Biotechnology is at the forefront of a paradigm shift in healthcare, combining cutting-edge technology with biological processes to create transformative solutions. However, I think fundamentally weak biotech stocks Alpine Immune Sciences, Inc. (ALPN), Kura Oncology, Inc. (KURA), and Blueprint Medicines Corporation (BPMC) might be best avoided now.
The growth of the biotechnology market is driven by advancements in genomic technologies and molecular biology techniques, which have unlocked new avenues for drug discovery, personalized medicine, and agricultural improvements. Therefore, the global biotechnology market is projected to hit $5.81 trillion by 2033, growing at a CAGR of 14%.
Also, biotech companies are increasingly embracing trends like AI, machine learning, data analytics, and automation to optimize their production processes. The global AI in the biopharmaceutical market is projected to total $14.07 billion by 2032, exhibiting a CAGR of 32.3%.
However, navigating the exciting world of biotech in the medical field also requires careful consideration of ethical and regulatory challenges. Maintaining patient safety, equitable access, and responsible development are still of utmost importance.
Given these factors, let’s look at the fundamentals of the three Biotech stocks, beginning with the third choice.
Stock #3: Alpine Immune Sciences, Inc. (ALPN)
ALPN is a clinical-stage biopharmaceutical company that focuses on the discovery and development of immunotherapies through protein engineering technologies for treating autoimmune and inflammatory diseases.
ALPN’s trailing 12-month gross profit margin of negative 37.41% compares to the 56.59% industry average. Likewise, the stock’s trailing 12-month EBIT margin of negative 75.16% unfavorably compares to the 0.65% industry average.
During the fiscal year that ended December 31, 2023, ALPN’s operating expenses increased 16.9% year-over-year to $103.13 million. It reported a loss from operations of $44.25 million. Further, the company’s net loss came in at $32.18 million, or $0.64 per share, respectively.
Analysts expect ALPN’s loss per share to widen 42.3% year-over-year to $0.40 for the first quarter that ended March 2024. Its revenue is expected to decrease 62.5% year-over-year to $3.52 million for the same quarter.
The stock has gained marginally intra-day to close its last trading session at $64.60.
ALPN’s POWR Ratings reflect this bleak outlook. The stock has an overall D rating, equating to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
ALPN has a D grade for Stability and Sentiment. It is ranked #195 among 360 stocks in the F-rated Biotech industry.
In addition to the POWR Ratings stated above, ALPN’s rating for Value, Quality, Momentum, and Growth can be accessed here.
Stock #2: Blueprint Medicines Corporation (BPMC)
BPMC is a precision therapy company that develops medicines for genomically defined cancers and blood disorders in the United States and internationally.
BPMC’s trailing-12-month EBIT margin of negative 194.99% is lower than the industry average of 0.65%. Also, its trailing-12-month levered FCF margin of negative 96% is lower than the industry average of 0.79%.
BPMC’s revenues for the fourth quarter ended December 31, 2023, stood at $71.03 million. It reported a net loss of $110.92 million, or $1.82 per share, respectively. Also, as of December 31, 2023, the company’s cash and cash equivalents were $767.17 million, compared to $1.08 billion as of December 31, 2022.
Analysts expect BPMC to report a loss per share of $1.65 for the first quarter that ended March 2024. For the fiscal year 2024, the company is expected to incur a loss of $5.54 per share.
Shares of BPMC have surged 13.6% over the past three months to close the last trading session at $94.86.
BPMC’s weak fundamentals are reflected in its POWR Ratings. The stock has an overall D rating, which equates to a Sell in our proprietary rating system.
The stock has an F grade in Stability. BPMC is ranked #192 in the same industry.
For additional POWR Ratings of BPMC (Growth, Value, Sentiment, Quality, and Momentum), click here.
Stock #1: Kura Oncology, Inc. (KURA)
KURA is a clinical-stage biopharmaceutical company that develops medicines for the treatment of cancer. The company's pipeline consists of small-molecule product candidates that target cancer.
On April 22, 2024, KURA announced that its investigational drug, ziftomenib, had been granted Breakthrough Therapy Designation (BTD) by the U.S. Food and Drug Administration (FDA) for the treatment of patients with relapsed/refractory (R/R) NPM1-mutant acute myeloid leukemia (AML).
KURA’s trailing-12-month ROTC of negative 24.42% compares to the industry average of negative 20.89%. Also, its trailing-12-month ROTC of negative 34% compares to the industry average of the negative 29.80%.
For the fourth quarter that ended December 31, 2023, KURA’s net loss worsened by 29.2% year-over-year to $42.79 million. Its net loss per share widened 12.2% from the prior year’s quarter to $0.55. Also, as of December 31, 2023, the company’s long-term liabilities rose to $16.40 million, compared to $11.97 million as of December 31, 2022.
Street expects KURA’s loss per share to increase 7.5% year-over-year to $0.54 for the first quarter that ended March 2024. Similarly, the company’s loss per share is expected to widen by 4.3% year-over-year to $0.55 for the second quarter ending June 2024.
KURA’s stock has declined 4.9% over the past month to close the last trading session at $20.28.
It’s no surprise that KURA has an overall rating of D, which translates to a Sell in our POWR Ratings system.
KURA has a D grade for Growth, Momentum, and Stability. It is ranked #166 in the same industry.
Click here to see the POWR Ratings of KURA for Value, Sentiment, and Quality.
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ALPN shares rose $0.10 (+0.15%) in premarket trading Thursday. Year-to-date, ALPN has gained 239.45%, versus a 6.31% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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