March 30, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Biotech companies come in a lot of shapes and sizes, which provide a variety of risk profiles. Many are one-drug development companies, the so-called unicorns, and don’t have any actual revenue being generated. The Motley Fool takes a look at three biotech companies that don’t necessarily require day-to-day monitoring.
Thousand Oaks, Calif.-based Amgen (AMGN) is no unicorn. It has an extensive portfolio, including two drugs, Neulasta and Enbrel, that bring in $1 billion or more in sales each quarter. Neulasta is used to treat low white blood cell counts and Enbrel is used to treat rheumatoid arthritis.
Three other of the company’s drugs are blockbusters—$1 billion in annual sales: Prolia for osteoporosis, Sensipar/Mimpara to treat hyperparathyroidism, and XGEVA for cancer. The company also recently launched Kyprolis for multiple myeloma and Repatha for cholesterol.
Brian Feroldi writes, “Yet despite its huge profitability and deep portfolio of products, investors interested in Amgen’s stock look to be getting quite a deal. Shares are currently trading for around 14 times 2016 profit estimates, and the company offers up a 2.75 percent dividend yield.”
Foster City, Calif.-based Gilead Sciences (GILD), despite a 10 percent turndown since the beginning of 2015, has shown gains of more than 4,930 percent in the last 15 years. The company dominates the hepatitis C market and has a very strong presence in the HIV market.
The company is being encouraged to acquire another company or two to bolster that slight sag in sales and possibly to help it push into the oncology market. “With an earnings yield of nearly 13 percent,” writes Cory Renauer, for The Motley Fool, “Gilead has a bottom line that could remain flat into eternity, and the stock would still outperform the S&P 500’s 10 percent historical return. Given the existing, and possibly increasing, demand for hepatitis C treatments, combined with Gilead’s dominant position in this space, achieving flat to modest bottom-line growth in the years ahead should be a doddle.”
Summit, N.J.-based Celgene Corporation (CELG) recently projected net product sales for 2016 of $10.5 billion to $11 billion, a 17 percent increase year-over-year. Its multiple myeloma drug, Revlimid, is projected to have sales of $6.6 billion to $6.7 billion.
The company has also been suggested as a tasty acquisition target for Shire . Not only is Revlimid doing well, but it has Abraxane and Pomalyst, which both almost hit the $1 billion mark last year. Another drug with strong potential earnings is Otezla, to treat plaque psoriasis and psoriatic arthritis.
“Unlike some biotech stocks with sky-high valuations and little or no earnings,” writes Keith Speights for The Motley Fool, “Celgene claims a reassuring price tag: Its forward earnings multiple is less than 14. And when you factor in that Celgene’s earnings should grow well over 20 percent annually for the next several years, the stock looks like a bargain.”
