Biotech stocks have always been high-risk and high-reward, with the futures and fortunes of companies often decided with a single successful drug trial or Federal Drug Administration (FDA) approval. The right company can yield extravagant returns for the lucky or prudent investor. However, choosing the wrong ones can lead to losses just as significant as the potential wins.
Therefore, due diligence is important. A company announcing that it is developing a cure for cancer, MS, Huntington’s, or HIV is not enough to rank it as a buy. Investors must review whether they’ve made significant strides in their research and drug trials and if they have other products that can sell just as well.
Next, investors should check the company’s finances, that is, whether it can sustain its wonder drug’s development cycle without buckling under the weight of debt. So, let’s look at three biotech stocks that combine attractive product pipelines with solid financials.
BioNTech SE (BNTX)
BioNTech SE (NASDAQ:BNTX) may not be a household name, but its significance in our current times is not something to scoff at. True, the company is more known for treating cancer and other serious diseases. But it has been a partner of one of the largest healthcare companies in the world that have created Covid-19 vaccines that helped us mitigate the global crisis.
BNTX has been developing technologies that utilize mRNA-based therapies, small molecules, antibodies, and cell therapies for various treatments. Its specialization in mRNA technology was a key component in its partnership with Pfizer. Together, they developed the first-ever full FDA-approved Covid-19 vaccine.
According to BNTX’s third-quarter financials and corporate update, its oncology pipeline made significant progress, with trials initiated during the quarter reaching late stages. The company has been experiencing a revenue decline for the past year as the demand for Covid vaccines waned. Total revenue came in 74% less year over year (YOY), from €3.46 billion to €895.30 million. However, we must consider that the pandemic was an extreme circumstance. Besides, BNTX made good use of the earnings from Covid-19 to build its current pipeline.
And, despite the revenue shrinkage, analysts still have hope for the company, marking it as a buy-rated biotech stock and setting its high price target at $171, roughly double its current price.
Exelixis, Inc. (EXEL)
Exelixis, Inc. (NASDAQ:EXEL) is a biotech stock with great prospects and solid financial standing to support its operations.
The company offers four marketed pharmaceutical products, which include its flagship molecule. Cabozantinib is an inhibitor of various tyrosine kinases and advanced renal cell carcinoma, carcinoma, hepatocellular carcinoma, radioactive iodine (RAI)-refractory differentiated thyroid cancer with approved CABOMETYX tablets. Recently, the company announced a phase 3 pivotal study evaluating cabozantinib (CABOMETYX®), which produced favorable results for the patients.
Furthermore, Exelixis’ latest financials didn’t disappoint. Total revenue reached $480 million for the fourth quarter and $1.83 billion for the full year. A significant contribution came from the Cabozantinib franchise, which made $1.63 billion in U.S. net product revenues for the fiscal year. More notably, GAAP diluted EPS came in at $0.27, a significant step from the $0.09 net loss YOY.
Finally, its strong performance is reinforced by its promising pipeline developments that include positive data from pivotal trials such as CABINET and CONTACT-02. This underscores cabozantinib’s potential as a significant revenue driver in the future. Therefore, EXEL is a great addition to your list of biotech stocks to watch.
Neurocrine Biosciences, Inc. (NBIX)
Neurocrine Biosciences, Inc. (NASDAQ:NBIX) is focused on discovering and developing treatments for unaddressed neuropsychiatric, neurological, and neuroendocrine disorders.
It has a diverse portfolio of U.S. FDA-approved treatments for various diseases like endometriosis, uterine fibroids, tardive dyskinesia, and chorea associated with Huntington’s disease. Also, Neurocrine Biosciences has a robust pipeline of multiple compounds in its mid-to-late clinical development phase.
Recently, the company announced that it has achieved positive top-line data for the Phase 3 CAHtalyst™ Pediatric Study for crinecerfont. The study evaluated the safety, tolerability, and safety of crinecerfont in adolescents and children experiencing congenital adrenal hyperplasia due to 21-hydroxylase deficiency. The results were promising, meeting primary and secondary endpoints.
Additionally, NBIX reported strong quarter and full-year financials. Net product sales of INGREZZA® (valbenazine) reached $500 million and $1.84 billion, representing a YOY growth of 25% and 29%, respectively. The company expects INGREZZA to do well in 2024, outlining a sales guidance of $2.1 to $2.2 billion.
Meanwhile, quarterly net product sales grew 25% YOY. Also, GAAP net income reached $1.44, a 63.64% increase from $0.88 YOY. In addition, NBIX received a breakthrough therapy designation from the FDA for treating Congenital Adrenal Hyperplasia in adults and pediatrics, highlighting its future potential.
CEO Kevin Gorman emphasized the company’s positive progress with INGREZZA and Crinecerfont as potential growth drivers, cementing its position as a leading neuroscience-focused entity. NBIX’s high potential for growth makes it a worthy addition to any biotech stocks to buy list.
On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.