The biotechnology industry has rightfully received a huge amount of attention from investors this year thanks to the pandemic. For the development of a COVID-19 vaccine or a treatment, record-breaking investments have already been made in this industry by both government and private organizations. In addition, the demand for new drugs and treatments is increasing due to a renewed focus on the industry.
The SPDR S&P Biotech ETF (XBI), which is an indicator of the performance of biotechnology and stocks, has gained more than 78.8% since hitting its low in mid-March. This compares to the S&P 500’s 39.7% return over the same period.
The industry still has immense growth potential. According to a Fior Markets report, the global biotechnology market is expected to grow at a CAGR of 7.02% from $447.92 billion in 2019 to $ 833.34 billion by 2027.
Amgen, Inc. (AMGN)
AMGN is one of the world’s leading independent biotechnology companies with a focus on developing human therapeutic medication for the treatment of cardiovascular, oncology, and neuroscience related diseases.
On October 8th, AMGN, Cytokinetics (CYTK), and Servier announced positive topline results from GALACTIC-HF, a Phase 3 pivotal clinical trial of omecamtiv mecarbil in patients with heart failure with reduced ejection fraction (HFrEF).
On October 5th, the company announced positive topline Phase 2 results from the CodeBreaK 100 clinical study, evaluating sotorasib (proposed INN for AMG 510) in 126 patients with KRAS G12C-mutant advanced non-small cell lung cancer (NSCLC), who had failed a median of two prior lines of anti-cancer therapies (immunotherapy and/or chemotherapy).
In September 2020, the company had entered into a global antibody manufacturing collaboration with Eli Lilly and Company (LLY) to significantly increase the supply capacity available for Lilly’s potential COVID-19 therapies. This would allow the two companies to generate profits from scaled up production and supply.
AMGN reported a 6% year-over-year increase in total revenues to $6.2 billion for the second quarter ending June 2020. EPS increased 7% from the year-ago value to $4.25, surpassing the consensus estimates by 11.3%.
Analysts expect the company’s revenue to grow 11.6% for the quarter that ended September 2020 and 8.8% in the current year. EPS is expected to grow 2.7% for the last completed quarter and 5.7% in the current year. Also, the market expects the EPS to grow at a rate of 7.2% per annum over the next five years. For the second quarter ending in June, the company had $2.8 million in cash from operations and generated $4.56 million in free cash flow.
AMGN has gained around 35% since hitting its 52-week low in mid-March. The stock hit its 52-week high of $264.97 in July.
How does AMGN stack up for the POWR Ratings?
A for Trade Grade
B for Buy & Hold Grade
A for Peer Grade
B for Overall POWR Rating.
It is also ranked #1 out of 384 stocks in the Biotech industry.
Immunomedics, Inc. (IMMU)
IMMU is a leading biopharmaceutical company developing monoclonal antibody-based products for targeted cancer treatment. It recently transitioned from a research and development organization into a fully-integrated global biopharmaceutical company.
Its pipeline comprises six clinical stage product candidates. In September, Gilead Sciences (GILD) announced that it has entered into an acquisition agreement with IMMU for $21 billion, which is expected to close by the fiscal fourth quarter that ended December 2020.
On October 12th, the company announced that the Office of Orphan Products Development of the U.S. Food and Drug Administration (FDA) has granted Trodelvy orphan status for the treatment of adult and pediatric patients with glioblastoma. “This orphan drug designation is an important milestone for Immunomedics as we strive to broaden the clinical utility of Trodelvy,” said Dr. Loretta M. Itri, Chief Medical Officer of IMMU. Orphan drug status is granted by the FDA to support development of drugs and biologics for underserved patient populations, or rare disorders.
IMMU’s product Trodelvy has garnered $20.1 million in sales over the first two months of its commercial launch in April. The company’s revenue is expected to grow 173.8% for the next year. The company maintained a strong liquidity position of $987.5 million at the end of the second quarter. The market expects the company’s EPS to grow 49% in the third quarter that ended September 2020.
Revenue growth over the past 12 months for IMMU came in at 6,804.75%, a number that beats 99.77% of the US stocks in the StockNews.com universe. IMMU has gained around 877% since hitting its 52-week low in April.
IMMU’s strong fundamentals are reflected in its POWR Ratings. It is rated “Strong Buy” with a grade of “A” in Trade Grade, Buy & Hold Grade, and Peer Grade. In the 384-stock Biotech industry, IMMU is ranked #4.
