With the resurgence of COVID-19 cases worldwide, fueled by the rapid spread of the virus’ Delta variant, the pharmaceutical industry is again in the spotlight. This, along with the growing need for personalized therapies and the treatment of rare diseases, has significantly improved the industry's growth prospects. Investors’ interest in pharmaceutical stocks is evidenced by the Invesco Dynamic Pharmaceuticals ETF’s (PJP) 15.1% returns year-to-date.
Also, the growing use of advanced technologies and artificial intelligence to accelerate drug discovery and provide life-transforming treatments should further propel the industry’s growth. Consequently, the global pharmaceuticals market is expected to hit $1,700.97 billion in 2025, growing at an 18% CAGR.
Therefore, we think under-the-radar pharmaceutical stocks Catalyst Pharmaceuticals, Inc. (CPRX), Kamada Ltd. (KMDA), and Opiant Pharmaceuticals, Inc. (OPNT), which have increased their R&D spending significantly, are well-positioned to continue rallying. Hence, it could be wise to bet on these stocks now.
Click here to checkout our Healthcare Sector Report for 2021
Catalyst Pharmaceuticals, Inc. (CPRX)
A commercial-stage biopharmaceutical company, CPRX in Coral Gables, Fla., provides novel, safe, and efficient therapies to patients with chronic neuromuscular and neurological diseases. The company is developing Firdapse to treat patients with the lambert-eaton myasthenic syndrome (LEMS). In addition, it has collaborations with Endo Ventures Limited for the development and commercialization of generic Sabril tablets.
In July, the United States Patent and Trademark Office (USPTO) issued a new U.S patent to CPRX for Firdapse Tablets 10mg. This new patent should further enhance its intellectual property protection for Firdapse and help it strengthen its brand.
In June, CPRX entered an exclusive license and supply agreement with DyDo Pharma, Inc. to develop and commercialize Firdapse Tablets 10mg in Japan to treat LEMS. This collaboration should allow CPRX to address the unmet medical needs of its patients and grow its sales milestones for Firdapse.
During the second quarter, ended June 30, 2021, CPRX’s total revenues increased 23% year-over-year to $36.4 million. Its Firdapse product revenue grew 14% from the prior-year quarter to $33.6 million. Also, the company’s operating income increased 54% year-over-year to $15.84 million. CPRX’s net income increased 24.6% year-over-year to $12.18 million.
Analysts expect CPRX’s revenue for its fiscal year 2021 to be $134.8 million, representing 13.20% year-over-year growth. CPRX has an impressive earnings surprise history; it beat the consensus EPS estimates in three of the trailing four quarters. The company’s EPS is expected to increase 10.30% for the next year. Also, the stock has surged 67.4% in price over the past year and 38.7% over the past six months.
CPRX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
CPRX has a Value grade of A, and a Quality grade of B. Within the Medical-Pharmaceuticals industry, it is ranked #32 of 215 stocks. In addition, we have graded CPRX for Momentum, Growth, Sentiment, and Stability. Click here to access all CPRX’s ratings.
Kamada Ltd. (KMDA)
Based in Rehovot, Israel, KMDA offers specialty plasma-derived protein therapeutics. It operates through Proprietary Products and Distribution segments. The company markets its products through strategic partners in the U.S as well as through distributors internationally. KMDA has partnerships with Takeda Pharmaceutical Company Ltd., PARI GmbH, and Kedrion Biopharma.
In June, KMDA and Kedrion announced the FDA’s approval of KEDRAB, the first and only human rabies immune globulin (HRIG). KMDA believes that this approval will support the increase of KEDRAB’s market share in the United States. It could also help the company capture a notable portion of the estimated annual $150 million U.S. HRIG product market.
KMDA’s cash and cash equivalent increased 19.2% year-over-year to $68.42 million in the second quarter, ended June 30, 2021. Its total revenues stood at $24.2 million, while its gross profit came in at $9.1 million. Also, the company’s adjusted EBITDA totaled $2.4 million, while its net income stood at $0.9 million for the quarter.
The company’s EPS is expected to increase 20% year-over-year to $0.12 next year.
KMDA’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary ratings system. KMDA is also rated an A in Value, and a B in Stability. In the same industry, it is ranked #24.
To see additional POWR Ratings for Sentiment, Momentum, Quality, and Growth for KMDA, click here.
Opiant Pharmaceuticals, Inc. (OPNT)
OPNT, which is based in Santa Monica, Calif., is a specialty pharmaceutical company that produces medicines for addiction and drug overdose. The company offers NARCAN nasal spray, a treatment to reverse opioid overdose. In addition, it provides medicines for the treatment of alcohol use disorder, acute cannabinoid overdose, and opioid use disorders.
In July, the company announced positive top-line results from its confirmatory pharmacokinetic study for OPNT003 to treat opioid overdose. The study is consistent with the findings of OPNT’s initial pilot study and demonstrates the company’s efforts to reduce the number of opioid overdose deaths.
In the second quarter, ended June 30, 2021, OPNT’s revenue increased 79.4% year-over-year to $11.3 million, driven primarily by NARCAN Nasal Spray royalties. Its net income came in at $1.68 million, versus a $0.22 million net loss in the second quarter of 2020. The company’s EPS came in at $0.31, compared to a $0.05 loss per share in the prior-year period.
OPNT’s revenue for its fiscal year 2021 is estimated to be $37 million, indicating a 24.9% improvement year-over-year. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in three of the trailing four quarters. OPNT’s stock has gained 86% in price over the past nine months and 90.2% year-to-date.
It is no surprise that OPNT has an A grade for Sentiment, and a B for Value. In the same industry, it is ranked #34.
In total, we rate OPNT on eight different levels. Beyond what we’ve stated above, we have also given OPNT grades for Growth, Quality, Momentum, and Stability. Get all the OPNT ratings here.
Click here to checkout our Healthcare Sector Report for 2021
CPRX shares were trading at $5.58 per share on Wednesday morning, down $0.01 (-0.18%). Year-to-date, CPRX has gained 67.07%, versus a 20.69% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization.
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