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Forget Alexion (ALXN), Buy These 3 Biotech Stocks Instead
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New Haven, CT-based Alexion Pharmaceuticals, Inc. has had a tough year with shares falling 33.3% year-to-date (YTD). The company, which is known for its focus on developing treatments for rare disorders, has underperformed the Zacks categorized Medical-Biomed/Genetics industry which declined 25.1% YTD.
Alexion’s shares touched a 52-week low recently following the departure of two top executives in the midst of an ongoing probe into improper sales practices (Read more: Alexion Slips to 52-Week Low as CEO, CFO Quit amid Probe). The probe relates to allegations made by a former employee regarding sales practices of the company’s top-selling blockbuster drug, Soliris, which is approved for paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS). The Audit and Finance Committee of the Board of Directors is looking into these allegations -- with the investigation almost complete, Alexion expects to file the Form 10Q for the September quarter in Jan 2017 or earlier.
Soliris is the key revenue generator at Alexion and has brought in sales of $2.1 billion in the first nine months of 2016 with the product expected to clock sales of $2.835 - $2.875 billion this year.
Meanwhile, Alexion suffered some setbacks on the R&D front as well. Earlier this year in June, Alexion had said that Soliris failed to meet the primary endpoint in a late-stage study for refractory generalized myasthenia gravis (gMG), an ultra-rare segment of MG which is a debilitating, complement-mediated neuromuscular disease. Shares were down 10.9% on the news (Read more: Alexion's Soliris Misses Phase III Primary Efficacy Endpoint).
In addition to the above, Alexion has also felt the impact of the drug pricing controversy that has been weighing on biotech stocks for more than a year now.
So while Alexion, a Zacks Rank #4 (Sell) stock, sorts through all these issues especially the ongoing investigation into Soliris sales practices, we advise investors to focus on biotech stocks with a strong Zacks Rank and interesting pipelines/products and growth potential.
Our Picks
Celgene Corporation : Summit, NJ-based Celgene is well known for its presence in the cancer and immunology market. While blood cancer treatment, Revlimid, is the key contributor to the top-line and continues to deliver impressive growth, Celgene has been diversifying its portfolio with other drugs like Pomalyst and Otezla. Otezla (psoriasis, active psoriatic arthritis) has immense potential with sales being driven by demand, growing market share and an expanding global footprint. The product is comfortably on track to achieve blockbuster status in 2016.
Celgene has a rich and promising pipeline as well. While the company is working on expanding the labels of currently marketed products like Revlimid and Otezla, it has several late-stage candidates including ozanimod (ulcerative colitis and relapsing multiple sclerosis) and GED-0301 (Crohn’s disease) in the inflammation and immunology therapeutic area and CC-486 (myelodysplastic syndromes and acute myeloid leukemia), enasidenib (acute myeloid leukemia) and luspatercept (myelodysplastic syndromes and beta-thalassemia) within hematology. What makes the pipeline more attractive is that quite a few of these candidates have blockbuster potential.
Celgene’s YTD price performance shows that the company has outperformed the Zacks categorized Medical/Biomedical Genetics industry.
Incyte Corporation (INCY - Free Report) : Wilmington, DE-based Incyte has two marketed products in its portfolio and a strong pipeline. Flagship product, Jakafi – a JAK1/JAK2 inhibitor – looks well-positioned for growth and is expected to bring in sales of $850 - $855 million in 2016. Moreover, with Gilead presenting mixed results on its experimental JAK inhibitor, momelotinib, the competitive threat for Jakafi seems to have gone down considerably. Incyte has a robust pipeline as well with a focus on the highly sought after immuno-oncology space. A near-term catalyst for Incyte could be the potential approval of its experimental rheumatoid arthritis treatment, baricitinib, which has been developed in collaboration with Eli Lilly and Company (LLY - Free Report) . The companies recently got a positive opinion in the EU for the drug. We note that Incyte is often considered an attractive acquisition target given Jakafi’s strong performance and the company’s promising pipeline. YTD, Incyte has outperformed the Zacks categorized Medical/Biomedical Genetics industry.
Regeneron Pharmaceuticals, Inc. (REGN - Free Report) : Tarrytown, New York-based Regeneron’s main areas of focus include eye disorders, cholesterol management, rheumatoid arthritis, asthma, atopic dermatitis, pain, cancer, and infectious diseases.
Flagship product, Eylea (eye treatment), continues to be the key financial driver with factors like demographics, an aging population and a higher number of patients with diabetic eye disease expected to drive sales. Moreover, the competitive scenario for Eylea has improved with the recent failure of Ophthotech Corporation’s anti-PDGF therapy Fovista for wet age-related macular degeneration (AMD).
Meanwhile, though PCSK9 inhibitor, Praluent, is yet to show a significant ramp up in sales with scrips continuing to be impacted by reimbursement hurdles for physician offices and patients, positive cardiovascular outcomes data on the treatment would help boost sales significantly.
Regeneron has been working on its pipeline and has several candidates in development including label expansion efforts for Eylea. A key catalyst for the company would be the FDA approval of Dupixent, currently under priority review for atopic dermatitis with a response expected on Mar 29, 2017. Dupixent, which has blockbuster potential, is being investigated for other indications as well including asthma, nasal polyps, and eosinophilic esophagitis. Regeneron is also looking to grow its ophthalmology segment and is evaluating Eylea in combination with other treatments.
Although Regeneron has underperformed the Zacks categorized Medical/Biomedical Genetics industry, the failure of Fovista, a potential competitor, removes a major overhang on the shares.
