2 Bay Area Biotechs Expected to Grow 67% or Up Over the Next Five Years

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Traditionally, investors are advised to hope for about 8 percent growth per year. Which isn’t to say investors aren’t looking for stocks that grow way more than that. Of course they are. Brian Feroldi, writing for The Motley Fool, looks at two life science companies that are expected to grow more than 67 percent over the next five years.

1. Corcept Therapeutics

Headquartered in Menlo Park, Calif., Corcept focuses on developing glucocorticoid receptor antagonists. Its drug Korlym (mifepristone) has been on the market since 2012 as a treatment for hyperglycemia secondary to hypercortisolism in adults with endogenous Cushing’s syndrome who have type 2 diabetes or glucose intolerance and have failed surgery or are not candidates for surgery. It is also being evaluated for prostate, breast and ovarian cancer.

Feroldi writes, “Last quarter this company’s sales grew 97 percent to $42.8 million thanks to strong growth in sales of Korlym, which is the company’s one and only drug that treats a rare disease called Cushing’s syndrome. What’s more, the company translated that huge growth into $17.4 million in profits, which is a figure that smoked analysts’ estimates.”

And Wall Street believes that growth is just the beginning. Analysts have projected profits to grow 71 percent annually over the next five years. The company’s revenue guidance shows revenue increasing in the range of $157 to $162 million for this year.

There are concerns that competition is on its way. Novartis and another biotech, Strongbridge Biopharma, are each working on treatments for Cushing’s disease. That could squash Corcept’s growth. But Corcept is working on a next-generation Cushing’s drug, CORT125134.

“We expect our strong growth to continue,” said Joseph Belanoff, the company’s chief executive officer, in a third-quarter earnings report. “Relacorilant promises to provide Korlym’s benefits, but without the side effects caused by Korlym’s affinity for the progesterone receptor—an important medical improvement. We also achieved CLIA-validation for our FKBP5 assay, a direct measure of cortisol activity. This biologic test has the potential to help physicians better diagnose and optimally treat patients with hypercortisolism.”

2. Penumbra

Based in Alameda, Calif., Penumbra is a medical device company that designs, develops, manufactures and markets a portfolio of products in neurology and peripheral vascular. Its Penumbra System is a fully-integrated system for mechanical thrombectomy by aspiration, used for stroke patients. The company’s Penumbra Smart Coil System is a platinum embolization device used to treat aneurysms.

The neuro business makes up 70 percent of the company’s revenue. This market is growing at more than 20 percent for the company. Its peripheral vascular business is also growing more than 20 percent.

Feroldi writes, “While Penumbra’s stock has been a massive winner since its 2014 IPO—shares have climbed more than 150 percent since first hitting the markets—the company hasn’t produced much in the way of profits. That’s finally on the cusp of changing now that the company is starting to scale. Wall Street expects Penumbra to post a small profit in 2018 and for that figure to grow in excess of 67 percent annually over the next five years.”

The company reported $89.3 million in revenue for its third quarter, up 24.9 percent from the same quarter the previous year. Gross profit for the quarter was $54.8 million, or 65.3 percent of total revenue, and total operating expenses were $54.1 million.

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