EXEL: 2 Buy-Rated Biotech Stocks Fighting Cancer

With the onset of the COVID-19 pandemic, the biotech industry’s focus shifted almost myopically to fighting against the virus. And by so doing, the industry has done well for investors, as reflected in iShares Nasdaq Biotechnology ETF’s (IBB) 55.9% return over the past year. However, now that the ongoing nationwide vaccination drive has kicked-started a potentially turbo-charged economic recovery this year, other areas of focus by the sector–cancer therapies in particular–have been showing signs of improvement.

The cancer-therapy market has been gaining traction with increasing demand for personalized medicines. The size of the market is expected to grow significantly over the next few years. In 2020, more than 1.8 million people were diagnosed with the disease in the U.S. The global cancer therapy market, which was valued at approximately $158 billion in 2020, is expected to grow at a CAGR of 9.2% by 2026.

Furthermore, the increase in cancer research, funding initiatives and technological advancements, together with increasing FDA approvals, have been further improving the prospects of that therapy segment. Consequently, we think Exelixis, Inc. (EXEL) and Jounce Therapeutics, Inc. (JNCE), which possess state-of-the-art research and development facilities, could witness significant gains in the near term.

Click here to checkout our Healthcare Sector Report for 2021

Exelixis, Inc. (EXEL)

EXEL is an oncology-focused biotechnology company that is focused on discovering, developing and commercializing new medicines for treating cancers. The company’s primary products include CABOMETYX tablets and COMETRIQ capsules for the treatment of advanced kidney cancer and metastatic medullary thyroid cancer. A third product, COTELLIC, helps in treating advanced melanoma.

In January, EXEL announced that the FDA had approved its supplemental New Drug Application (sNDA) for CABOMETYX in combination with Bristol Myers Squibb’s (BMS) OPDIVO as a first-line treatment of patients with advanced Renal Cell Carcinoma (RCC).

And last month, EXEL and Adagene forged an agreement in which EXEL will utilize Adagene’s SAFEbody technology platform to develop Novel Masked ADC Therapies with improved safety and efficacy profiles.

3 STOCKS TO DOUBLE THIS YEAR

EXEL’s total revenues have increased 12.4% year-over-year to $270.05 million in the fourth quarter, ended December 31. Its total revenues for the quarter included net product revenues, license revenues and collaboration services revenues of $200.35 million, $53.98 million and $15.72 million, respectively.

Analysts expect EXEL’s revenues to increase 23.3% year-over-year to $1.22 billion in its fiscal year 2021 (ending December 31). Its EPS for the current year is expected to improve 20% from the previous year to $0.42. The company has an impressive earnings surprise history; it beat consensus Street estimates in three of the trailing four quarters. The stock has gained 13.9% year-to-date.

EXEL’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 the weighting of each optimized to improve overall performance.

EXEL has a Value Grade of A and a Quality Grade of B. Within the Biotech industry, it is ranked #27 of 488 stocks.

In total, we rate EXEL on eight different levels. Beyond what we’ve stated above, we have also given EXEL grades for Momentum, Stability, Sentiment and Growth. Get all EXEL’s ratings here.

Jounce Therapeutics, Inc. (JNCE)

JNCE is a clinical-stage company focused on the discovery and development of novel cancer immunotherapies and predictive biomarkers. The company is engaged in developing therapies that enable the immune system to attack tumors and provide long lasting benefits to patients. Its lead product candidates include JTX-8064, JTX-4014 and JTX-1811 antibodies. Last December, JNCE was selected for inclusion in the NASDAQ Biotechnology Index (NBI).

In January, JNCE initiated Phase 1 INNATE trials of JTX-8064 alone and in combination with JTX-4014. The trial is designed to progress quickly through dose escalation and demonstrate proof of concept in tumor specific expansion cohorts.

JNCE reported revenues of $62.34 million in the fourth quarter, ended December 31, 2020. Its operating income has risen 250.5% from its year-ago value to $35.42 million, while its EPS has improved 226.5% to $0.86 over the same period.

A consensus revenue estimate of $11.81 million for the current quarter (ending March 31, 2021) represents a 607.2% improvement year-over-year. The consensus EPS estimate for the first quarter represents a 47.4% improvement from the year-ago value. The stock has gained 61.4% year-to-date.

It is no surprise that JNCE has an overall B rating of B, which translates to Buy in our POWR Ratings system. JNCE has a B grade for both Growth and Value and an A for Sentiment. It is ranked #15 in the same industry.

Click here to see the additional POWR Ratings for JNCE (Stability, Momentum and Quality).

Click here to checkout our Healthcare Sector Report for 2021

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EXEL shares were trading at $23.46 per share on Friday afternoon, up $0.60 (+2.62%). Year-to-date, EXEL has gained 16.89%, versus a 4.50% rise in the benchmark S&P 500 index during the same period.

About the Author: Rishab Dugar

Rishab is a financial journalist and investment analyst. His investment approach is to focus on quality stocks, trading at low prices, with business models that he readily understands. More...