The Zacks Medical-Biomedical and Genetics industry has outperformed the broader Medical market so far this year, gaining 6.1% compared with an increase of 5.1% for the Medical market.
The Zacks Medical-Biomedical and Genetics industry consists of several large as well as small pharma companies. The larger companies, which hold the majority of the industry’s market capitalization, have a strong portfolio of commercial drugs and pipeline candidates. These companies also boast a strong balance sheet and a steady stream of revenues. However, the majority of the companies in the sector are small with a few to no marketed drugs. Most of these companies are in development-stage especially with focus on diseases, which are rare to treat or have significant unmet need like fatty liver, uncommon cancer indications and others.
Some of these clinical stage biotech companies are dependent on just one pipeline candidate. Consequently, the success or failure of their key pipeline candidates in clinical studies affects a stock’s price. These stocks are also affected by a partnership deal or the loss of one with a big pharma company as the latter provides significant funding for research.
These smaller innovative companies, in general, have been witnessing a strong 2019, driven primarily by merger and acquisition deals in the biotech sector. Several large pharma companies acquired small biotechs by paying a hefty premium to add innovative or next-generation therapies to their pipeline. The large-cap pharma companies are looking to add new drugs to their portfolio/pipeline to offset the loss of sales from legacy drugs and avoid time, costs and uncertainty related to the development of new and innovative therapies from scratch. These deals were led by biotechs with gene therapies or cancer candidates in their pipeline.
Collaboration deals between large pharmaceuticals and smaller biotechs and new drug approvals have also contributed to the upside in stock prices.
Recently, Merck offered to buy ArQule for $2.7 billion and Sanofi offered $2.5 billion for the acquisition of Synthorx. Both ArQule and Synthorx are developing therapies targeting cancer indications. Significant mergers this year included the ones between pharma behemoths namely Bristol-Myers Squibb-Celgene and AbbVie-Allergan. Following these two mega mergers and other acquisition offers, share price of several biotechs with attractive pipeline showed strong upward movement.
Stocks That Outperformed
Here we have zeroed in on five biotech companies, which have risen more than 100% so far this year and witnessed positive earnings estimate revisions.
All these stocks carry a Zacks Rank 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Importantly, the Zacks Medical-Biomedical and Genetics industry features among the top 22% of the 255 Zacks-ranked industries.
ACADIA Pharmaceuticals Inc. ACAD)
ACADIA Pharma surpassed earnings estimates in three of the last four reported quarters with average beat of 11.62%. The Zacks Consensus Estimate for loss has narrowed 6.11% for 2020 in the past 60 days. Shares of the company have rallied 186% so far in 2019.
Compugen Ltd. CGEN)
Genomic Health surpassed earnings estimates in all the last four reported quarters with average beat of 19.78%. The Zacks Consensus Estimate for loss has narrowed by 2.4% for 2020 in the past 60 days. Shares of the company have rallied 156.2% year to date.
Cue Biopharma, Inc. CUE)
Cue Biopharma’s four-quarter average earnings beat is 23.71%. The Zacks Consensus Estimate for loss has narrowed by 7.4% for 2020 in the past 60 days. Shares of the company have rallied 167.9% so far this year.
Epizyme, Inc. EPZM)
Epizyme surpassed earnings estimates in three of the past four quarters with the average beat being 20.94%. The Zacks Consensus Estimate for loss has narrowed 8.6% for 2020 in the past 60 days. Shares of the company have rallied 205.3% year to date.
Krystal Biotech, Inc. KRYS)
Krystal Biotech beat earnings estimates in two of the last four reported quarters with the average beat being 4.26%. The Zacks Consensus Estimate for loss has narrowed 2.1% for 2020 in the past 60 days. Shares of the company have rallied 203.6% so far in 2019.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Epizyme, Inc. (EPZM) : Free Stock Analysis Report
Compugen Ltd. (CGEN) : Free Stock Analysis Report
ACADIA Pharmaceuticals Inc. (ACAD) : Free Stock Analysis Report
Krystal Biotech, Inc. (KRYS) : Free Stock Analysis Report
Cue Biopharma, Inc. (CUE) : Free Stock Analysis Report
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