Biotechnology companies are increasingly contributing to the economy with their latest advancements and innovations in areas such as healthcare, agriculture, environment, industrial manufacturing, etc. Their activities are rapidly expanding from the lab into people’s lives, providing ample growth opportunities for the biotechnology industry.
Given the industry’s robust outlook, investors may want to consider investing in high-risk, high-reward biotech stocks United Therapeutics Corporation (UTHR), Entrada Therapeutics (TRDA), and Exelixis (EXEL).
Last year, the FDA, including the Center for Drug Evaluation and Research (CDER) and the Center for Biologics Evaluation and Research (CBER), approved 80 new products, setting a new record for the number of biopharmaceutical product approvals, signaling an upward trend in the market driven by the growth of biotechnology start-ups.
IMARC Group predicts that the global biotechnology market will reach $1.28 trillion by 2032, growing at a compound annual growth rate of 6.5%. Factors driving the growth and expansion of the industry include increased research and development in personalized medicine, advances in genetic engineering, and a growing demand for sustainable agriculture.
Breakthroughs in the scientific fields of biology, chemistry and IT have also expanded biotechnology activities from the lab into our lives, sparking a nature-driven revolution. A wide range of modern biotechnology innovations, from rapidly developed life-saving therapeutic drugs to eco-friendly alternatives to traditional textiles, are contributing widely to the advancement of the field.
Moreover, the recent adoption of artificial intelligence (AI) to facilitate drug identification, development, and healthcare application has led to various innovations accelerating the biopharmaceutical sector. The global artificial intelligence in biopharmaceutical market is projected to reach $14.07 billion by 2032, at a compound annual growth rate (CAGR) of 32.3%.
Additionally, investor interest in biotech stocks is evident from the 18% return of the SPDR Series Trust SPDR S&P Biotechnology ETF (XBI) over the past month.
Given these encouraging trends, let’s take a look at the fundamentals of the top three biotech stocks, starting with number three.
Stock #3: United Therapeutics Corporation (UTHR)
UTHR is a biotechnology company committed to developing and commercializing products that address unmet medical needs of patients worldwide with chronic and life-threatening diseases. The company’s portfolio includes Tyvaso DPI, Tyvaso, Remodulin (treprostinil) injection, Orenitram and Adcirca.
On July 10, UTHR announced the completion of enrollment for the TETON 2 study, evaluating the use of Tyvaso® (treprostinil) inhaled solution (Tyvaso by nebulizer) in the treatment of idiopathic pulmonary fibrosis. TETON 2 is analyzing the use of inhaled treprostinil in patients with IPF outside the U.S. and Canada.
On April 24, the UTHR announced the world’s first successful transplantation of a genetically engineered xenothymic kidney and heart pump implant into a living donor, marking a major breakthrough in xenotransplantation and progress in addressing the organ shortage.
The transplant was the first ever combination artificial heart pump and organ transplant, and also the first xenotransplant into a living human using only FDA-approved immunosuppressants.
UTHR’s total revenue for the first quarter ended March 31, 2024 was $677.7 million, up 33.7% year over year. Operating income was $356.3 million, up 25.3% year over year. The company’s net income was $306.6 million, or $6.17 per share, representing increases of 27.3% and 26.9%, respectively, year over year.
Additionally, as of March 31, 2024, the Company’s cash, cash equivalents and marketable investments, and total assets were $4.2 billion and $6.49 billion, respectively.
Analysts expect UTHR’s second-quarter (ending June 2024) revenue to increase 15.5% year over year to $688.96 million and EPS to increase 20.9% year over year to $6.34 for the same period. Additionally, the company has beaten consensus estimates for revenue and EPS for each of the past four quarters.
The stock has risen 53.8% over the past six months and 35.4% over the past year, closing at $332.63 in the last trading session.
UTHR’s positive outlook is reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a “Strong Buy” in our proprietary rating system. POWR Ratings are calculated by taking into account 118 different factors, each weighted optimally.
UTHR has an A grade for Value and a B grade for Quality, ranking it 8th out of 341 stocks in the Biotechnology industry.
To see more POWR Ratings for UTHR’s Growth, Momentum, Stability, and Sentiment, click here.
Stock #2: Entrada Therapeutics, Inc. (TRDA)
TRDA, a clinical-stage biotechnology company, is developing endosomal escape vehicle (EEV) therapeutics for the treatment of multiple neuromuscular diseases. The company’s EEV platform is developing a portfolio of oligonucleotide-, antibody- and enzyme-based programs.
