The healthcare industry plays a major economic role by providing essential products and services that enhance people’s health and well-being. Recent years have brought significant changes to the sector, driven by technological advancements, personalized healthcare, and biotechnological innovations.
Amid this, it could be wise to invest in fundamentally sound small-cap healthcare stocks Theratechnologies (THTX), Anika Therapeutics (ANIK), and SIGA Technologies (SIGA). With a market capitalization of up to $2 billion, these companies offer greater growth potential than large-cap firms and could be valuable additions to one’s portfolio.
Over the last decade, significant advancements in survival rates and patient quality of life have greatly benefited the healthcare industry. These improvements stem from the intersection of medical and technological breakthroughs, which have enhanced the effectiveness of healthcare delivery and treatment outcomes.
Integrating high-tech diagnostic and therapeutic equipment with clinical practices has significantly improved healthcare outcomes. Innovations such as telemedicine, robotic process automation, and remote patient monitoring are transforming patient care by making it more efficient and accessible, benefiting the sector.
The continuous introduction of new drugs also benefits the industry by expanding treatment options and improving patient care. The U.S. Food and Drug Administration's approval of 23 new drugs this year for various chronic conditions illustrates the sector's growth potential and capacity to advance medical treatments.
According to a report by Precedence Research, the global biotechnology market is expected to grow at a CAGR of 11.8%, reaching approximately $4.25 trillion by 2033. This growth signifies increased investment and innovation, driving further advancements and improvements in patient care.
Considering these factors, let’s explore the fundamentals of three promising small-cap healthcare stocks, starting with #3.
Stock #3: Theratechnologies Inc. (THTX)
THTX, based in Montreal, Canada, has a market capitalization of $62.76 million and develops therapies that address unmet medical needs. Its pipeline includes the F8 Formulation in Phase 2b/3 trials for tesamorelin in treating nonalcoholic steatohepatitis, a multi-dose pen injector for tesamorelin administration, and more.
On May 23, THTX reported Phase 1 data for its investigational peptide drug conjugate, sudocetaxel zendusortide (TH1902). The data showcased promising long-term efficacy and a manageable safety profile in patients with solid tumors, highlighting the potential of TH1902 in advancing cancer treatment.
This could position THTX favorably for future development stages and regulatory approval.
On April 8, THTX showcased preclinical data demonstrating the versatility of its SORT1+ Technology™ platform. The data revealed that camptothecin-peptide conjugates effectively regress tumors in colorectal cancer (CRC) and triple-negative breast cancer (TNBC) models.
The validation could boost THTX's growth by confirming the platform's broad application and efficacy. The promising results could attract potential partners and investors, positioning THTX as a leader in innovative cancer treatments and accelerating its path to clinical development and market success.
For the fiscal 2024 second quarter that ended May 31, 2024, THTX reported revenue of $22.02 million, indicating a 25.5% year-over-year increase. Its profit from operating activities was $3.29 million compared to a loss of $7.94 million in the previous year’s quarter.
Moreover, the company reported a net income and income per share of $987 thousand and $0.02, compared to a loss and loss per share of $10.01 million and $0.41 in the prior year’s period.
Street expects THTX’s revenue to rise 15.2% year-over-year to $23.94 million in the fiscal 2024 third quarter ending in August. The company’s EPS is expected to be $0.04. Moreover, THTX has surpassed the consensus EPS estimates in three of the four trailing quarters.
Shares of THTX have gained 8.3% over the past three months and 1.11% over the past nine months to close the last trading session at $1.37.
THTX’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated considering 118 different factors, each weighted optimally.
THTX stock has an A grade for Growth and a B for Value and Sentiment. It is ranked #27 in the 639-stock Biotech industry.
Beyond what is stated above, we’ve also rated THTX for Quality, Momentum, and Stability. Click here to get all THTX ratings.