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
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Forget Alexion (ALXN), Buy These 3 Biotech Stocks Instead
New Haven, CT-based Alexion Pharmaceuticals, Inc. has had a tough year with shares falling 33.3% year-to-date (YTD). The company, which is known for its focus on developing treatments for rare disorders, has underperformed the Zacks categorized Medical-Biomed/Genetics industry which declined 25.1% YTD.
Alexion’s shares touched a 52-week low recently following the departure of two top executives in the midst of an ongoing probe into improper sales practices (Read more: Alexion Slips to 52-Week Low as CEO, CFO Quit amid Probe). The probe relates to allegations made by a former employee regarding sales practices of the company’s top-selling blockbuster drug, Soliris, which is approved for paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS). The Audit and Finance Committee of the Board of Directors is looking into these allegations -- with the investigation almost complete, Alexion expects to file the Form 10Q for the September quarter in Jan 2017 or earlier.
Soliris is the key revenue generator at Alexion and has brought in sales of $2.1 billion in the first nine months of 2016 with the product expected to clock sales of $2.835 - $2.875 billion this year.
Meanwhile, Alexion suffered some setbacks on the R&D front as well. Earlier this year in June, Alexion had said that Soliris failed to meet the primary endpoint in a late-stage study for refractory generalized myasthenia gravis (gMG), an ultra-rare segment of MG which is a debilitating, complement-mediated neuromuscular disease. Shares were down 10.9% on the news (Read more: Alexion's Soliris Misses Phase III Primary Efficacy Endpoint).
More recently, Soliris failed in a registrational study for the prevention of delayed graft function (DGF) after kidney transplantation in adult recipients of a deceased donor kidney (Read more: Alexion Soliris Fails in Phase II/III Delayed Graft Function Study).
In addition to the above, Alexion has also felt the impact of the drug pricing controversy that has been weighing on biotech stocks for more than a year now.
So while Alexion, a Zacks Rank #4 (Sell) stock, sorts through all these issues especially the ongoing investigation into Soliris sales practices, we advise investors to focus on biotech stocks with a strong Zacks Rank and interesting pipelines/products and growth potential.
Our Picks
Celgene Corporation : Summit, NJ-based Celgene is well known for its presence in the cancer and immunology market. While blood cancer treatment, Revlimid, is the key contributor to the top-line and continues to deliver impressive growth, Celgene has been diversifying its portfolio with other drugs like Pomalyst and Otezla. Otezla (psoriasis, active psoriatic arthritis) has immense potential with sales being driven by demand, growing market share and an expanding global footprint. The product is comfortably on track to achieve blockbuster status in 2016.
Celgene has a rich and promising pipeline as well. While the company is working on expanding the labels of currently marketed products like Revlimid and Otezla, it has several late-stage candidates including ozanimod (ulcerative colitis and relapsing multiple sclerosis) and GED-0301 (Crohn’s disease) in the inflammation and immunology therapeutic area and CC-486 (myelodysplastic syndromes and acute myeloid leukemia), enasidenib (acute myeloid leukemia) and luspatercept (myelodysplastic syndromes and beta-thalassemia) within hematology. What makes the pipeline more attractive is that quite a few of these candidates have blockbuster potential.
Celgene’s YTD price performance shows that the company has outperformed the Zacks categorized Medical/Biomedical Genetics industry.
Incyte Corporation (INCY - Free Report) : Wilmington, DE-based Incyte has two marketed products in its portfolio and a strong pipeline. Flagship product, Jakafi – a JAK1/JAK2 inhibitor – looks well-positioned for growth and is expected to bring in sales of $850 - $855 million in 2016. Moreover, with Gilead presenting mixed results on its experimental JAK inhibitor, momelotinib, the competitive threat for Jakafi seems to have gone down considerably. Incyte has a robust pipeline as well with a focus on the highly sought after immuno-oncology space. A near-term catalyst for Incyte could be the potential approval of its experimental rheumatoid arthritis treatment, baricitinib, which has been developed in collaboration with Eli Lilly and Company (LLY - Free Report) . The companies recently got a positive opinion in the EU for the drug. We note that Incyte is often considered an attractive acquisition target given Jakafi’s strong performance and the company’s promising pipeline. YTD, Incyte has outperformed the Zacks categorized Medical/Biomedical Genetics industry.
Regeneron Pharmaceuticals, Inc. (REGN - Free Report) : Tarrytown, New York-based Regeneron’s main areas of focus include eye disorders, cholesterol management, rheumatoid arthritis, asthma, atopic dermatitis, pain, cancer, and infectious diseases.
Flagship product, Eylea (eye treatment), continues to be the key financial driver with factors like demographics, an aging population and a higher number of patients with diabetic eye disease expected to drive sales. Moreover, the competitive scenario for Eylea has improved with the recent failure of Ophthotech Corporation’s anti-PDGF therapy Fovista for wet age-related macular degeneration (AMD).
Meanwhile, though PCSK9 inhibitor, Praluent, is yet to show a significant ramp up in sales with scrips continuing to be impacted by reimbursement hurdles for physician offices and patients, positive cardiovascular outcomes data on the treatment would help boost sales significantly.
Regeneron has been working on its pipeline and has several candidates in development including label expansion efforts for Eylea. A key catalyst for the company would be the FDA approval of Dupixent, currently under priority review for atopic dermatitis with a response expected on Mar 29, 2017. Dupixent, which has blockbuster potential, is being investigated for other indications as well including asthma, nasal polyps, and eosinophilic esophagitis. Regeneron is also looking to grow its ophthalmology segment and is evaluating Eylea in combination with other treatments.
Although Regeneron has underperformed the Zacks categorized Medical/Biomedical Genetics industry, the failure of Fovista, a potential competitor, removes a major overhang on the shares.
While Celgene, Incyte and Regeneron are all Zacks Rank #2 (Buy) stocks, you can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>