Pfizer Inc.’s (PFE) announcement of a breakthrough in the COVID-19 vaccine earlier this week has placed the biotech stocks under focus. Since the onset of the pandemic, these stocks have garnered a lot of attention as the entire world is watching out for a better diagnosis and cure for the coronavirus. Besides, the investors are looking at a more secular growth in the wake of the growing uncertainty and volatility. The new policies formulated by the Democrats, the decision over a fiscal stimulus, and the second wave of COVID-19 will continue to keep investors on the edge in the next several months. Because of this, it is wise to add recession-proof stocks to your portfolio and biotech tops the list.
The biotech stocks have witnessed rapid growth since the beginning of this year and outpaced the S&P 500. iShares Nasdaq Biotechnology ETF (IBB) has rallied 25.1% in the past year compared to 10.4% returns delivered by the S&P 500.
As the world is grappling with a larger health crisis, biotech companies are more relevant than ever. While choosing biotech stocks, it’s a smart move to consider those companies which have robust balance sheets and a strong pipeline of drugs. These factors ensure a company’s resilience to economic downturns.
Jazz Pharmaceuticals Plc (JAZZ), Arrowhead Pharmaceuticals, Inc. (ARWR), United Therapeutics Corporation (UTHR), and Intellia Therapeutics, Inc. (NTLA) are four such companies that have seen an impressive financial performance and are likely to see sustained momentum in 2021.
Jazz Pharmaceuticals Plc (JAZZ)
JAZZ is an Irish biopharmaceutical company. The company is involved in identifying, developing, and marketing drugs that address the gaps in medical needs. JAZZ has a diversified portfolio of products that focuses on narcolepsy, psychiatry, severe chronic pain, and women’s health. Its flagship drug is the FDA approved Xyrem, the sodium salt of the natural neurotransmitter γ-Hydroxybutyric acid.
On October 26th, JAZZ acquired SpringWorks’ fatty acid amide hydrolase (“FAAH”) inhibitor program including PF-04457845. This association will help JAZZ build its mid-stage neuroscience portfolio. The company plans to develop PF-04457845 for the prospective treatment of post-traumatic stress disorder (“PTSD”) and associated symptoms.
During the third quarter ended September 2020, JAZZ’s revenue climbed 11.8% year-over-year to $600.9 million, driven by a 37% growth in the Oncology product sales. JAZZ saw robust demand for Zepzelca after its launch in July. JAZZ’s EPS for the quarter jumped 30% year-over-year to $2.67.
Analysts expect the revenue for the quarter ending December 2020 to be $639.8 million, up 10% year-over-year. Meanwhile, EPS is expected to increase by 35% in 2021.
On a year-to-date basis, JAZZ dropped 2.1% to close at $150.62 yesterday. Over the past six months, the stock rallied 32.4%.
How does JAZZ stack up for the POWR Ratings?
A for Trade Grade
B for Buy & Hold Grade
A for Peer Grade
B for Overall POWR Rating.
It is ranked #16 out of 384 stocks in the Biotech industry.
Arrowhead Pharmaceuticals, Inc. (ARWR)
ARWR specializes in developing drugs for treating intractable diseases in the United States by silencing the genes. The company’s drug candidates ARO-AAT, ARO-APOC3, and ARO-ANG3 are in various phases of clinical trials. ARWR is also involved in the development of JNJ-3989, a third-generation subcutaneously administered RNAi therapeutic candidate for the treatment of chronic hepatitis B virus infection.
In October, ARWR announced that it would collaborate with Japan’s Takeda Pharmaceutical to co-develop and co-commercialize an investigational RNAi-based liver disease treatment. ARWR’s drug candidate, ARO-AAT, is designed to reduce mutant alpha-1 antitrypsin protein production, which is the primary cause of the disease.
ARWR’s revenue during the third quarter ended June 2020 declined 35.9% year-over-year to $27.4 million. The company also posted a $0.13 loss per share for the quarter compared to an EPS of $0.21 in the same period last year. During the quarter, ARWR earned a payment of $20 million from Amgen after the administration of the first dose of AMG 890 in the Phase 2 clinical study.
