The biotech industry has been at the center of investor attention over the past year thanks to the COVID-19 pandemic and an accompanying global race for a vaccine. A rising incidence of chronic disorders has also been creating solid growth opportunities for the industry in recent years. With substantial investments in R&D to develop regenerative therapies and new treatments, the industry is expected to thrive this year and beyond. The industry’s solid performance over the past three years is evidenced by the iShares Nasdaq Biotechnology ETF’s (IBB) 45.6% returns over this period.
Government support in speeding up the drug approval process, coupled with the rising advancements in the field of genomics, may further accelerate the industry’s growth. The size of the global biotechnology market is expected to grow at a CAGR of 7.0% over the next six years to reach $833.34 billion in 2027.
Amid such a favorable backdrop, many well-known biotech stocks are currently trading at high prices. So, it could be wise to bet on relatively smaller and affordable biotech stocks with appealing drugs in their pipelines. We think Siga Technologies. Inc. (SIGA), Jounce Therapeutics, Inc. (JNCE) and BioDelivery Sciences International, Inc. (BDSI) fit the bill. They are currently trading below $10 and are nicely positioned to capitalize on the industry tailwinds.
Siga Technologies, Inc. (SIGA)
Founded in 1995, SIGA is a commercial-stage pharmaceutical company that focuses on infectious diseases as well as the health security markets in the United States. The company’s lead product, TPOXX, is an orally administered antiviral drug used for treating human smallpox disease caused by the variola virus.
In March, SIGA and Cipla Therapeutics formed a strategic partnership to offer access to novel antibacterial drugs and deliver innovative solutions for biothreat and public health needs, like AMR (anti-microbial resistance). The collaboration is expected to benefit from the Biomedical Advanced Research and Development Authority (BARDA) and other government customers that are providing patients with innovative and advanced drug development solutions.
In January, the Public Health Agency of Canada signed a contract with Meridian Medical Technologies, Inc. for the purchase of approximately $33 million of SIGA’s lead product, oral TPOXX, to protect Canada’s military and civilian population from smallpox. This contract award should help increase SIGA’s revenue and create greater awareness of TPOXX around the world.
SIGA’s total revenue increased significantly year-over-year to $37.8 million in the fourth quarter ended December 31, 2020. It reported operating income of $26.8 million for the quarter compared to an operating loss of $3.4 million in the fourth quarter ended 2019. Its net income came in at $20.1 million for this period. The company’s EPS was $0.26 compared to a loss per share of $0.06.
A consensus EPS estimate of $0.81 for fiscal 2022 represents a 6.6% improvement year-over-year. The consensus revenue estimate of $124.50 million for the next year represents a 4.4% increase from the same period last year. Currently trading at $7.26, the stock has gained 30.8% over the past year.
SIGA’s POWR Ratings reflect this promising outlook. The company has an A overall rating, which translates to Strong Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
SIGA is also rated an A for Value Grade and Quality Grade, and a B for Growth. Within the F-rated Biotech industry, it is ranked #1 of 494 stocks.
To see additional POWR Ratings for Momentum, Stability, and Sentiment for SIGA, Click here.
Jounce Therapeutics, Inc. (JNCE)
Incorporated in 2012, JNCE is a clinical-stage immunotherapy company that develops therapies for treating cancer. Its clinical-stage monoclonal antibody vopratelimabis is in its Phase II clinical trials. The company is also developing JTX-4014, an anti-PD-1 antibody for combination therapy.
Last month, JNCE closed a public offering of 5.75 million shares of its common stock. Gross proceeds from the offering were approximately $64.7 million.
In January, JNCE initiated the patient enrollment in its Phase 1 INNATE study of JTX-8064 (LILRB2/ILT4 Inhibitor) Monotherapy and PD-1 Inhibitor Combination Therapy in patients with advanced solid tumors. This study should help the company to cater to the large and growing unmet medical need and by so doing stand out in the biotech industry.
In the fourth quarter ended December 31, 2020, JNCE generated license and collaboration revenue of $62.34 million. It reported a net income of $35.47 million, compared to a net loss of $22.67 million in the prior-year quarter. Furthermore, its operating income came in at $35.42 million, compared to a loss of $23.53 in the same quarter in the previous year. The company’s EPS came in at $0.86 for this period.
Analysts expect JNCE’s revenue for the current quarter to be $11.81 million, representing 607.2% year-over-year growth. The company’s EPS is likely to increase 58.5% for the quarter ending June 30, 2021. Closing yesterday’s trading session at $9.09, JNCE has gained 91.8% over the past year.
JNCE has an overall rating of B, which translates to Buy in our proprietary grading system. It has a B grade for Growth and Value. Within the F-rated Biotech industry, it is ranked #26 of 494 stocks.
In total, we rate JNCE on eight different levels. Beyond what we’ve stated above, we have also given JNCE grades for Momentum, Stability, Sentiment, and Quality. Get all the JNCE ratings here.
BioDelivery Sciences International, Inc. (BDSI)
BDSI is a specialty pharmaceutical company that develops and commercializes pharmaceutical products for the treatment of chronic conditions in the U.S. and internationally. The company offers products based on its patented BioErodible MucoAdhesive drug-delivery technology. It also offers products, such as BELBUCA, a buprenorphine buccal film for the treatment of chronic pain, and Symproic, a peripherally acting mu-opioid receptor for treating opioid-induced constipation in adult patients with chronic non-cancer pain.
During the fourth quarter, ended December 31, 2020, BDSI’s net revenue increased 33% year-over-year to $42.2 million. Its EBITDA for this quarter was $14.3 million, or 34% of net sales, compared to $4.1 million or 13% of net sales, in the fourth quarter of 2019. The company reported net income of $10.2 million, compared to a net loss of $696,000 in the same quarter in the previous year.
BDSI is expected to generate revenue growth of 21.0% for 2022. Its EPS is estimated to increase 82.8% next year. Also, the company beat the Street’s EPS estimates in three of the trailing four quarters. The stock closed yesterday’s trading session at $3.42.
BDSI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall Brating, which equates to Buy in our POWR Ratings system. BDSI has an A grade for Quality, and a B for Value and Sentiment. In the same industry, it is ranked #11.
Click here to see the additional POWR Ratings for BDSI (Growth, Momentum, and Stability).
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SIGA shares were trading at $7.09 per share on Monday afternoon, down $0.17 (-2.34%). Year-to-date, SIGA has declined -2.48%, versus a 11.38% rise in the benchmark S&P 500 index during the same period.
About the Author: Samiksha Agarwal
Samiksha Agarwal has always had a keen interest in financial markets. This has led her to a career as a financial journalist. Through her extensive knowledge of fundamental analysis, her goal is to help investors identify untapped investment opportunities in the stock market. More...
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