On June 24, TRDA announced positive preliminary results from the Phase 1 clinical trial ENTR-601-44-101. Results showed that ENTR-601-44 was well tolerated in healthy volunteers, with no serious or drug-related adverse events and no clinically significant changes or trends in vital signs, electrocardiograms, physical exams, or laboratory tests.
Additionally, ENTR-601-44 demonstrated significant plasma concentrations, muscle concentrations and exon skipping at levels suggesting a potentially clinically meaningful starting dose in upcoming patient studies.
For the first quarter ended March 31, 2024, TRDA’s collaboration revenue increased 134% year over year to $59.12 million, while operating income was $21.11 million for the quarter. The company’s net income was $23.50 million, or $0.68 per share, down from a net loss of $6.67 million and $0.21 per share in the same period last year.
Furthermore, the company’s total assets will be $510.84 million as of March 31, 2024, compared to $469.19 million as of December 31, 2023.
The Street expects TRDA’s second-quarter (ending June 2024) revenue to increase 153.6% year-over-year to $46.08 million. Similarly, the company’s revenue for fiscal 2024 is expected to increase 11.7% year-over-year to $144.1 million. Additionally, TRDA has beaten consensus estimates for its revenue for each of the past four quarters.
TRDA shares have risen 15.4% over the past month and 9.2% over the past six months, closing the last trading session at $17.11.
TRDA’s sound fundamentals are reflected in its POWR Ratings: The stock has an overall rating of A, which equates to a “Strong Buy” in our proprietary rating system.
The stock has a grade of B in terms of sentiment, value, and quality. Within the same industry, TRDA ranks 5th out of 341 stocks.
To access additional assessments of TRDA’s stability, growth, and momentum, click here.
Stock #1: Exelixis, Inc. (EXEL)
EXEL is an oncology company focused on the discovery, development and commercialization of novel medicines for hard-to-treat cancers. The company offers CABOMETYX tablets for the treatment of patients with advanced renal cell carcinoma.
On May 20, EXEL entered into a settlement and license agreement with Cipla Ltd. and Cipla USA, Inc. Under the agreement, EXEL will grant Cipla a license to market generic versions of CABOMETYX in the United States beginning January 1, 2031, subject to FDA approval and subject to the customary terms and conditions of the agreement.
On January 25, EXEL announced encouraging results from the CONTACT-02 trial at ASCO GU 2024. The trial showed that the combination of cabozantinib and atezolizumab significantly improved progression-free survival compared with second-line treatment, with 97% of patients in the combination arm experiencing treatment-emergent adverse events compared with 87% in the second-line arm.
For the first quarter ended March 31, 2024, EXEL’s total revenue increased 13.1% year over year to $425.23 million. Operating income increased 2.2% year over year to $29.46 million. The company’s non-GAAP net income was $51.98 million and $0.17 per share, respectively, for the quarter.
According to the company’s fiscal 2024 financial guidance, EXEL reaffirmed that it expects total revenue to be between $1.83 billion and $1.93 billion, with net product revenue expected to be in the range of $1.65 billion to $1.75 billion.
Analysts expect EXEL’s fourth-quarter (ending December 2024) revenue to increase 4.3% year-over-year to $500 million and EPS to increase 33.3% year-over-year to $0.36 for the quarter. For fiscal 2024, the company’s revenue and EPS are expected to increase 2.8% year-over-year to $1.88 billion and 74.7% year-over-year to $1.14.
EXEL shares have risen slightly over the past month and are up 13.6% in the past year, closing the last trading session at $22.60.
EXEL’s POWR Ratings reflect the company’s robust outlook: The stock has an overall rating of A, which equates to a “Strong Buy” in our proprietary rating system.
EXEL receives an A grade for quality and value, ranking it #2 out of 341 stocks in the Biotechnology industry.
To see other assessments of EXEL’s Growth, Sentiment, Momentum and Stability click here.
What next?
Steve Reitmeister, a 43-year investing veteran, shares his 2024 market outlook, trading plan and top 11 stocks for the coming year.
Stock market outlook for 2024 >
UTHR shares were trading at $335.50 per share on Tuesday afternoon, up $2.87 (+0.86%). Year-to-date, UTHR is up 52.58%, while the benchmark S&P 500 index is up 17.50% over the same period.
About the author: Rjkumari Saxena
Rajkumari started her career as a writer but slowly shifted her focus to financial journalism, leveraging her educational background in commerce. Fascinated by the interplay of business and economic changes in stocks, she aims to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to provide investors with insights that lead to profitable decisions. Read more…
