The biotech industry is poised for robust growth thanks to the increasing number of innovative clinical solutions, growing demand for personalized medicines, advances in gene editing and cell therapy, and government initiatives. Further, technological advancements like AI open new avenues for industry players.
Given the industry’s bright growth prospects, it could be wise to invest in quality biotech stocks Shionogi & Co., Ltd. (SGIOY), United Therapeutics Corporation (UTHR), and SIGA Technologies Inc. (SIGA) for substantial returns.
As part of President Biden’s investment in America agenda, the White House recently launched the National Bioeconomy Board as an essential step toward realizing the potential of biotechnology for the economy and advancing Biotechnology and Biomanufacturing leadership.
The stated Board will function with partners from the public and private sectors to advance societal well-being, national security, sustainability, economic productivity, and competitiveness with biotechnology and biomanufacturing.
With more patients requiring better treatment, especially in immunology, endocrinology, and oncology, the global medicine market’s spending is rapidly expanding, of which the global spending on biotech is expected to represent 39%, exceeding $892 billion by 2028 and will include breakthrough cell and gene therapies and maturing biosimilar segment.
The global biotechnology market revenue is expected to total $3.88 trillion by 2030, growing at a CAGR of 14% during the forecast period (2024-2030). Further, the U.S. biotechnology market is anticipated to hit around $1.78 trillion by 2033, expanding at a CAGR of 12.5%.
Further, the rapid adoption of cutting-edge technologies such as artificial intelligence (AI) and machine learning are expediting the identification, development, and healthcare applications of drugs, revolutionizing the biotech segment. The global AI in the biopharmaceutical market is estimated to reach around $14.07 billion by 2032, growing a CAGR of 32.3%.
Moreover, investors’ interest in biotech stocks is evident from iShares Nasdaq Biotechnology Index Fund ETF’s (IBB) 9.3% returns over the past six months.
Given the industry’s favorable prospects, let’s delve into the fundamentals of the three best Biotech stock picks, beginning with the third choice.
Stock #3: Shionogi & Co., Ltd. (SGIOY)
Headquartered in Osaka, Japan, SGIOY engages in the research, development, manufacture, and distribution of pharmaceuticals, diagnostic reagents, and medical devices. Its product portfolio includes Fetroja, Cabenuva and Apretude, Xocova, Finibax, Xofluza, and Tivicay.
On April 15, SGIOY’s subsidiary, Taiwan Shionogi & Co., Ltd., received approval for a supplemental New Drug Application for Xofluza® for the treatment and postexposure prophylaxis for influenza virus infection for pediatrics aged 5 to less than 12 years. The newly approved indication extends treatment options and offers a new choice for managing influenza.
On April 11, SGIOY’s European subsidiary, Shionogi B.V., announced that the European Commission had granted Orphan Medicinal Product designation for zatolmilast, an investigational treatment for Fragile X syndrome (FXS), a leading cause of inherited intellectual disability and autism. This designation is a significant milestone for the company.
SGIOY is dedicated to bringing new and innovative medicines to the market for rare pediatric and orphan diseases, and this regulatory designation in Europe is a recognition of the potential clinical benefit of zatolmilast.
SGIOY reported a revenue of ¥336.82 billion ($2.18 billion) for the nine months ended December 31, 2023. Its operating profit was ¥138.74 billion ($896.94 million) over the same period. The company’s profit attributable to owners of parent and EPS came in at ¥27.22 billion ($822.48 million) and ¥435.74, respectively.
Furthermore, the company’s comprehensive income increased 10.6% year-over-year to ¥ 183.44 billion ($1.18 billion). Its total assets stood at ¥1.36 trillion ($8.79 billion) as of December 31, 2023, compared to ¥1.31 trillion ($8.47 billion) as of March 31, 2023.
Street expects SGIOY’s revenue for the fourth quarter (ended March 2024) to increase 8% year-over-year to $710.11 million. For the fiscal year 2024, the company’s revenue is expected to grow 4.6% year-over-year to $2.88 billion. Moreover, SGIOY has topped the consensus revenue estimates in each of the trailing four quarters.
Over the past year, SGIOY’s stock has climbed 6.7% to close the last trading session at $11.87.
SGIOY’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
SGIOY has a B grade for Value and Quality. It is ranked #17 out of 358 stocks in the Biotech industry.
In addition to the POWR Ratings we’ve stated above, we also have SGIOY’s other ratings for Momentum, Sentiment, Growth, and Stability. Get all SGIOY ratings here.
