4 Drug Stocks Rising More Than 40% in 2023 With Room to Grow
The drug and biotech sector had a rather rough time in 2023. Regular pipeline setbacks, slow ramp-up of newer drugs, supply chain disruptions, uncertainty about the impact of Medicare drug price negotiations, Federal Trade Commission’s scrutiny of merger and acquisition (M&A) deals and broader economic uncertainty were some of the factors that pulled down the drug/biotech industry. However, rapid innovation, artificial intelligence and machine learning techniques for drug discovery and target identification processes, and growing opportunities for generics and biosimilar products were some of the highlights of 2023.
Innovation is likely to drive growth in the industry, with key spaces like weight loss/obesity and Alzheimer’s disease drugs attracting attention. M&A activity will continue to remain strong, which shows growth. Also, the Federal Reserve's indications of potential rate cuts in 2024 lead to hopes of a biotech market rebound in 2024. The fundamentals of the sector remain strong and investors are expected to come back to this defensive space eventually.
Several companies in the drug and biotech sector have returned 40% or higher year to date and have room for more growth in 2024. Here, we discuss four such companies — Novo Nordisk NVO, Journey Medical Corporation DERM, Lyra Therapeutics LYRA and Fusion Pharmaceuticals FUSN.
Novo Nordisk
It has one of the broadest diabetes portfolios in the industry, with an extensive range of insulin drugs and diabetes-related products. Semaglutide remains the company's growth engine. It is approved as Ozempic pre-filled pen and Rybelsus oral tablet for type II diabetes and as Wegovy injection for weight management. Ozempic, Rybelsus and Saxenda have been helping the company maintain momentum.
Novo Nordisk is a global market leader in the popular GLP-1 segment of the diabetes market. Its popular GLP-1 receptor agonist, Wegovy, is seeing strong prescription trends and is generating impressive revenues and profits for Novo Nordisk. Label expansions of diabetes and obesity care drugs in cardiovascular and other indications are likely to boost sales.
Data from the phase III SELECT study, which evaluated Wegovy (semaglutide 2.4 mg) as an adjunctive treatment for preventing cardiovascular (“CV”) diseases in adults with overweight or obesity, showed that Wegovy reduced the risk of major adverse CV events by 20%. Obesity is one of the major risk factors responsible for CV diseases. A weight-loss drug like Wegovy, which also has CV benefits, is expected to see an increase in sales and demand. Novo Nordisk is also evaluating a once-daily oral formulation of semaglutide for obesity indication in late-stage studies, with a potential FDA filing expected later this year.
Novo Nordisk has also significantly stepped up its M&A activity in the past two years.
Novo Nordisk sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The stock has risen 47.8% so far this year compared with an increase of 5% for the industry.
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Estimates for its 2024 earnings per share have increased from $2.99 to $3.10 over the past 60 days.
Journey Medical
Journey Medical markets eight branded and two generic products to treat some common skin conditions.
Its key pipeline candidate is DFD-29, which is being developed as an oral treatment for inflammatory lesions (papules and pustules) and erythema of rosacea. Journey Medical announced positive top-line data from two phase III studies on DFD-29 in July. The studies achieved the co-primary and all secondary endpoints, demonstrating statistically superior efficacy of DFD-29 over Oracea (standard of care) and placebo. Oracea is used to treat inflammation associated with rosacea in adults.
The studies also demonstrated the beneficial effect of DFD-29 on erythema assessment, which means redness from rosacea. Erythema assessment is a key secondary endpoint of the study. Erythema is an important sign of rosacea severity. Improving erythema is relevant to rosacea treatment. DFD-29’s significant impact on erythema reduction could prove to be the differentiating factor over the current standard of care for rosacea. The company plans to file a new drug application for DFD-29 toward the end of 2023. Journey Medical believes DFD-29 has the potential to change the treatment paradigm for rosacea.
Journey Medical's stock has risen 296.9% so far this year against a decrease of 3.5% for the industry.
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Journey Medical sports a Zacks Rank #1 currently. Estimates for Journey Medical’s 2024 bottom line have improved from a loss of 41 cents per share to a loss of 35 cents per share over the past 60 days.
Lyra Therapeutics
The company is developing two therapies for the treatment of chronic rhinosinusitis (CRS) in late-stage studies. LYR-210 and LYR-220 are bioresorbable nasal implants designed to deliver six months of continuous anti-inflammatory medication to the sinonasal passages for the treatment of CRS, a highly prevalent inflammatory disease of the paranasal sinuses.
In September, Lyra announced positive top-line data from the BEACON phase II study of LYR-220 in CRS patients who have had prior ethmoid sinus surgery. The study met its primary safety endpoint with LYR-220 demonstrating statistically significant and clinically relevant improvements in symptom severity.
Enrolment has been completed in the pivotal phase III ENLIGHTEN I study on the second candidate, LYR-210, in CRS patients who have not had ethmoid sinus surgery, with top-line data expected in the first half of 2024. Enrolment is ongoing in the second pivotal phase III study, ENLIGHTEN II on LYR-210, also in the pre-surgical CRS patient group.
Lyra Therapeutics’ stock has risen 58.9% so far this year against a decrease of 3.5% for the industry.
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The consensus estimate for 2024 loss has narrowed from $1.27 per share to $1.03 per share over the past 60 days. The company has a Zacks Rank #2 (Buy).
Fusion Pharmaceuticals
The company makes next-generation radiopharmaceuticals as precision medicines. It has a diversified pipeline of targeted alpha therapy (TAT) programs.
Its key pipeline candidates are FPI-2265, a small molecule-based TAT targeting prostate specific membrane antigen for the treatment of metastatic castration-resistant prostate cancer, and FPI-1434 in phase I for patients with solid tumors expressing IGF-1R. Preliminary data from approximately 20 to 30 patients from the phase II study on FPI-2265 are expected to be released in the first quarter of 2024.
In April, Fusion Pharmaceuticals received IND clearance to begin clinical development of FPI-2068, its novel TAT candidate, which targets solid tumors expressing EGFR-cMET. Fusion Pharmaceuticals is jointly developing FPI-2068 with AstraZeneca under the companies' multi-asset collaboration agreement. Pre-clinical data on the candidate has demonstrated strong anti-tumor activity and confirmatory evidence of FPI-2068's mechanism of action.
Fusion has also entered into a collaboration with Merck to evaluate FPI-1434 in combination with Merck's blockbuster PD-L1 inhibitor, Keytruda, in patients with solid tumors expressing IGF-1R.
Fusion Pharmaceuticals’ stock has risen 91.4% so far this year against a decrease of 3.5% for the industry.
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The consensus estimate for 2024 loss has narrowed from $1.63 per share to $1.40 per share over the past 60 days. The company has a Zacks Rank #2.
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Novo Nordisk A/S (NVO) : Free Stock Analysis Report
Journey Medical Corporation (DERM) : Free Stock Analysis Report
Fusion Pharmaceuticals Inc. (FUSN) : Free Stock Analysis Report
Lyra Therapeutics, Inc. (LYRA) : Free Stock Analysis Report
