Biotechnology stocks attracted unprecedented investor interest throughout 2020 due to the development of vaccines and therapies for COVID-19. Historically, biotech stocks advance when there is a possibility of developing a new drug or vaccine for a rare or chronic disease. So, not surprisingly, the development of the coronavirus vaccine has instilled optimism among investors that the sector will soon deliver cures for other rare diseases. This is in part why biotech stocks have rallied over the past year, and we believe the momentum will continue this year.
The biotech sector is developing innovative therapies for fatal ailments like cancer, kidney failure, human immunodeficiency virus (HIV) infection, and fibrotic conditions. Much research is currently being conducted to find cures for such diseases. There have also been significant developments in the sector in the form of collaborations, external investments, positive government policies, and FDA approvals. Small and large biotech companies are also seeking growth through mergers and acquisitions. According to Global Market Insights, the rare disease treatment market is likely to grow beyond $317 billion by 2026.
Gilead Sciences, Inc. (GILD – Get Rating), Seagen, Inc. (SGEN – Get Rating), and Genmab A/S (GMAB – Get Rating) are well-positioned to benefit from this growth phase we believe. They are collaborating with global players and working to find therapies for life-threatening diseases. Their stocks have performed well over the past year and we think the uptrend is likely to continue.
GILD is a research-based biopharmaceutical company involved in discovering, developing, and commercializing medicines for rare diseases globally. Biktarvy, Descovy, Stribild, Complera/Eviplera, and Truvada are some of the products the company delivers. GILD manufactures medicines primarily for viral diseases, inflammatory and fibrotic diseases, oncology, and human immunodeficiency virus (HIV) infection.
GILD and Gritstone Oncology, Inc. (GRTS) have announced a collaboration, option and license agreement to research and develop a vaccine-based immunotherapy for HIV infections. The vaccine would use GRTS’s proprietary prime-boost vaccine platform, alongside mRNA (SAM) and adenoviral vectors, with antigens developed by GILD.
During the fourth quarter ended December 31, 2020 the company’s product sales climbed 26.2% year-over-year to $7.4 billion. Its EPS for the quarter fell to $1.23 from $2.12 posted in the same period last year.
A consensus revenue estimate for the quarter ended March 31, 2021 was $6.4 billion, representing a 14.7% increase year-over-year. Meanwhile, its EPS is likely to grow 8.9% to $1.83.
Over the past year, GILD saw a 2.8% retreat to end yesterday’s trading session at $653.86. Over the past six months, the stock declined 10.1%.
It is no surprise that GILD has an overall rating of A, which equates to Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
GILD has a grade of A for Value, and B for Momentum and Quality. In the 478-stock in Biotech industry, it is ranked #4.
Click here to see the additional POWR Ratings for GILD (Growth, Stability and Sentiment)
SGEN is a biotechnology company that is primarily developing and marketing an innovative cancer treatment that leverages monoclonal antibody-based therapies. Adcetris, Padcev, and Tukysa are among the drugs that the company formulated. In October, Merck made a $1billion investment in SGEN. SGEN is also eligible to receive up to $850 million based on hitting development milestones and $1.75 billion based on sales milestones. SGEN has also received positive data from Phase 2 PADCEV clinical trials to support global registration applications.
During the third quarter ended September 30, 2020, its total net product sales climbed 60% over the year earlier period to $267.5 million. Its EPS for the quarter was $3.65 compared to a loss per share of $0.55 posted in the same period last year. Analysts expect revenue for the quarter ended December 31, 2020 to be $586.6 million, representing 102.4% year-over-year growth. Its EPS is likely to grow at the rate of 236.6% per annum over the next five years.
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