The biotechnology industry is expanding steadily due to the rapid growth of drug development and technological innovations. Considering this and the rising need to cater to an aging population, it could be wise to keep an eye on biotech stocks Inovio Pharmaceuticals, Inc. (INO), Surrozen, Inc. (SRZN), and Genmab A/S (GMAB) for potential gains.
But before delving deeper into the fundamentals of these stocks, let’s see what’s shaping the industry’s prospects.
The world’s population is getting older. According to the World Health Organization (WHO), in 2019, the number of people aged 60 years and older was 1 billion. This number is expected to increase to 1.4 billion by 2030 and 2.1 billion by 2050. This is set to increase the demand for innovative healthcare solutions.
The biotechnology sector is constantly evolving, which positions the sector well to address changing healthcare needs. Moreover, the sector is leveraging technological progress, notably Artificial Intelligence (AI) and Big Data analytics, to stay ahead. The global generative AI in Biotech Market is estimated to be worth $472 million by 2032, increasing at a 24.9% CAGR.
Moreover, the biotechnology market is expected to reach $2.77 trillion by 2030, growing at a CAGR of 14.2%.
Considering these conducive trends, let’s take a look at the fundamentals of the three Biotech stocks, starting with number 3.
Stock #3: Inovio Pharmaceuticals, Inc. (INO)
INO is a biotechnology company developing DNA medicines to treat HPV, cancer, and infectious diseases. The company’s pipeline includes treatments for cervical dysplasia, recurrent respiratory papillomatosis, glioblastoma multiforme, Ebola Virus Disease, and Lassa fever.
On October 10, INO received U.S. Food and Drug Administration (FDA) feedback that suggests its Phase 1/2 trial data for INO-3107 could support a BLA submission for accelerated approval. This could potentially impact INO’s business by accelerating the development and commercialization of INO-3107.
For the fiscal third quarter ended September 30, INO’s revenue from collaborative arrangements and other contracts amounted to $388.45 thousand. Its interest income increased 42% year-over-year to $1.94 million. Moreover, its total current liabilities came in at $43.71 million as of September 30, compared to $96.87 million as of December 31, 2022.
Street expects INO’s EPS estimate for the fiscal fourth quarter ending December 2023 to increase 42.4% year-over-year. For the same period, its revenue is projected to reach $136.37 thousand, showing a 9.4% growth year-over-year.
The stock has declined 10% over the past three months to close the last trading session at $0.36.
INO’s fundamentals are reflected in its POWR Ratings. The stock has an overall rating of C, which translates to Neutral 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 a C grade for Growth, Value, Sentiment, and Quality. It is ranked #142 in the Biotech industry.
Click here for INO’s additional POWR Ratings (Momentum and Stability).
Stock #2: Surrozen, Inc. (SRZN)
SRZN is a clinical-stage biotechnology company that pioneers drug candidates for precise modulation of the pivotal Wnt pathway. The company’s forefront products entail multispecific, antibody-based therapeutics emulating the functions of natural Wnt and R-spondin proteins, vital for Wnt pathway activation and enhancement.
On June 5, SRZN, Stanford Medicine, and Columbia University scientists disclosed a pivotal breakthrough. They administered a highly optimized Fzd4-selective surrogate, demonstrating systemic pharmacologic efficacy and restoring blood-brain-barrier function in disease models, notably ischemic stroke. This could be beneficial for the company.
For the fiscal third quarter that ended September 30, SRZN’s interest income increased 233.8% year-over-year to $661 thousand. Loss from operations also decreased 17.8% from the prior-year quarter to $11.19 million. Moreover, as of September 30, the company’s cash and cash equivalents came in at $33.98 million, compared to $24.69 million as of December 31, 2022.
Analysts expect EPS for the first quarter of 2024, ending March 2024, to increase 39.6% year-over-year. For the fiscal year ending December 2024, the EPS is estimated to increase 18.3% year-over-year.
SRZN’s shares have declined 25.6% over the past month to close the last trading session at $0.33.
SRZN’s fundamentals are apparent in its POWR Ratings. The stock has an overall C rating, equating to Neutral in our proprietary rating system. SRZN also has a B grade for Value and Sentiment. It is ranked #34 in the same industry.
In addition to the POWR Ratings I’ve just highlighted, you can see SRZN’s ratings for Growth, Momentum, Stability, and Quality here.
Stock #1: Genmab A/S (GMAB)
Headquartered in Copenhagen, Denmark, GMAB develops antibody therapeutics to treat cancer and other diseases. The company’s offerings include DARZALEX, a human monoclonal antibody; teprotumumab for treating thyroid eye disease; and Amivantamab for advanced or metastatic gastric or esophageal cancer.
On September 25, GMAB received conditional marketing authorization for its drug TEPKINLY from the European Commission to treat relapsed or refractory diffuse large B-cell lymphoma. This is a significant milestone for the company and could increase sales.
GMAB’s revenue increased 16.1% year-over-year to DKK4.74 billion ($680.31 million) for the fiscal quarter that ended September 30, 2023, while its operating profit amounted to DKK1.72 billion ($246.23 million).
For the nine months ended September 30, GMAB’s net cash provided by operating activities increased 62.4% year-over-year to DKK5.71 billion ($818.56 million), while its cash and cash equivalents at the end of the period came in at DKK14.27 billion ($2.05 billion), up 37.5% from the prior-year period.
The consensus revenue estimate of $2.77 billion for the next fiscal year (ending December 2024) represents a 17.8% increase year-over-year. Its EPS is expected to grow 7.8% year-over-year to $1.20 for the same period. The company surpassed consensus revenue estimates in each of the four trailing quarters.
The stock has gained 7.1% over the past five days and marginally intraday to close the last trading session at $31.16.
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.
GMAB has a B grade for Value and Sentiment. Within the same industry, it is ranked #22.
Click here for the additional POWR Ratings for Growth, Momentum, Stability, and Quality for GMAB.
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GMAB shares were trading at $31.34 per share on Friday afternoon, up $0.18 (+0.58%). Year-to-date, GMAB has declined -26.05%, versus a 16.18% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
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