Three Dinged Biopharmas that Could Make a Fierce Comeback

February 16, 2016
By Mark Terry, BioSpace.com Breaking News Staff

With the biotech market in an early-year slump, investors are searching for a few good companies that just might come back swinging. The Motley Fool asked three of its investors to pick their Comeback Kids.

Celgene

Summit, NJ-based Celgene Corporation (CELG) is Selena Maranjian’s pick, noting that the company’s stock has dropped more than 17 percent in the last year. She points out that the company has several successful drugs out and has a promising pipeline. “That last aim,” she writes, “is a powerful way both to boost earnings and to prolong patent protection. Celgene’s current big sellers include Revlimid, Pomalyst, and Otezla, which together generated $9.2 billion in 2015, with $10.5 billion expected in 2016.”

Celgene recently announced major changes in its executive leadership. Mark Alles was taking on the chief executive role, replacing Bob Hugin, who was going to become executive chairman and remain to lead the board of directors. Jackie Fouse, formerly chief financial officer and president of the company’s Hematology & Oncology franchise, stepped up to become president and chief operating officer. Scott Smith, the company’s president of Immunology and Inflammation (I&I) moves to chair Celgene’s Global Management Committee. And Tom Daniel will head research and early development.

Celgene has been on a downward trend, although most recently it’s been heading upward. Shares traded on July 23, 2015 for $139.01, dropped on Sept. 28 to $104.79, and jumped back to $127.20 on Nov. 2. But its volatility continued, dropping again on Feb. 2, 2016 to $96.85. Shares are currently trading for $102.45.

Vertex Pharmaceuticals

Brian Feroldi chose Vertex Pharmaceuticals (VRTX), based in Boston. Even though the company’s has fallen off a cliff recently, with shares currently trading for $83.23, down from a recent high on Dec. 30 of $126.40, some analysts think the company’s revenue will more than double to $2.3 billion this year.

The company’s fortunes have been built on two cystic fibrosis drugs, with Kalydeco sales in 2015 hitting $632 million, an increase of 36 percent. It also has recently been granted label extensions, so 2016 is expected to have strong sales again.

What has Feroldi excited, however, is its latest CF drug, Orkambi, which recently gained approval in the U.S. and Europe. In last year’s fourth quarter, Orkambi had $220 million in sales, which was only its second quarter on the market. It’s not even all that clear why share prices are down, which is why Feroldi and others suspect stock prices are likely to improve. He also points out that the company hasn’t even really started reporting sales revenue of Orkambi in Europe.

Biogen

Cambridge, Mass.-based Biogen (BIIB) is Cheryl Swanson’s pick. The company’s stock has taken a hit because sales of its blockbuster multiple sclerosis (MS) drug, Tecfidera, has slowed. She cites Biogen’s expected data this year for LINGO, the first ever drug to fix nerve damage caused by MS. “Admittedly,” she writes, “LINGO is a long shot, and Biogen’s Alzheimer’s drug candidate aducanumab is even riskier. But the possibility that aducanumab could become an approvable therapy seems to be completely written out of Biogen’s price, so any positive results could skyrocket this stock.”

Although Lingo and aducanumab are high-stakes bets, the company appears to be bolstering its bottom line with a biosimilar for Amgen ’s Embrel, for rheumatoid arthritis, and a possible European approval for a biosimilar of Johnson & Johnson ’s Remicade.

Sean Williams wrote in The Motley Fool back in January that Biogen has an interesting pipeline. At the J.P. Morgan Healthcare Conference held in January in San Francisco, George Scangos, Biogen’s chief executive officer, said, “If we attack these diseases in a measured, thoughtful way with a good understanding of the biology and good biomarkers we think the risk is quite reasonable, and the risk-reward benefit for our company, for our patients, is quite attractive.”

Which is probably an understatement. The first company to develop a good, even moderately effective Alzheimer’s drug is going to make a fortune.

Biogen hasn’t responded to that promise just yet, however. Shares traded for $475.98 on Mar. 20, 2015, then plunged to $300.30 on July 24. Shares meandered around for a while and are currently trading for $252.79.

Swanson writes, “The company announced 11 percent growth in annual revenues and a significant cash stockpile of $3.4 billion. The size of that war chest gives Biogen ample ammunition for some price-moving acquisitions this year of either companies or drugs.”