Stock #2: Anika Therapeutics, Inc. (ANIK)
Valued at $374.21 million, ANIK is a joint preservation company that develops and markets products using hyaluronic acid technology. Its product family includes Monovisc and Orthovisc for pain management, joint preservation solutions like Integrity and Hyalofast, Arthrosurface for sports medicine, and non-orthopedic products like adhesion barrier and wound care.
On July 11, ANIK announced a full market release of its Integrity Implant System across the United States. The Integrity System includes a hyaluronic acid-based implant with bone and tendon fixation components and ingenious one-time use arthroscopic delivery instruments and is made to protect an injured tendon and propagate healing in rotator cuff repair and other tendon procedures
The positive feedback from the limited release underscores Integrity's clear advantages over collagen patches. Initially focused on rotator cuff repairs, Integrity's versatility has been proven in diverse applications, including Achilles tendon and foot repairs. This breakthrough positions ANIK as a leader in advancing surgical outcomes, driving its growth and reputation.
For the fiscal 2024 second quarter, which ended June 30, 2024, ANIK reported revenue of $41.92 million. The company's adjusted gross profit amounted to $27.52 million, while it registered an adjusted EBITDA of $6.29 million, indicating a marginal year-over-year increase.
Furthermore, ANIK’s income from operations amounted to $161 thousand compared to a loss of $3.63 million in the previous year’s quarter.
Analysts predict ANIK’s revenue for the fiscal fourth quarter ending December 2024 to increase 5.8% year-over-year to $45.45 million. Its EPS for the same quarter is expected to grow 530% from the prior year’s quarter to $0.32. Moreover, the company surpassed consensus revenue estimates in all four trailing quarters.
The stock has gained 7.2% over the past six months and 20% over the past nine months to close the last trading session at $25.29.
ANIK’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.
ANIK has a B Growth and Stability. It is ranked #23 out of 639 stocks in the Biotech industry.
In addition to the POWR Ratings we’ve stated above, we also have ANIK ratings for Momentum, Value, Sentiment, and Quality. Get all ANIK ratings here.
Stock #1: SIGA Technologies, Inc. (SIGA)
With a market capitalization of $854.29 million, SIGA is a commercial-stage pharmaceutical firm focused on health security, including countermeasures for biological, chemical, radiological, and nuclear threats. Its lead product, TPOXX, is an antiviral drug available in oral and IV forms for treating human smallpox disease.
On July 19, SIGA announced that the U.S. Department of Health and Human Services had exercised a $113 million procurement option for oral TPOXX® treatment courses. The substantial order builds on 2023’s orders from the U.S. government and 15 international customers.
The consistent support from government and international customers could enhance SIGA’s market position and credibility, paving the way for continued innovation and readiness against biological threats.
On June 17, SIGA announced an agreement to expand access to TPOXX (tecovirimat) across the ASEAN member states, a political and economic union in Southeast Asia. The agreement would help SIGA establish a presence in a densely populated area and lay the foundation for future developments.
SIGA’s total revenue for the fiscal 2024 second quarter, which ended June 30, 2024, amounted to $21.81 million, showing a 270.9% year-over-year growth. The company’s net income and EPS were $1.83 million or $0,03 per share, compared to a loss of $2.87 million and $0.04 in the previous year’s quarter.
SIGA’s revenue and EPS for the fiscal year ending December 2024 are expected to increase 14.7% and 6.3% year-over-year to $160.46 million and $1.01, respectively.
The stock has gained 52.5% over the past three months and 142.3% over the past nine months to close the last trading session at $11.97.
SIGA’s positive fundamentals are mirrored in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system.
SIGA has an A grade for Value and Quality and a B for Growth. It is ranked #14 out of 362 stocks in the Biotech industry.
Beyond what we stated above, we also have given SIGA grades for Momentum, Stability, and Sentiment. Get all the SIGA ratings here.
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SIGA shares fell $11.97 (-100.00%) in premarket trading Thursday. Year-to-date, SIGA has gained 113.75%, versus a 15.12% 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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