When the massive selloff battered Wall Street in the final months of 2018, biotechnology stocks were no exception. And, most of them bounced back this year in line with the general trend Wall Street witnessed. Currently, the outlook for the sector is quite bullish, with estimates indicating stronger growth in 2019. Investors have been showing a great deal of interest in biotech stocks even as companies keep pursuing partnerships and mergers to enhance growth.
The high-value merger between Celgene (CELG) and Bristol-Myers Squib (BMY) at the beginning of the year gives a sense of the transition the sector is going through. Despite the unpredictable nature of the business and the risks to investors, the stocks are considered to be high-return investment options. Incidentally, most of the top biotech companies with strong growth potential are involved in the development of healthcare technologies and drugs.
Unlike its peers, California-based drug research firm Amgen (AMGN) had a sluggish start to the year, with the stock paring its early grains and maintaining the downtrend. The stock, which has underperformed the sector and S&P 500 index so far, spiked earlier this month after the company reported positive results from an early-stage trial on its latest cancer drug AMG510 . It is widely expected that the uptrend will continue as Amgen approaches its next quarterly report.
Having gained 45% so far this year, Celgene is one of the fastest-growing Wall Street stocks. The company, whose flagship product Revlimid is currently facing threat from its generic counterparts, seeks to regain strength through the $74-billion mega-merger with Bristol-Myers. The combination is expected to help Celgene further strengthen its development pipeline. Revenues of Revlimid, one of the top-selling drugs worldwide, climbed 18% to $9.7 billion in 2018 when overall sales also increased so much. The company is also awaiting FDA approval for its myelofibrosis drug fedratinib.
The high-value merger between Celgene and Bristol-Myers Squib gives a sense of the transition the sector is going through
Gilead Sciences (GILD) has been one among the fast-growing biotech firms. Shares of the HIV drug-maker gained about 6% so far this year, often outperforming the sector. Considering the company’s strong pipeline and the stock’s potential to grow further, it needs to be followed closely. Moreover, the current stock price is below the long-term average.
In a move that could broaden its pipeline, Biogen (BIIB) acquired clinical-stage gene therapy company Nightstar for $800 million a few of months ago, thereby adding the latter’s lead asset NSR-REP1 to its fold. NSR-REP1 is being evaluated for the treatment of a severe retinal disorder called choroideremia. Though Biogen had a strong start to the year, the stock dropped by a third in March after the company stopped its Alzheimer’s drug trial. With Biogen’s leading multiple sclerosis drug facing exclusivity issues, there are concerns about long-term growth. However, the stock is bound to bounce back from the current lows in the coming weeks.
Vertex Pharmaceuticals (VRTX) is currently riding on the success of the three drugs it has developed for the treatment of cystic fibrosis. There is literally no competition for the formulations – Kalydeco, Symdeko and Orkambi. The recent move to seek global regulatory approval for a three-drug combination treatment for cystic fibrosis points to a stronger pipeline for the company. Vertex earlier this month extended its partnership with CRISPR Therapeutics for an exclusive licensing agreement to develop gene editing therapies.