3 Biotechs Wall Street Predicts is Heading Toward Tremendous Growth

April 3, 2017
By Mark Terry, BioSpace.com Breaking News Staff

Investors and analysts dusted off their crystal balls and chose three biotech stocks they think will grow the fastest this year. Keith Speights, writing for The Motley Fool, provides an overview.

1. Vertex Pharmaceuticals

On March 6, Vertex Pharmaceuticals , based in Boston, acquired a cystic fibrosis (CF) drug candidate, CTP-656, from Concert Pharmaceuticals . Vertex paid $160 million in cash for the global development and commercialization rights. If approved as part of a combination regimen for CF, Concert could receive an additional $90 million in milestone payments in the U.S., and reimbursement in the U.K., Germany or France. The drug is basically the same as Vertex’s Kalydeco, but the hydrogen atoms are replaced by deuterium atoms. This makes it last longer.

Wall Street predicts Vertex earnings will grow by 67 percent average annual rate over the next five years. It has two CF drugs on the market, Orkambi and Kalydeco. Speights notes that, “The company’s primary path to growth for the immediate future is securing reimbursement for Orkambi in more European countries. Over the long run, though, Vertex hopes to expand the approved indications for both of its current drugs and advance its pipeline.”

Vertex is currently trading for $109.32.

2. Incyte Corporation

Incyte , along with Eli Lilly , is expecting the U.S. Food and Drug Administration (FDA) to make a decision on baricitinib for rheumatoid arthritis by April 14. It was originally scheduled for January 2017, but the FDA wanted more time to review the data.

Wall Street analysts expect Incyte to increase earnings at an average annual rate of more than 39 percent over the next five years. The key is its JAK1/JAK2 inhibitor Jakafi, which is approved for myelofibrosis and polycythemia vera. It’s being evaluated for two more cancer indications.

And though baricitinib will help the company, and is also being evaluated in psoriatic arthritis, atopic dermatitis, and systemic lupus erythematosis, it’s not the only drug in its pipeline. It has 13 compounds in various stages of development.

Speights writes, “Perhaps Incyte’s biggest opportunity other than Jakafi, though, lies with epacadostat. The experimental ID01 inhibitor is currently in a pivotal late-stage study for treating melanoma. Other indications targeted in additional clinical studies include lung cancer, renal cancer, head and neck cancer, and bladder cancer.”

Incyte is currently trading for $138.72.

3. Celgene

Analysts have dubbed Celgene as the fastest growing biotech stock. It’s had something of a bumpy ride. Shares traded on July 23, 2015 for $139.01, dropped on Sept. 28 to $104.79, rose back to $127.20 on Nov. 2, dropped again to $107.49 on Nov. 13. On Dec. 24 shares rose back to $122.14, and on Feb. 2, 2016 dropped to $96.85. It is currently for $124.74.

A big part of analysts’ expectations have to do with the company’s portfolio. It has fewer than 10 drugs in its portfolio, mostly cancer drugs, which make up most of company revenue. The rest are for inflammatory diseases. However, the company has about 30 drugs in its development pipeline. At least 10 of those have the potential to be blockbusters—$1 billion in annual revenue each—by 2022.

Wall Street estimates predict annual average growth in earnings of 22 percent over the next five years. Speights writes, “Celgene’s current bright star is Otezla. Sales are soaring for the drug, which is approved for treating psoriatic arthritis and psoriasis. Late-stage studies are in progress evaluating Otezla in treating two other indications—ankylosing spondylitis and Behcet’s disease.”