March 28, 2017
By Mark Terry, BioSpace.com Breaking News Staff
For the last few years, oncology and immuno-oncology have been some of the hottest areas in biopharma. With that in mind, Cory Renauer, writing for The Motley Fool, takes a look at three oncology biopharma companies investors should keep in mind.
Right from the beginning of 2017, when Celgene presented at the JP Morgan Healthcare Conference, the key word associated with Celgene was “overperformance.” Over the last five years, the company has shown compound annual growth rates (CAGR) for revenue of 20 percent and 25 percent for adjusted diluted earnings per share. In three out of five years, the company’s performance outstripped its guidance. Its projected total revenue in 2020 is expected to surpass $21 billion.
A lot of that expansion is from its blood-cancer drug Revlimid. Celgene also has a strong pipeline, a powerhouse portfolio and numerous collaboration agreements.
Renauer writes, “While it’s impossible to predict just how many of its collaborative efforts will pay off in the future, Celgene stock is a great buy right now. Some blazing fast growth of recently launched drugs are expected to lift the bottom line at a 22.3 percent annual rate over the next five years, but a recent price of about 17 times this year’s earnings estimates is what you’d expect for a company growing less than half as fast.”
Celgene are currently trading for $125.02.
Investors were tough on the company after some missteps and increasing pressure from Merck and Roche , but the company’s still strong in immuno-oncology. Recently both Jana Partners and Carl Icahn have acquired big stakes in the company, which has raised the possibility of a major acquisition. There aren’t many companies that could afford the probable $100 billion price tag, but Pfizer (PFE) has been floated as a possible buyer.
But BMS has more revenue drivers than Opdivo. Its leukemia drug, Sprycel, grew by 13 percent in 2016 to hit $1.82 billion. The company recently brought Empliciti to market, which added $150 million to sales. And outside oncology, Eliquis’ year-to-year sales jumped 80 percent in 2016, bringing in $3.34 billion.
Renauer writes, “Unlike Celgene, Bristol-Myers Squibb stock offers a nice 2.8 percent yield at recent prices. At recent prices, the shares can be scooped up for just 20 times this year’s earnings estimates. With earnings expected to grow at about 14.5 percent each year for the next five years, this cancer stock may be one of the best bargains of the year.”
Bristol-Myers Squibb are currently trading for $56.24.
The company, when it isn’t losing out on collapsed acquisitions like Allergan (AGN), has invested a lot of money into Hospira and Medivation. Renauer notes, “Although Pfizer ’s past is dotted with expensive missteps, it has quickly risen up the ranks to become a top cancer drug stock to buy this year.”
Why? Bavencio, which it developed with Merck KGaA, is an immuno-oncology drug that recently received approval in the U.S. for the treatment of Merkel cell carcinoma. It’s likely to be the first of many indications the drug can treat. The U.S. Food and Drug Administration (FDA) is reviewing applications for the drug to treat bladder cancer, and Pfizer has late-stage trials evaluating it for head and neck, lung, stomach, ovarian, and kidney cancers.
It is also developing talazoparib and peak annual sales, if approved, are pegged at $1.5 billion or more. This drug candidate was acquired when it bought Medivation for $14 billion, so it would have to do well to make its money back. The drug is being evaluated in difficult-to-treat breast cancers, but it may have applicability for lung and ovarian cancer as well.
And meanwhile, Pfizer’s Ibrance is still raking in sales, hitting $2.14 billion in 2016.
Renauer writes, “Consensus annual earnings growth expectations of about 6.4 percent over the next five years make Pfizer the slowest grower among the three. However, the diverse product lineup weighing it down could also make it less prone to erratic price swings down the road. At a recent price of just 13.3 times this year’s earnings estimates, it looks like a solid bargain for more conservative investors.”
Pfizer are currently trading for $34.20.
