Investors’ focus  on biotech companies has increased significantly since the onset of the COVID-19 pandemic. Investors have realized these companies’  potential and consider them  an integral part of their portfolios. In addition to the development of coronavirus vaccines, various other specializations and advances make the industry  promising as an investment opportunity.

Genomics, cell technology, and genetic analytics are some research niche areas that are expected to show immense progress over the long run. These are relatively lesser traveled fields but have the potential to  redefine medical science. Such  areas of study could also have a profound impact on the agricultural sector in terms of  the enhancement of the crop quality and yield. Experts believe that that the single-cell genomics market in North America might reach $5 billion by 2025.

There are some biotechnology companies that are involved in these fields and have witnessed a bull run over the past year. Also, investment exposure to exclusively mainstream biotech stocks could heighten the risk quotient in a portfolio.  Hence, adding relatively smaller biotech players with a strong business models can provide a  portfolio with  necessary diversification.

Four offbeat biotechnology companies are 10X GENOMICS, INC. (TXG), Twist Bioscience Corporation (TWST), Pacific Biosciences of California, Inc. (PACB), and CareDx, Inc. (CDNA). Their stocks have delivered outstanding returns in 2020 and we think are poised to advance.

10X GENOMICS, INC. (TXG)

TXG is a life science technology company that offers integrated solutions, including single cell transcriptomics, single cell genomics, single cell epigenomes, linked-reads genomics and spatial transcriptomics. Single cell gene expression, immune profiling, CNV, ATAC, and genome and exome are some of the company’s key products.

In September, TGX announced that it had begun shipping its Chromium Single Cell Multiome ATAC + Gene Expression solution to customers. It  marked the first commercial release of a product capable of profiling the epigenome and transcriptome from a same single cell simultaneously.

TXG’s revenue for the third quarter ended September 30, 2020 climbed 17.3% year-over-year to $71.8 million. Its loss per share expanded to $0.65 from $0.33 posted in the prior year period. During the quarter, TGX completed the acquisition of ReadCoor and CartaNA.

The Street estimates the company’s revenue for the quarter ended December 30, 2020 to be $100 million, representing  a 33.4% increase year-over-year. Meanwhile, its loss per share is likely to increase 228.6% to $0.23. The company expects its full year 2021 revenue to be in the range of $110 million to $118 million.

TXG soared 70.4% in the past year to close yesterday’s trading session at $171.75. The stock has climbed 81.4% during the past six months.

How does TXG stack up for the POWR Ratings?

A for Trade Grade

B for Buy & Hold Grade

B for Peer Grade

B for Industry Rank

B for Overall POWR Rating

The stock is also ranked #32 of 77 stocks in the Medical – Services industry.

Twist Bioscience Corporation (TWST)

TWST is involved in the development of proprietary semiconductor-based synthetic DNA manufacturing processes. The company produces synthetic biology tools such as oligonucleotides, genes, pathways, chassis, and genomes. TWST is also involved in agriculture production and new applications, such as in vivo diagnostics, biodetection and data storage.

TWST announced that its Twist Biopharma division has signed two licensing agreements with Serotiny and Applied StemCell. The partnership with Serotiny will help  TWST to discover novel Chimeric Antigen Receptors (CAR) for CAR T-Cell therapies. The agreement with Applied StemCell will enable TWST to cover the use of its TARGATT™ CHO Cell Technology.

During the fourth quarter ended September 30, 2020, TWST’s revenue surged 106.3% year-over-year to $32.4 million. Its loss per share narrowed to $0.54 from $0.96 posted in the same period last year. Total orders for the fourth quarter climbed 113.5% over the year to $42.7 million.

Analysts expect revenue for the quarter ended December 31, 2020 to rise 57.9% year-over-year to $25.4 million. Loss per share for the quarter is likely to narrow 56.2% to $0.74.

TWST ended yesterday’s trading session at $162.82, rallying 652.1% over the past year. During the past six months, the stock has surged 198%. TWST is rated “Buy” in our POWR Ratings, with an “A” for Trade Grade and Peer Grade, and a “B” for Industry Rank.

Pacific Biosciences of California, Inc. (PACB)

PACB is involved in the design, development, manufacture, and marketing of an integrated platform for genetic analysis. The company enables single molecule real-time detection of biological processes through single molecule real-time (SMRT) sequencing technology. PACB offers its solutions worldwide. PACB announced preliminary revenue of approximately $27 million, representing an estimated increase of nearly 41% from the previous quarter. The company placed 35 Sequel II/IIe Systems during the fourth quarter. Hence, the total installed base of Sequel II/IIe systems totaled  203 as of the end of the quarter.

During the third quarter ended September 30, 2020, revenue declined 12.9% year-over-year to $19 million. Its loss per share for the quarter narrowed to $0.14 from $ 0.19 posted in the same period last year.

The consensus revenue estimate for the quarter ended December 31, 2020 is $1.2 billion, representing  a 1.2% year-over-year increase. EPS is expected to grow 8.2% to $0.53.

PACB ended yesterday’s trading session at $32.88, surging 564.2% over the past year. Over the past six months, the stock has rallied 803.3%.

PACB’s POWR Ratings reflect this promising outlook. It has an overall rating of “Buy” with an “A” for Trade Grade, and Industry Rank. It is currently ranked #30 of 64 stocks in the Medical – Diagnostics/Research Industry.

CareDx, Inc. (CDNA)

CDNA is involved in the discovery, development, and marketing of healthcare services for transplant patients and caregivers globally. The company offers AlloSure Kidney, a donor-derived cell-free DNA (dd-cfDNA) solution for kidney transplant patients. It also offers AlloMap Heart, a gene expression solution for heart transplant patients.

During the end of the third quarter ended September 30, 2020, CDNA’s total revenue surged 57.8% year-over-year to $53.3 million. Its loss per share for the quarter expanded to $0.06 from $0.04 posted in the same period last year. CDNA provided more than  21,800 AlloSure Kidney and AlloMap Heart patient results. The company also  published  pivotal AlloSure Lung data.

Analysts expect revenue for the quarter ended December 31, 2020 to grow 55% year-over-year to $55.5 million. Meanwhile, EPS for the quarter is likely to expand at the rate of 20% per annum over the next five years.

CDNA ended yesterday’s trading session at $78.96, soaring 264.4% over the past year. During the past six months, the stock climbed  142.3%.

Our  POWR Ratings are also bullish on CDNA. It has a “Buy” rating, with an “A” for Trade Grade and Industry Rank. It is currently ranked #31 of 64 stocks in the Medical – Diagnostics/Research Industry.

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TXG shares were trading at $163.92 per share on Wednesday morning, down $7.83 (-4.56%). Year-to-date, TXG has gained 15.76%, versus a 0.74% rise in the benchmark S&P 500 index during the same period.

About the Author: Namrata Sen Chanda

Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education. More...

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