Deerfield Beach, FL / July 23, 2014 / Biotechnology stocks were among the top performers in 2012 and 2013. The NASDAQ Biotech Index gained an impressive 120% from the start of 2012 to the end of 2013, easily outperforming the S&P 500, which itself posted significant gains. However, the strong performance has not continued in 2014. In fact, there were concerns even last year that there could be sharp pullback in the biotech sector. The pullback has happened this year.
Recently, even the Federal Reserve warned about a bubble in biotech stocks. The Fed noted that the price tags on some sectors, which include biotech, do appear significantly stretched. The sharp decline in the biotech sector, though, is not such a bad thing after all as it allows investors to take stock of the situation. Indeed this is a very good time to take a closer look at the sector and separate the biotech players that have the potential from the ones that were just riding the wave.
Here are some interesting companies in the biotech sector that investors should certainly take a closer look at, given their potential.
IsoRay Inc. (ISR): The biotechnology stock has had a phenomenal year so far, gaining a whopping 453%, year-to-date. The gains of course are being driven by the strong progress the Richland, Washington-based company is making.
IsoRay is engaged in the development, manufacture and sale of isotope-based medical products and devices for the treatment of cancer and other malignant diseases. In March 2003, the company received clearance from the FDA to market Cesium-131 for the treatment of prostate, breast, liver, brain, head, and neck cancers. Cesium-131 provides superior clinical benefits for seed brachytherapy patients.
Cesium-131 has been gaining wide acceptance. Recently, the company announced that it entered into two international distribution agreements for the sale of its full line products. Last month, the company also announced the world’s first liquid Cesium-131 treatment for metastatic brain cancer using GLIASITE® Radiation Therapy System.
The positive developments led to analysts at Maxim raising price target on IsoRay shares to $5 from $3.50. The stock is currently trading at around $2.75. Maxim analysts have a buy rating on the stock. The analysts noted the fundamental attributes of Cesium-131, which include higher average energy and a relatively shorter half-life than other commonly used brachytherapy isotopes, will eventually lead to conversion and adoption by key opinion leaders although it will take time. The analysts further said in a research note that IsoRay’s further growth will likely be driven by increasing adoption in non-prostate cancer treatment.
Gilead Sciences Inc. (GILD): Another biotechnology stock that investors should watch is Gilead Sciences. The Foster City, California-based company is engaged in the discovery, development and commercialization of medicines. Its primary areas of focus include HIV/AIDS, liver diseases and cardiovascular/metabolic.
With a market cap of over $137 billion, Gilead of course is one of the bigger players in the biotech space. Year-to-date, the company’s shares have gained more than 19%, outperforming the NASDAQ. While the gains this year are impressive, they are well below those seen in 2013. Last year, Gilead shares surged more than 100%.
According to analysts at JP Morgan, Gilead Sciences has a very strong and impressive oncology pipeline. Gilead is scheduled to release its second-quarter financial results next week. In the first quarter of 2014, the company had reported total revenue of $5 billion, up from $2.53 billion reported for the same period in the previous year. The company’s product sales for the quarter rose to $4.87 billion from $2.39 billion. Net income for the first quarter came in at $2.23 billion, or $1.33 per diluted share, compared to $722 million, or $0.43 per share reported for the same period in the previous year.
Incyte Corporation (INCY): According to JP Morgan analysts, Incyte is well-positioned with a growing commercial franchise and significant near-and long-term optionality.
Based in Wilmington, Delaware, Incyte focuses on the discovery, development and commercialization of small molecule drugs to treat serious unmet medical needs. Recently, the company announced that it earned a $25 million milestone payment from Novartis (NVS) in connection with the approval of Jakavi® (ruxolitinib) in Japan for the treatment of patients with myelofibrosis.
Incyte has a collaboration and license agreement with Swiss drug giant Novartis. Under the terms of the agreement, Novartis received exclusive development and commercialization rights to ruxolitinib outside the U.S. for all hematologic and oncologic indications. Herve Hoppenot, President and CEO of Incyte, noted earlier this month that he is very pleased with the progress that Novartis is making in the global roll-out of Jakavi. In the U.S., ruxolitinib is marketed by Incyte as Jakafi®.
Incyte also said earlier this month that Novartis is continuing to make progress in obtaining formal pricing and reimbursement approval for a third major European country and expects this to occur in the second half of 2014. Once this is achieved, Incyte will receive an additional $60 million in milestone payment.
Despite the progress, Incyte shares have fallen more than 6% so far this year. However, in the last one year, the stock has gained nearly 110%.
Emerging Equities Report
Source: Emerging Equities Report