.
ENTR-601-44 further showed significant plasma concentration, muscle concentration and exon skipping, at levels suggesting potential for a clinically meaningful starting dose in planned upcoming patient trials.
For the first quarter that ended March 31, 2024, TRDA’s collaboration revenue increased 134% year-over-year to $59.12 million, while its income from operations came in at $21.11 million for the quarter. The company’s net income was $23.50 million or $0.68 per share, against a net loss of $6.67 million and $0.21 per share in the prior year’s quarter, respectively.
Furthermore, the company’s total assets stood at $510.84 million as of March 31, 2024, compared to $469.19 million as of December 31, 2023.
Street expects TRDA’s revenue for the second quarter (ended June 2024) to increase 153.6% year-over-year to $46.08 million. Similarly, for the fiscal year 2024, the company’s revenue is expected to grow 11.7% year-over-year to $144.10 million. Furthermore, the TRDA has surpassed the consensus revenue estimates in each of the trailing four quarters.
TRDA’s stock has gained 15.4% over the past month and 9.2% over the past six months to close the last trading session at $17.11.
TRDA’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
The stock has a B grade for Sentiment, Value, and Quality. Within the same industry, TRDA is ranked #5 among the 341 stocks.
Click here to access additional ratings of TRDA for Stability, Growth, and Momentum.
Stock #1: Exelixis, Inc. (EXEL)
EXEL is an oncology company which focuses on the discovery, development, and commercialization of new medicines for difficult-to-treat cancers. The company provides CABOMETYX tablets for the treatment of patients with advanced renal cell carcinoma.
On May 20, EXEL entered into a Settlement and License Agreement with Cipla Ltd. and Cipla USA, Inc., under which EXEL will grant Cipla a license to sell generic versions of CABOMETYX in the US starting January 1, 2031, depending upon approval by the FDA and subject to the usual terms and conditions of such agreements.
On January 25, EXEL announced promising results from the CONTACT-02 trial at ASCO GU 2024. The trial showed a significant improvement in progression-free survival with cabozantinib and atezolizumab combination therapy compared to second-line treatment, with 97% experiencing treatment-emergent adverse events in the combination group versus 87% in the second-line group.
For the first quarter that ended March 31, 2024, EXEL’s total revenues increased 13.1% year-over-year to $425.23 million. Its income from operations grew 2.2% from the year-ago value to $29.46 million. The company’s non-GAAP net income came in at $51.98 million and $0.17 per share for the quarter, respectively.
According to the company’s financial guidance 2024, EXEL reaffirmed its total revenues between $1.83 billion and $1.93 billion and its net product revenues is expected to range from $1.65 billion to $1.75 billion.
Analysts expect EXEL’s revenue for the fourth quarter (ending December 2024) to increase 4.3% year-over-year to $500.07 million and its EPS is expected to grow 33.3% year-over-year to $0.36 for the same quarter. For the fiscal year 2024, the company’s revenue and EPS are expected to increase 2.8% and 74.7% year-over-year to $1.88 billion and $1.14.
Shares of EXEL have gained marginally over the past month and 13.6% over the past year to close the last trading session at $22.60.
EXEL’s POWR Ratings reflect its robust outlook. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
EXEL has an A grade for Quality and Value. It is ranked #2 among 341 stocks within the Biotech industry.
To see the other ratings of EXEL for Growth, Sentiment, 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.
UTHR shares were trading at $335.50 per share on Tuesday afternoon, up $2.87 (+0.86%). Year-to-date, UTHR has gained 52.58%, versus a 17.50% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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