The healthcare sector continues to be a hotbed of innovation, with biotechnology leading the charge. From groundbreaking gene therapies to next-generation cancer treatments, biotech companies are pushing the boundaries of medicine and transforming patient care.
This year has already witnessed significant advancements in the biotech space. We’ve seen successful clinical trials, regulatory approvals for life-changing therapies and major acquisitions within the industry. For instance, on July 2, the Food and Drug Administration (FDA) approved Eli Lilly’s (NYSE:LLY) new Alzheimer’s drug, donanemab, marketed as Kisunla. This drug is designed for patients with early-stage Alzheimer’s disease and has been shown to slow cognitive decline by 29% over 18 months compared to a placebo.
The industry’s growth momentum is expected to continue, fueled by rising investor confidence and a relentless pursuit of scientific breakthroughs. In fact, the global biotechnology market is projected to grow from almost $1.4 trillion in 2023 to well over $4 trillion by 2033, with a compound annual growth rate (CAGR) of 11.8%. North America leads the market, driven by key players, robust R&D and high healthcare spending.
It is noteworthy that the iShares Biotechnology ETF (NASDAQ:IBB) has underperformed the broader market, gaining only 1% YTD. This suggests potential for a catch-up rally within the biotechnology sector. Now, let’s highlight three top-rated biotech stocks that stand out for their recent regulatory approvals, strategic acquisitions and granted patents.
Biogen (BIIB)
Topping our list of top-rated biotech stocks is Biogen (NASDAQ:BIIB), which focuses on complex neurological and neurodegenerative diseases. The company’s product lineup includes treatments for multiple sclerosis (MS), spinal muscular atrophy, plaque psoriasis and Alzheimer’s disease, among others.
Yet, Biogen’s first quarter 2024 results presented a mixed picture in late April. While total revenue declined 7% year-over-year (YOY) to $2.29 billion, diluted EPS grew 8% to $3.67. This marks a significant milestone, representing the first EPS growth in several years for Biogen.
Biogen has bolstered its presence in two key therapeutic areas with recent regulatory approvals. The European Commission granted marketing authorization for Tofidence, a biosimilar referencing Roactemra for treating various inflammatory diseases. In a separate announcement, Biogen’s collaboration with Eisai (OTCMKTS:ESAIY) saw the launch of Leqembi (lecanemab) in China. It was the first treatment approved to reduce the progression of Alzheimer’s disease.
Despite these positive developments, BIIB stock has declined 10% year-to-date (YTD). Currently, Biogen shares are trading at a reasonable 14.3 times forward earnings and 3.5 times sales. Analysts have a 12-month price target of $285.60 for BIIB, signaling 25% upside potential.
Incyte (INCY)
Biopharma company Incyte (NASDAQ:INCY) specializes in novel small molecule therapies to address unmet medical needs in oncology and inflammatory diseases. Incyte’s product portfolio includes several high-impact drugs like Jakafi, Pemazyre and Iclusig, targeting myelofibrosis, polycythemia vera and chronic myeloid leukemia.
Incyte reported solid first quarter 2024 results, with total revenues rising 9% YOY to $881 million. Jakafi, their core product for myelofibrosis, maintained its strong performance with net product revenues of $572 million. Net income and diluted EPS both surged around 72% YOY to $145.3 million and 64 cents, respectively.
Incyte has completed its acquisition of Escient Pharmaceuticals, a company focused on developing novel treatments for systemic immune and neuro-immune disorders. This step is expected to strengthen Incyte’s inflammation and autoimmunity portfolio.
Despite strong earnings, INCY stock has lost more than 5% so far in 2024. Incyte shares are trading at an attractive 12.6 times forward earnings and 3.7 times sales. Wall Street remains bullish, with a median 12-month price target of $77, implying a 30% upside potential.
Halozyme Therapeutics (HALO)
Rounding out our discussion of top-rated biotech stocks is Halozyme Theraputics (NASDAQ:HALO), focused on revolutionizing drug delivery. Halozyme’s core technology, Enhanze, is a patented recombinant human hyaluronidase enzyme that facilitates the subcutaneous delivery of injectable biologics. Halozyme’s technology has the potential to improve the efficacy and tolerability of a wide range of drugs.
In early May, Halozyme reported strong first quarter 2024 earnings. Revenue increased 21% YOY to $196 million driven by continued strong advancement of Enhanze partner products and pipeline. Net income skyrocketed almost 95% to $76.8 million, while diluted EPS surged 68% to 79 cents.
Halozyme recently raised its financial outlook for 2024 following the grant of a new European patent for its Enhanze drug delivery platform. This patent secures the original royalty rate for Darzelex in Europe, a key revenue driver for the company. As a result, management raised its full-year 2024 revenue guidance 13% to 22% YOY to $935 million to $1.015 billion.
Reflecting the positive developments, HALO stock has appreciated 40% YTD. The shares are trading at 12.0 times forward earnings and 8 times trailing sales. Finally, the 12-month median forecast for HALO stock stands at $55.50, suggesting an 8% upside potential.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
