3 Biotechs Predicted to Grow 415% and More in 2018
May 4, 2017
By Mark Terry, BioSpace.com Breaking News Staff
Biotech stocks are volatile. At least one study says only one out of every 10 drugs in development make it to market, and in some areas, such as Alzheimer’s, that figure is closer to one out of every 1,000. Yet there are some biotech companies that are stable enough to be considered blue chip stocks, and let’s not forget that the payoff for some of these companies, such as for people who owned Pharmacyclics, now owned by AbbVie, rose more than 45,700 percent in a span of about six years.
Sean Williams, writing for The Motley Fool, takes a look at three companies that Wall Street consensus projects will create at least 415 percent growth in earnings per share (EPS) in 2018.
1. Alkermes
Headquartered in Dublin, Alkermes PLC focuses on diseases of the central nervous system (CNS). On May 1, it announced completion of patient enrollment in ENLIGHTEN-1, the first of two Phase III trials for ALKS 3831, a once-daily, oral atypical antipsychotic drug for schizophrenia.
Alkermes at one time focused on taking existing drugs and reformulating them for extended-release. Williams writes, “Alkermes also has a novel drug development pipeline filled with promising products. For instance, ALKS-5461, a drug designed to treat major depression, is currently in late-stage studies and, if all goes well, could be approved by the FDA and generating sales before the end of 2018.”
It also has a drug, ALKS-8700, for a potential treatment for multiple sclerosis (MS).
The consensus EPS growth for Alkermes is a daunting 1,425 percent. are currently trading for $59.66.
2. Exelixis
Just yesterday it was reported that Exelixis, headquartered in South San Francisco, had signed a 10-year lease for 110,783 square feet of office and research space in Alameda, Calif. An oncology company, it is currently focused on developing cabozantinib and cobemetinib. Cabozantinib has been approved for advanced renal cell carcinoma (RCC), and generated $62.4 million in net product revenue in this year’s first quarter. It has also been approved for progressive, metastatic medullary thyroid cancer. Ongoing studies are being performed to expands its label to become first-line treatment for RCC, as well as liver cancer, and in combination therapies.
Williams writes, “The result for investors is the expectation of rapid EPS growth. Wall Street’s consensus call is for just $0.05 in full-year EPS this year, but $0.49 in full-year EPS in 2018, representing growth of 880%! And that’s hardly the end. Wall Street believes Exelixis could produce $1.58 in full-year EPS by 2020, making the stock quite the bargain even after its huge run-up over the past two years.”
Exelixis is currently trading for $22.11.
3. Incyte Corporation
In a 2016 study by Evercore ISI that surveyed 244 biotech industry observers, Incyte Corporation was cited as the top acquisition target. The primary reason is its two marketed product, Jakafi and Iclusig. Jakafi is a JAK1 and JAK2 inhibitor for polycythemia vera. It has the potential to hit $3 billion in peak annual sales. Iclusig is used to treat chronic myeloid leukemia and acute lymphoblastic leukemia.
It also has two other compounds, epacadostat, in a clinical trial with Merck’s Keytruda in melanoma, which if approved could bring in $1.6 billion annually, and baricitinib, licensed to Eli Lilly, which has potential peak sales of $1.8 billion. However, baricitinib received a complete response letter (CRL) from the FDA last week for rheumatoid arthritis. The FDA asked the companies to hand over more dosing and safety data.
Incyte’s projected EPS growth is 417 percent, although Williams isn’t as optimistic. He writes, “Also worrisome is the fact that Geron and licensing partner Johnson & Johnson are developing a myelofibrosis drug of their own known as imetelstat. What makes imetelstat so intriguing is that in early stage studies it elicited partial and complete responses in patients. No clinical drug had ever previously elicited an objective response in myelofibrosis patients. If Geron's and Johnson & Johnson’s drug is approved in 2019 or 2020, it could very easily gobble up nearly every cent of Jakafi’s revenue stream since it treats the disease and not just the symptoms of the disease.”
Incyte is currently trading for $125.61.