Some experts say we’re in “the golden age of biotechnology.” Scientific advances are opening up possibilities for the treatment and prevention of diseases that could only have been imagined in the past.
This golden age is also presenting tremendous opportunities for investors. Biotech stocks offer the potential for huge long-term returns. The best biotech stocks to buy right now boast strong pipelines, and some already have winning drugs on the market.
In this article we’ll cover a few of the biotech companies that investors should watch closely.
GlaxoSmithKline (GSK)
Well-known for its vaccines as well as respiratory drug Advair, is another transformation story – this one underway since CEO Emma Walmsley took over in April 2017.
Walmsley’s plan includes spinning out consumer products like Sensodyne toothpaste, Advil pain reliever and Centrum vitamins in a joint deal with Pfizer, although that has been delayed. GSK also continues to divest other assets, such as plants in Poland and Canada.
The company’s top immunology drug, Nucala, is used in some cases of asthma and was recently approved for treating a rare blood disorder called hypereosinophilic syndrome, or HES. The drug works by preventing a protein from binding to white blood cells.
Argus Research’s Eade “Buy” calls GSK‘s price a buying opportunity and has a 12-month price target of $50 on the stock. He also calls out an attractive high dividend yield and says GSK shares trade below industry averages.
UBS’s Sutcliffe also sees GSK as a Buy. “The HIV business experienced a recent flattening of US sales, but new products mean the franchise has now returned to modest growth,” she writes. “Launch of a new injectable should further boost growth and we see mid-single-digit HIV sales CAGR through 2023.”
Regeneron Pharmaceuticals (REGN)
Responsible for drugs such as macular degeneration Eylea and arthritis treatment Kevzara, made headlines in 2020 for the monoclonal antibody cocktail REGN-CoV2, which was used to treat President Donald Trump’s COVID-19 infection. But there’s much more to get excited about when it comes to what is possible for REGN.
The company is responsible for an impressive system for drug discovery. Velocisuite is a collection of techniques, based on mouse DNA models, that lets researchers quickly test drug compounds.
Regeneron has collaborated on a number of drugs, including the aforementioned Libtayo and Dupixent, for instance, as well as Kevzara. As part of Sanofi’s exit from owning Regeneron, the two companies have restructured their collaborations on Kevzara and Praluent, a drug to treat high cholesterol that Regeneron feels will break even in 2021.
The current consensus among 26 analysts offering recommendations for the stock rate it a Buy. A median 12-month price target of $638.50 gives the stock an upside of 9.4%.
Novavax (NVAX)
As the name might suggest, specializes in vaccines. Novavax produces vaccines boosted with an adjuvant called Matrix-M, which makes it possible to vaccinate more people with less of the drug.
NVAX stock exploded in 2020 with shares which started the year around $4 peaking in early February of this year at more than $315. And yet its current share price is down 40% of what it was worth in February, showing the potential roller coaster you sign up for when investing in biotech stocks.
However, Novavax has been down this road before, and it has failed. Its ResVax vaccine failed two trials. The first (in 2016) resulted in layoffs, the second (in 2019) in a 1-for-20 reverse stock split.
Early trials of the new compound, conducted in South Africa, were promising. But that was true for ResVax as well. But a few pros think this time really might be different.
NVAX will be looking to display strength when it reports earnings on August 5th. 5 of the 6 analysts offering recommendations for NVAX rate it a Buy, while only one rates it a Hold. There are no Sell ratings for the stock. A median 12-month price target of $272 represents a 45% upside from the stock’s current price.