Seattle Genetics, Inc. (SGEN)
SGEN is a global biotechnology company that discovers, develops, and commercializes transformative cancer medicines to make a meaningful difference in people’s lives. Its lead lymphoma drug, ADCETRIS, has been performing quite well since its launch, and it is the primary growth driver for the company. The drug’s label was also expanded, providing more revenue to the company. SGEN has been collaborating with Takeda, a Japanese pharmaceutical company, for the global development and commercialization of Adcetris.
In addition to Adcetris, the company has a promising pipeline of drug candidates for its antibody-drug conjugate (ADC) technology. SGEN’s Padcev drug, created in collaboration with Astellas Pharma, is used to treat bladder cancer and another product, Tukysa, is a breast cancer drug. On October 12th, SGEN and Astellas Pharma Inc. announced positive topline results from the second cohort of patients in the pivotal phase 2 single-arm clinical trial known as EV-201.
In mid September, SGEN entered into a collaboration with Merck (MRK) to co-develop and commercialize Antibody-Drug Conjugate Ladiratuzumab Vedotin, and for Merck to acquire a $1 Billion equity Stake in Seattle Genetics common stock. Separately, Seattle Genetics has granted MRK an exclusive license to commercialize Tukysa.
SGEN’s revenues increased 27.5% year-over-year to $ 278 million in the second quarter that ended June 2020. This increase was mainly due to 51% growth in its net product sales where its two products (PADCEV and TUKYSA) started generating revenue and earned $57.2 million and $15.8 million, respectively. ADCETRIS, which is already generating income, saw its revenue grow by 5%. Additionally, royalty revenues also grew by almost 34%.
The company’s revenue is expected to grow 86.3% for the quarter ended September 2020 and 67% for the current year. The market expects the company’s EPS to grow 72.2% in the quarter that ended September 2020 and 39.1% in the current year. Additionally, EPS is expected to grow at 23% per annum for the next five years.
SGEN has gained almost 157% since hitting its 52-week low in mid-March. Currently the stock is trading close to its 52-week high of $213.94.
SGEN’s strong fundamentals are reflected in its POWR Ratings. It is rated “Strong Buy” with a grade of “A” for Trade Grade, Buy & Hold Grade, and Peer Grade. In the 384-stock Biotech industry, SGEN is ranked #2.
Genmab A/S (GMAB)
GMAB, founded in 1999 in Copenhagen, Denmark, is a dual-listed, international biotechnology company specializing in the creation and development of differentiated antibody therapeutics for the treatment of cancer. With the help of its own cutting-edge scientific capabilities, innovative scientific approach, translational medicine, laboratory expertise and strategic partnerships, the company has a robust pipeline of differentiated product candidates that are at the forefront of the industry.
The company has four created and approved products, four proprietary Genmab technologies, 21 Genmab created products in clinical development, and around 20 in-house and partnered pre-clinical programs. On October 13th, GMAB announced that worldwide net trade sales of one of its products DARZALEX (daratumumab), including sales of the subcutaneous formulation (sold under the trade name DARZALEX FASPROTM in the U.S.), as reported by Johnson & Johnson (JNJ) stood at $1.2 billion in the third quarter ending September 2020.
Net trade sales were $585 million in the United States and $514 million in the rest of the world. GMAB receives royalties on the worldwide net sales of DARZALEX and DARZALEX FASPRO under the exclusive worldwide license to Janssen Biotech, Inc. to develop, manufacture and commercialize the product.
The company’s revenue is expected to grow 48.4% for the quarter ended September 2020 and 85.7% for the current year. The market expects the company’s EPS to grow 105.9% in the current year. GMAB has gained almost 135% since hitting its 52-week low in mid-March. Currently the stock is trading close to its 52-week high price of $38.87.
GMAB’s strong fundamentals are reflected in its POWR Ratings. It has a “Strong Buy” rating with a grade of “A” for Trade Grade, Buy & Hold Grade, and Peer Grade. In the 384-stock Biotech industry, GMAB is ranked #3.
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AMGN shares were trading at $237.65 per share on Wednesday afternoon, down $1.69 (-0.71%). Year-to-date, AMGN has gained 0.62%, versus a 9.65% rise in the benchmark S&P 500 index during the same period.
About the Author: Madhavi Taneja
Madhavi is a seasoned financial analyst with a focus in valuing early-stage technology companies and evaluating potential mergers and acquisitions. After majoring in economics, she developed a deep understanding of investment strategies while working with EX Service. More...
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