The street estimates the revenue for the quarter ending December 2020 to grow 25.7% year-over-year to $127.8 million in 2021. Meanwhile, EPS is likely to increase at 7.3% per annum for the next five years.
ARWR soared 7.4% on a year-to-date basis to end the session at $68.68 yesterday. During the past six months, the stock soared 99.5%.
ARWR is rated “Buy” in our POWR Ratings system, consistent with its strong momentum. It holds an “A” in Trade Grade and Peer Grade. It is ranked #18 out of 384 stocks in the Biotech industry.
United Therapeutics Corporation (UTHR)
UTHR is a biopharmaceutical company that develops and markets products to cure chronic and life-threatening diseases in the United States as well as globally. Remodulin, Orenitram, Tyvaso, and Unituxin are some of the commercial therapies marketed by UTHR. The company has also entered into a licensing agreement with Medtronic to develop and commercialize the implantable system for Remodulin.
UTHR stated that it plans to expand its Tyvaso label in 2021 to include patients with pulmonary hypertension associated with interstitial lung disease. The company also has two planned launches for Remodulin in 2021-the first would be a subcutaneous form, the second would be intravenous. Martine Rothblatt, Ph.D., Chairman, and CEO of United Therapeutics stated, “I expect these three launches will set us on the path to revenue growth in the near term.”
During the third quarter ended September 2020, the company’s revenue slipped 5.3% year-over-year to $380.1 million. Orenitram® net revenue grew 20% year-over-year while the revenue of Tyvaso® rose 17%. Meanwhile, UTHR’s EPS climbed 27.8% year-over-year to $3.86.
The consensus estimate for revenue for the quarter ending in December 2020 is $358.2 million, indicating an increase of 15.1% year-over-year. EPS for the fourth quarter is expected to surge 170.8% year-over-year to $3.25.
On a year-to-date basis, the stock soared 54.7% to close at $139.28. It is currently trading 2.3% below its 52-week high of $142.34. Over the past six months, the UTHR climbed 20.1%.
It’s no surprise that UTHR is rated “Strong Buy” in our POWR Ratings system. It also has an “A” for Trade Grade, Buy & Hold Grade, and Peer Grade. It is also ranked #3 out of 240 stocks in the Medical – Pharmaceuticals industry.
Intellia Therapeutics, Inc. (NTLA)
NTLA is a leading genome editing Biopharmaceutical Company. It is involved in the development of therapeutics by utilizing a biological tool known as the Clustered, Regularly Interspaced Short Palindromic Repeats (CRISPR) and CRISPR associated 9 (Cas9) system. It develops in vivo programs for treating liver diseases as well as other deficiencies.
NTLA announced that the first patient has been treated with its NTLA-2001, which it is developing as a single-course, potentially curative therapy for transthyretin amyloidosis (ATTR). The company plans to evaluate NTLA-2001 for both polyneuropathy and cardiomyopathy patients. NTLA anticipates submitting an IND or IND-equivalent for NTLA-2002 for treating hereditary angioedema (HAE) in 2H 2021
During the third quarter ended in September 2020, NTLA’s collaboration revenue increased 109.3% year-over-year to $22.2 million. The company’s loss per share during the quarter narrowed to $0.47 from a loss of $0.49. At the end of the third quarter, NTLA had a cash position of $407.9 million.
Analysts expect the revenue for the December 2020 ending quarter to be $14.1 million, up 28.8% from the year-ago period. NTLA’s EPS is likely to increase by 30% per annum for the next five years.
NTLA surged 95.8% on a year-to-date basis to close at $29.51 yesterday. Over the past six months, the stock rallied 110.6%.
NTLA’s POWR Ratings reflect this promising outlook. It has an overall rating of “Buy” with an “A” for Trade Grade and Peer Grade, and “B” for Buy & Hold Grade. Among the 384 stocks in the Biotech industry, it’s ranked #32.
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JAZZ shares were trading at $147.28 per share on Wednesday afternoon, down $3.34 (-2.22%). Year-to-date, JAZZ has declined -1.34%, versus a 12.36% 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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