December 13, 2016
By Alex Keown, BioSpace.com Breaking News Staff
CHICAGO – Investors large and small look for stocks that are “profit friendly.” The Motley Fool’s Todd Campbell chose United Therapeutics , Gilead Sciences and Biogen Inc. as three companies that boast the “best operating margins in the business.”
Shares of United Therapeutics are currently trading at $138.32 as of 11:24 a.m. United Therapeutics’ top drug Remodulin makes the company the leading player in the treatment of pulmonary arterial hypertension (PAH). The drug generated $152.4 million in the previous quarter, which represents more than one-third of its overall quarterly revenue of $408.2 million. United Therapeutics currently markets five drugs for PAH. In addition to Remodulin, United Therapeutics continues to see strong growth based on sales of its products Adcirca and Orenitram. While Remouldin has done well, Campbell said the drug could be challenged by generics in 2018. In addition to PAH, United’s pipeline also includes therapies for other medical problems, including the only FDA-approved therapy for the childhood cancer neuroblastoma.
Gilead Sciences is the undisputed leader in the hepatitis C market. Its two leading drugs, Harvoni and Sovaldi, accounted for $20 billion in sales last year. Gilead’s two hepatitis C drugs, generated $4.8 billion in revenue during the third quarter of 2015. However, Sovaldi’s sales fell 48 percent during the third quarter. The drug generated revenue of $1.47 billion. Campbell noted that the company is facing competition, but is “still producing more profit per dollar of sales than its peers.” Gilead is also sitting on nearly $30 billion in reserves it could use for M&A activity that could spur future growth. Shares of Gilead are selling at $75.52 this morning, up nearly 4 percent.
3. Biogen
Biogen received a major shot in the arm last week after early data from its Phase Ib clinical trial of its Alzheimer’s drug, aducanumab showed positive growth in the reduction of amyloid plaque in the brain. Additionally, data showed a slowing of cognitive decline in the patient pool. The data was a relief to investors, particularly after Eli Lilly ’s amyloid-targeting drug failed. But Biogen’s hopes aren’t solely linked to aducanumab. Biogen remains the leader in multiple sclerosis treatments, behind its two drugs, Avonex and Tysabri. The company’s MS pipeline was bolstered by Tecfidera—which has allowed the company to “maintain an industry-leading operating profit margin of 49.3% over the last 12 months,” Campbell said. Shares of Biogen are currently trading at $288.08.
