Amidst a globally aging population and escalating healthcare spending due to increased infectious and chronic diseases, the demand for advanced healthcare solutions remains strong. So, I think robust biotech stocks Genmab A/S (GMAB), Jazz Pharmaceuticals plc (JAZZ), and Exelixis, Inc. (EXEL) could be ideal additions to elevate one’s portfolio.
The biotech landscape is witnessing a transformative shift driven by significant progress in genetics, a rise in collaborative initiatives among life sciences companies, and a notable surge in the utilization of digital assessment and treatment methods.
The expansion of healthcare infrastructure in emerging countries and the rapid growth of healthcare facilities are also boosting the industry. Moreover, shift towards personalized and targeted therapies, especially in the treatment of cancer and rare diseases, is driving the demand for biotech products and services.
The global biotechnology market is expected to grow at a CAGR of 12.8% until 2030.
Additionally, advancements in the field of genomics and gene editing technologies are paving the way for a myriad of groundbreaking possibilities within the realm of healthcare. The strides made in these scientific domains are not only fostering the growth of personalized medicine but are also unlocking novel avenues in the development of gene therapies and targeted drugs.
This year, the global genomics market is projected to reach an estimated value of $32.65 billion. The market is projected to grow at a CAGR of 16.5% from 2024 to 2030.
Furthermore, Artificial Intelligence (AI) significantly benefits the biotech industry by expediting drug discovery through data analysis, enabling personalized medicine by interpreting individual patient data, optimizing bioprocessing for efficient manufacturing, and enhancing clinical trial design.
The integration of AI fosters innovation, reduces costs, and improves the precision of healthcare solutions, contributing to the overall advancement of the biotech sector. As a result, the AI in biotechnology market share is expected to grow at a 29.7% CAGR until 2032.
Considering these conducive trends, let’s examine the fundamentals of the three Biotech stock picks, beginning with the third choice.
Stock #3: Genmab A/S (GMAB)
Headquartered in Copenhagen, Denmark, GMAB develops antibody therapeutics for treating cancer and other diseases, primarily in Denmark. The company’s offerings include DARZALEX, a human monoclonal antibody; teprotumumab for treating thyroid eye disease; and Amivantamab for advanced or metastatic gastric or oesophageal cancer.
On December 9, 2023, GMAB and AbbVie Inc. (ABBV) announced promising results from the EPCORE™ NHL-1 clinical trial of epcoritamab, a subcutaneously administered T-cell engaging bispecific antibody. In R/R follicular lymphoma patients, the treatment showed an overall response rate of 82%, a complete response rate of 63%, and minimal residual disease negativity rate of 67%.
These findings were presented at the 2023 ASH Annual Meeting, suggesting epcoritamab's potential as an alternative treatment option for this challenging patient population.
GMAB’s revenue for the third quarter that ended September 30, 2023, increased 16.1% year-over-year to DKK4.74 billion ($684.11 million). Its operating profit came in at DKK1.72 billion ($248.24 million). Also, the company’s net profit and net profit per share came in at DKK2.13 billion ($307.42 million) and DKK32.32, respectively.
GMAB revised its fiscal year 2023 financial guidance, adjusting the lower end of its revenue and operating expenses due to increased total royalty revenues from DARZALEX and other marketed products, along with heightened and expedited investments in epcoritamab clinical trials and the advancement of other pipeline products.
The updated guidance ranges from DKK15.90 billion ($2.29 billion) to DKK16.50 billion ($2.38 billion) for revenue. The projected operating profit is now expected to be between DKK4.80 billion ($692.77 million) and DKK5.75 million ($829.89 million).
Analysts expect GMAB’s EPS for the fiscal fourth quarter ending December 2023 to increase 143.8% year-over-year to $0.31. Its revenue for the quarter ending March 31, 2024, is expected to increase 34.7% year-over-year to $567.17 million. The company has surpassed the consensus revenue estimates in three of the trailing four quarters, which is remarkable.
Shares of GMAB have gained 1.5% over the past month to close the last trading session at $31.92.
GMAB’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted optimally.
GMAB has a B grade for Sentiment, Value, and Quality. It is ranked #18 in the 348-stock Biotech industry.
In addition to the POWR Ratings highlighted above, one can access GMAB’s ratings for Stability, Momentum, and Growth here.