Stock #2: United Therapeutics Corporation (UTHR)
UTHR is a biotechnology company that develops and commercializes products to address the unmet medical needs of patients with chronic and life-threatening diseases internationally. The company provides Tyvaso DPI, Tyvaso, Remodulin (treprostinil) injection, Orenitram, and Adcirca.
On April 24, 2024, UTHR announced the world’s first successful transplant of a UThymoKidney™, which the company produced, into a living person on April 12, 2024. This transplant represented several historic firsts for transplantation, including the first-ever transplant of a xenothymokidney into a living human recipient.
It also marked the first-ever combined mechanical heart pump and organ transplant and the first-ever xenotransplant into a living human using only FDA-approved immunosuppressive medicines.
On December 13, 2023, UTHR’s wholly-owned subsidiary, Morpheus Subsidiary Inc., acquired all outstanding shares of Miromatrix Medical Inc. (MIRO) for a purchase price of $3.25 per share in cash at closing and an additional $1.75 per share in cash. The acquisition is expected to expand UTHR’s existing complementary platform of organ manufacturing programs.
During the first quarter that ended March 31, 2024, UTHR’s total revenues increased 33.7% year-over-year to $677.70 million. Its operating income grew 25.3% from the year-ago value to $356.30 million. The company’s net income came in at $306.60 million, or $6.17 per common share, up 27.3% and 26.9% from the previous year’s quarter, respectively.
As of December 31, 2023, the company’s cash, cash equivalents and marketable investments, and total assets totaled $4.20 billion and $6.49 billion, respectively.
Analysts expect UTHR’s revenue for the second quarter (ending June 2024) to increase 14.7% year-over-year to $684.32 million. The consensus EPS estimate for the ongoing quarter of $6.19 indicates 18.2% year-over-year growth. Furthermore, the company surpassed the consensus revenue and EPS estimates in all four trailing quarters.
UTHR’s stock has surged 13% over the past month and 13.1% over the past six months to close the last trading session at $258.13.
UTHR’s POWR Ratings reflect its bright prospects. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has an A grade for Value and a B for Growth and Quality. UTHR is ranked #12 among 358 stocks in the Biotech industry.
To access UTHR’s additional ratings (Sentiment, Stability, and Momentum), click here.
Stock #1: SIGA Technologies Inc. (SIGA)
SIGA is a commercial-stage pharmaceutical company focused on health security-related markets. The company’s lead product includes TPOXX, an oral formulation antiviral drug for treating human smallpox disease caused by the variola virus.
On April 1, SIGA announced an amendment to its international promotion agreement with Meridian Medical Technologies, Inc., under which SIGA will drive international promotion activities for oral TPOXX® while maintaining its contractual relationship with Meridian to maintain continuity for crucial customer relationships.
The company believes the amendment in the Meridian promotion agreement will be instrumental in driving long-term growth opportunities for oral TPOXX.
On March 12, SIGA’s Board of Directors declared a special cash dividend of $0.60 per share on its common stock, representing an increase of $0.15 per share, or 33%, over the June 2023 special dividend. This reflects the company’s robust capital structure and its ability to provide stable growth in the long run.
The dividend was paid on April 11, 2024, to shareholders of record at the close of business on March 26, 2024.
For the fiscal year that ended December 31, 2023, SIGA’s total revenues rose 26.3% year-over-year to $139.92 million, and its operating income grew 95.8% from the prior period to $83.62 million. The company’s net income and EPS of $68.07 million and $0.95 indicate growth of 100.8% and 106.5% year-over-year, respectively.
Also, as of December 31, 2023, the company’s cash and cash equivalents were $150.14 million, compared to $98.79 million as of December 31, 2022.
Analysts expect SIGA’s revenue and EPS for the fiscal year (ending December 2024) to increase 36.2% and 24.2% year-over-year to $190.60 million and $1.18, respectively.
Shares of SIGA have gained 93.1% over the past six months and 84.8% over the past year to close the last trading session at $9.44.
SIGA’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
The stock has an A grade for Value, Growth, and Quality. Within the same industry, SIGA is ranked #6 of 358 stocks.
Click here to access additional ratings of SIGA for Momentum, Sentiment, and Stability.
What To Do Next?
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SGIOY shares were unchanged in premarket trading Friday. Year-to-date, SGIOY has declined -0.85%, versus a 7.75% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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