The biopharmaceutical industry seems optimistic as it enters 2024 with surging demand for new drugs, particularly for obesity and Alzheimer’s. Hence,  quality biotech stocks, Theratechnologies Inc. (THTX), Equillium, Inc. (EQ), and BioMarin Pharmaceutical Inc. (BMRN) could be ideal investments with solid growth prospects.

U.S. lawmakers are reportedly concerned about America’s biotech lag behind China, citing risks to national security and commerce. As a result, the Biden administration has put forward a “whole-of-government approach” to advance biotechnology and biomanufacturing that is important for health, climate change, energy, food security, agriculture and supply chain resilience.

Moreover, the focus on competition with China has the potential to galvanize and strengthen the US biotech industry, positioning it for continued success and leadership on the global stage.

Besides, the surge in chronic diseases drives demand for drugs and vaccines, boosting the biotechnology market. Moreover, increased investment in medical R&D is a notable trend in the sector. Artificial intelligence and machine learning are also boosting the drug development and personalized medicine sector.

The global biotech industry is expected to reach $465.90 billion this year. Looking ahead, the global biotechnology market is expected to reach $5.01 trillion by 2032 at a CAGR of 13.8%.

Furthermore, investors’ keenness on biotech stocks is evident from the iShares Nasdaq Biotechnology Index Fund’s (IBB) impressive 15.8% returns over the last three months.

With these favorable trends in mind, let’s delve into the fundamentals of the three Biotech stock picks.

Stock #3: Theratechnologies Inc. (THTX)

Headquartered in Montreal, Canada, THTX is a biopharmaceutical company focused on developing and commercializing various therapies addressing unmet medical needs. The company commercializes two medicines in Human Immunodeficiency Viruses (HIV) and has research programs in Non-Alcoholic Steatohepatitis (NASH), Oncology, and HIV.

THTX’s revenue has grown at a CAGR of 7.4% and 12.6% over the past three and five years, respectively.

On February 30, 2024, THTX announced that it had completed enrollment of the first six participants in Part 3 of its Phase 1 clinical trial for sudocetaxel zendusortide, an innovative therapy for advanced ovarian cancer.

The company aims to enhance safety and efficacy through dose optimization. This development marks a significant advancement in its’ oncology clinical program.

In the fiscal fourth quarter that ended November 30, 2023, THTX’s revenue increased 9.5% year-over-year to $23.45 million. Adjusted EBITDA stood at $4.96 million, compared to a negative $2.91 million in the prior-year quarter.

As of November 30, 2023, the company held $34.10 million in cash, along with $6.29 million in bonds and money market funds.

Street expects THTX’s revenue to come in at $21.44 million for the fiscal second quarter, ending May 2024, up 21.4% year-over-year. Its EPS is expected to grow 68.3% for the same quarter.

The stock has gained 54.3% over the past six months to close the last trading session at $1.64.

THTX’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

The stock has an A grade for Growth and a B for Value and Sentiment. It is ranked #19 in the 393-stock Biotech industry.

Beyond what is stated above, we’ve also rated THTX for Quality, Momentum and Stability. Get all THTX ratings here.

Stock #2: Equillium, Inc. (EQ)

EQ is a clinical-stage biotechnology company that develops and sells products to treat severe autoimmune and inflammatory or immuno-inflammatory disorders with unmet medical needs.

In December, EQ completed EQ101’s Phase 2 study, one of its multi-cytokine programs, which includes EQ101 for alopecia areata and EQ102 for celiac disease, along with a new program, EQ302. Results are awaited by this year’s end.

The company has raised its total assets at a CAGR of 53.8% over the past five years.

In the fiscal third quarter that ended September 30, 2023, EQ’s revenue stood at $8.87 million, while its total operating expenses declined 5.6% from the year-ago quarter to $12.49 million.

For the nine months that ended September 30, 2023, its cash and cash equivalents increased 33.6% year-over-year to $34.38 million.

EQ’s revenue is expected to rise 2.7% year-over-year in the fiscal year that ended December 2023. Its EPS is expected to grow 77.6% year-over-year for the current year. It surpassed revenue estimates in each of the four trailing quarters, which is notable.

The stock has returned 408% over the past three months to close the last trading session at $2.54. It has soared 159.2% over the past year.

EQ’s POWR Ratings reflect this solid outlook. The stock has an overall B rating, equating to Buy in our proprietary rating system.

EQ also has a B grade for Growth, Value, Sentiment, and Quality. It is ranked #17 in the same industry.

To access EQ’s additional POWR Ratings for Stability and Momentum, click here.

Stock #1: BioMarin Pharmaceutical Inc. (BMRN)

BMRN develops and commercializes therapies for people with serious and life-threatening rare diseases and medical conditions. The company’s commercial products include Vimizim, Naglazyme, Kuvan, Palynziq, Brineura, Roctavian, Aldurazyme, and Voxzogo.

In November, BMRN finalized an agreement with the German National Association of Statutory Health Insurance Funds (GKV-SV) regarding reimbursement for ROCTAVIAN® (valoctocogene roxaparvovec-rvox), the first gene therapy for severe hemophilia A in Germany.

This agreement covers about 90% of the German population, helping BMRN expand its presence.

BMRN’s revenue and EBITDA have grown at a CAGR of 9.2% and 174% over the past three and five years, respectively.

During the fiscal fourth quarter that ended December 31, 2023, BMRN’s revenues increased 20% year-over-year to $646.20 million. It reported a non-GAAP income of $94.90 million, up 50.4% from the previous-year quarter. The company’s non-GAAP EPS rose 48.5% year-over-year to $0.49.

Analysts expect BMRN’s EPS for the fiscal first quarter (ending March 2024) to increase 15.8% year-over-year to $0.69. The company’s revenue is estimated to grow 10.9% year-over-year to $661.26 million. It has surpassed the consensus EPS estimates in three of the trailing four quarters.

Over the past three months, the stock has gained 3.2%, closing the last trading session at $91.24. It surged 1.4% intraday.

BMRN’s rosy fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.

BMRN has an A grade for Growth and a B in Value. It is ranked #15 in the same industry.

Click here to access the additional BMRN ratings (Momentum, Quality, and Sentiment Stability).

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BMRN shares were trading at $90.18 per share on Monday morning, down $1.06 (-1.16%). Year-to-date, BMRN has declined -6.47%, versus a 7.00% 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. More...

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