Stock #2: Jazz Pharmaceuticals plc (JAZZ)
Headquartered in Dublin, Ireland, JAZZ identifies, develops, and commercializes pharmaceutical products for unmet medical needs. The company has a portfolio of products and product candidates focusing on neuroscience, including sleep medicine, movement disorders, and oncology.
On November 14, JAZZ and Autifony Therapeutic entered an exclusive global licensing agreement for up to $770.5 million. Autifony will spearhead drug discovery and preclinical development for two ion channel targets associated with neurological disorders. After successful preclinical development, JAZZ will lead clinical development, manufacturing, regulatory activities, and commercialization.
This collaboration aims to leverage Autifony's expertise in ion channel drug discovery and JAZZ's track record in advancing neuroscience programs to benefit patients across various indications.
JAZZ’s total revenues for the fiscal third quarter that ended September 30, 2023, increased 3.3% year-over-year to $972.14 million. Its non-GAAP net income came in at $340.15 million. The company’s income from operations rose 596.2% year-over-year to $172.39 million. Moreover, its adjusted earnings per share stood at $4.84.
JAZZ updated its non-GAAP financial guidance for the fiscal year 2023. With a gross margin of 93%, its net income is projected to be in the range of $1.29 billion to $1.34 billion, resulting in a net income per share of $18.15 to $19.
Street expects JAZZ’s revenue for the quarter ending December 31, 2023, to increase 4.3% year-over-year to $1.01 billion. Its EPS for the quarter ending March 31, 2024, is expected to increase 9.4% year-over-year to $4.32.
The stock soared marginally intraday, closing the last trading session at $121.26.
JAZZ’s POWR Ratings reflect this positive outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has an A grade for Value and a B for Growth and Quality. Within the same industry, it is ranked #14.
To see the other JAZZ ratings for Momentum, Stability, and Sentiment, click here.
Stock #1: Exelixis, Inc. (EXEL)
EXEL is a biotech firm specializing in oncology. The company develops and commercializes cancer treatments, including CABOMETYX and COMETRIQ. Its pipeline includes promising drugs like zanzalintinib and XL102.
On November 10, EXEL reported encouraging results from the STELLAR-001 trial’s expansion cohort, showing a 38% objective response rate in patients with previously treated clear renal cell carcinoma.
Zanzalintinib demonstrated effectiveness, particularly in those who had progressed on prior treatments, including cabozantinib. The safety profile was consistent across different solid tumors. Ongoing STELLAR trials aim to explore zanzalintinib’s potential in kidney cancer and other advanced solid tumors.
On the same day, EXEL and Arcus Biosciences Inc. (RCUS) entered into a clinical trial collaboration for STELLAR-009, a phase 1b/2 trial evaluating zanzalintinib (EXEL’s next-generation tyrosine kinase inhibitor) in combination with AB521 (RCUS' HIF-2⍺ inhibitor) for patients with advanced solid tumors, including clear cell renal cell carcinoma (ccRCC).
The combination aims to inhibit cancer cell proliferation and tumor angiogenesis, potentially offering improved outcomes. Patient enrollment for STELLAR-009 is expected to begin by the end of 2023, representing a collaborative effort to advance treatment options, particularly in kidney cancer.
During the fiscal third quarter (ended September 30, 2023), EXEL’s total revenues increased 14.6% year-over-year to $471.92 million. Its non-GAAP net income and net income per share stood at $32.10 million and $0.10, respectively. For the nine months ended September 30, EXEL generated total revenues of $1.35 billion, up 13.8% year-over-year.
EXEL updated financial guidance for the fiscal year 2023, projecting total revenues between $1.825 billion and $1.850 billion, with net product revenues estimated at $1.625 billion to $1.650 billion.
For the fiscal first quarter ending March 2024, EXEL’s revenue and EPS are expected to grow 18.6% and 61.1% from the year-ago quarter to $484.60 million and $0.19, respectively.
Shares of EXEL returned 39.8% over the past year and 37.5% year-to-date to close the last trading session at $22.05.
EXEL’s POWR Ratings reflect this solid outlook. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
EXEL has an A grade for Value and Quality and a B for Growth. Within the same industry, it is ranked #6.
Click here for EXEL’s additional Momentum, Stability, and Sentiment ratings.
What To Do Next?
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GMAB shares were trading at $30.16 per share on Tuesday morning, down $1.76 (-5.51%). Year-to-date, GMAB has declined -28.83%, versus a 22.11% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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