3 growth stocks that are crushing it this year
The biotechnology sector has had a difficult year so far. The SPDR S&P Biotech ETF is still down more than 26%, and the iShares Biotechnology ETF is down more than 19%, although both have recovered somewhat in recent months.
Compare this with Vertex Pharmaceuticals (VRTX 1.08%), Axsome therapeutics (AXSM 1.41%)and Neurocrine Biosciences (NBIX -0.16%), as all are up 20% or more this year. Their momentum is likely to continue as the three biotech companies have blockbuster drugs and extensive late-stage pipelines that could bear fruit for years.
Get out of the core business
Vertex Pharmaceuticals specializes in the treatment of cystic fibrosis (CF), a rare genetic disease that affects the lungs, pancreas and other organs. The company has had a great year financially and in terms of drug development, and shares are up more than 32% in 2022.
In the second quarter, the company reported revenue of $2.19 billion, up 22% year-over-year, and earnings per share (EPS) of $3.13, versus EPS of $0.26 over the same period last year. The main driver is the CF drug Trikafta/Kaftrio, which grossed $1.89 billion, up 50.7% from the second quarter of 2021. The company’s full-year forecast calls for revenue between 8.6 and $8.8 billion, compared to $7.6 billion last year.
The company has also had success working with CRISPR therapeutics on the development of exa-cel, a gene-editing therapy that is considered a potential cure for transfusion-dependent thalassemia (TDT) and severe sickle cell disease (SCD), two rare genetic blood disorders, and progressed to phase 3 trials for both.
A potential blockbuster at Auvelity
Axsome Therapeutics’ stock is up more than 65% this year. The reason for this is that the biopharmaceutical company, which specializes in therapies to treat central nervous system disorders, has moved from the clinical stage to the commercial stage. It also has a potential blockbuster drug that was just approved by the Food and Drug Administration (FDA) last month.
Axsome’s first commercial product, Sunosi, to improve wakefulness in adults with excessive daytime sleepiness, was purchased in May from Jazz Pharmaceutical for $53 million, plus royalty payments. In just over a month, the drug has already brought in $8.8 million in revenue, the company said. However, the big payday is expected to come later this year when the company’s major depressive disorder (MDD) drug, Auvelity, hits the market.
The big advantage of Auvelity over other antidepressants is its ability to work within a week, whereas the response time of most antidepressants is six to eight weeks or more. The FDA approved the drug on August 19. The potential market in the United States alone includes the 85 million people who had high depressive symptoms in 2021.
The company also has more late-stage therapies in its pipeline that may soon bear fruit, led by AXS-07 to treat acute migraines. The company has just begun enrolling its first patient in a Phase 3 trial to examine the safety and efficacy of the therapy in patients who have had an inadequate response to an oral calcitonin gene-related peptide inhibitor ( CGRP).
Build a healthy late-stage pipeline
Shares of Neurocrine Biosciences are up more than 24% since the start of the year. The company specializes in what it calls undertreated neurological, neuroendocrine and neuropsychiatric disorders.
The company released its second quarter figures on August 4, with revenue of $378.2 million, up 32% year-over-year, and EPS of $0.84, against $0.72 in the same period last year.
Most of Neurocrine’s revenue ($350 million) came from movement disorder therapy Ingrezza. The drug is approved to treat patients with tardive dyskinesia, a disorder that results in involuntary, repetitive body movements. The company raised its full-year revenue forecast for Ingrezza to between $1.35 billion and $1.4 billion.
The other drug marketed by the company is Ongentys, a treatment for Parkinson’s disease.
Neurocrine has several other promising phase 3 trials. Ingrezza is in phase 3 trials to treat two different types of movement disorder: chorea (as it occurs in Huntington’s disease) and dyskinetic cerebral palsy. Crinecerfont is in phase 3 trials, one for adults and one for children, to treat congenital adrenal hyperplasia (CAH), a disorder that creates an enzyme deficiency that impairs production of the hormone adrenal gland necessary for development.
The company, flush with its profits from Ingrezza, is looking to expand its portfolio and has a $56.5 million deal underway to buy the Dirurnal Group, a British pharmaceutical company specializing in therapies to treat chronic hormonal diseases. . Its lead candidate, DNL-0200, is in phase 3 trials to treat HCS.
Three good choices
Neurocrine Biosciences and Vertex Pharmaceuticals are both profitable. It’s hard not to be excited about the potential of Vertex because of the possibilities of exa-cel and the growing sales of Trikafta/Kaftrio. Neurocrine is also using earnings from its flagship product, Ingrezza, to expand its portfolio. Axsome is not yet profitable, but the potential patient base for Auvelity is so large that if the drug is approved, the stock will likely increase.