2017 Could be The Breakout Year for These 5 Biotechs
January 18, 2017
By Mark Terry, BioSpace.com Breaking News Staff
With a new year just starting, investors are keeping an eye out for stocks that might exceed expectations. Todd Campbell, writing for The Motley Fool, takes a look at five biotech stocks that have a chance at explosive growth this year.
1. Exact Sciences
Exact Sciences is a molecular diagnostic company that started on early detection of colorectal cancer. It markets Cologuard, a noninvasive screening test for colorectal cancer that analyzes stool DNA and blood biomarkers. The test, which is cheaper than a colonoscopy and noninvasive, is gaining traction in the market. Last year, the company completed 244,000 Cologuard tests. And it’s picking up speed after being added to the national colon cancer screening guidelines in 2016.
Campbell writes, “This year could be a breakout year for Exact Sciences in terms of both sales and profit. Last year, the company pocketed $99 million in sales, but management believes this market could be worth $4 billion. If test volume continues to accelerate and management can keep a lid on expenses, this company could exit 2017 at a sales run rate that positions it for profitability in 2018.”
Exact Sciences is currently trading for $19.04.
2. Kite Pharma
Pretty much the leader in CAR-T therapies for cancer treatments, Kite Pharma has begun to complete its rolling Food and Drug Administration (FDA) application for KTE-C19 for non-Hodgkin lymphoma. If approved, it would be marketed under the name Axi-Cel, and would be used to treat patients with B-cell cancers that haven’t responded to existing therapies.
Campbell writes, “Since Axi-Cel could have first-mover advantage and it’s a complex approach, it’s likely to command top-tier pricing, and that suggests to me that it could be a nine-figure selling drug out of the gate. If I’m right, then owning shares in this innovative biotech could be profit-friendly this year.”
Kite is also one of several companies that are regularly tossed around as potential acquisition targets, such as for Gilead Sciences .
Kite Pharma is currently trading for $46.98.
3. Illumina
Illumina is the world leader in gene sequencing, which is going to be a stronger and stronger presence in healthcare as we shift to personalized medicine and gene-based therapies become prevalent. They have led the way in developing sequencing technology that is faster and cheaper, including its new NovaSeq 6000, which has the potential to drop sequencing prices to about $100, although it’s probably worth noting that technologist and analysis requirements for sequencing are generally a separate factor.
Campbell says, “Given the potential for lower sequencing costs to spark another surge in sequencing demand, Illumina’s one of my favorite growth stocks to buy in 2017.”
Illumina is currently trading for $161.53.
4. GW Pharma
Marijuana has been touted as a cure for everything from cancer to state’s budget shortfalls. GW Pharmaceuticals had three clinical trials last year of its purified CBD, a cannabinoid found in marijuana, that cuts by 40 percent seizures in Dravet and Lennox-Gastaut syndrome patients. It plans to file with FDA5 in the first half of this year. If approved, it could hit the market by the end of this year or the beginning of 2018.
Campbell notes, “While the addressable market in Dravet and Lennox-Gastaut syndrome is small, GW Pharma estimates that one-third of the 477,000 children with epilepsy respond inadequately to existing treatments.”
GW Pharmaceuticals is currently trading for $121.02.
5. Sarepta Therapeutics
After a rollercoaster 2016, where Sarepta Therapeutics ' experimental treatment for Duchenne muscular dystrophy (DMD) had a dramatic and often contentious approval process, the drug was approved in August. Despite the drug’s $300,000 annual price tag—and that’s a starting point for a drug based on weight, which could hit $500,000—most insurance companies have been willing to reimburse for it. According to the company, about a dozen patients have started on the drug and another 250 are working on the paperwork needed to get the drug.
Campbell writes, “If insurers get on board and the number of patients receiving Exondys 51 climbs, it could provide an important source of tens of millions of dollars in revenue to support research that could expand Sarepta Therapeutics’ approach to more DMD patients. Admittedly, it’s unlikely this company will turn a profit anytime soon, but it could make progress toward that goal this year, and that makes it a stock worth considering.”
Sarepta is currently trading for $36.25.