In 2024, gene therapy is gaining traction, driven by breakthroughs like CRISPR technology and high-cost therapies. Growing regulatory approvals and innovative solutions for rare diseases position gene therapy as a promising investment opportunity in the pharmaceutical landscape.
Amid this favorable backdrop, investors could consider keeping an eye on strong pharma stocks: Vertex Pharmaceuticals Incorporated (VRTX), Wave Life Sciences Ltd. (WVE), and Poseida Therapeutics, Inc. (PSTX).
Gene therapy is driving growth in the pharmaceutical industry by addressing complex conditions through innovations like recombinant AAV vectors and peptide-modified AAV capsids. These advancements improve treatment options and patient outcomes, opening market opportunities. Global pharmaceutical revenues are projected to reach $1.16 trillion this year, with a 6.2% CAGR, reaching $1.47 trillion by 2028. Also, the global gene therapy market is projected to grow at a CAGR of 18.9% until 2030.
In addition, gene therapy is revolutionizing biotech innovation by shortening drug development timelines. Enhanced delivery methods and technologies like CRISPR improve precision and efficacy, reigniting interest in the industry. As a result, the pharmaceutical sector is positioned for robust growth, with the global biotechnology market expected to reach $3.88 trillion by 2030, at a CAGR of 14%.
Considering these conducive trends, let’s take a look at the fundamentals of the three pharma picks.
Vertex Pharmaceuticals Incorporated (VRTX)
VRTX is a biotechnology company that develops and commercializes therapies for treating cystic fibrosis (CF). It markets TRIKAFTA/KAFTRIO, SYMDEKO/SYMKEVI, ORKAMBI, and KALYDECO.
On August 7, 2024, VRTX announced a reimbursement agreement with NHS England for eligible transfusion-dependent beta thalassemia (TDT) patients to access CASGEVY. This CRISPR/Cas9 gene-edited therapy is one of the first medicines funded by NHS England’s Innovative Medicines Fund.
In terms of the trailing-12-month EBIT margin, VRTX’s 40.61% is considerably higher than the 2.64% industry average. Likewise, its 27.99% trailing-12-month levered FCF margin is significantly higher than the 1.44% industry average. Furthermore, its 0.51x trailing-12-month asset turnover ratio is 24.3% higher than the 0.41x industry average.
VRTX’s net revenues for the fiscal second quarter that ended on June 30, 2024, increased 6.1% year-over-year to $2.64 billion. Its interest income grew 8.2% from the prior year’s quarter to $156.50 million. Furthermore, as of June 30, 2024, the company’s total liabilities and shareholders' equity stood at $20.13 billion, compared to $22.73 billion as of December 31, 2023.
Street expects VRTX’s net product revenues for the quarter ended September 30, 2024, to increase 8.4% year-over-year to $2.69 billion. Its EPS for the same quarter is expected to grow 1.3% year-over-year to $4.13. It surpassed the Street EPS estimates in three of the trailing four quarters. Over the past year, VRTX’s stock has gained 31.2% to close the last trading session at $474.91.
VRTX’s POWR Ratings reflect strong prospects. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is ranked #72 out of 328 stocks in the Biotech industry. It has a B grade for Stability. Click here to see VRTX’s Growth, Value, Momentum, Sentiment, and Quality ratings.
Wave Life Sciences Ltd. (WVE)
Based in Singapore, WVE is a clinical-stage genetic medicine company that designs, optimizes, and produces novel stereopure oligonucleotides through PRISM, a discovery and drug development platform. It is developing oligonucleotides that target ribonucleic acid (RNA) to correct disease-causing mutations, modulate protein activity, and restore the production of functional proteins.
On October 16, 2024, WVE announced the first-ever therapeutic RNA editing in humans in its RestorAATion-2 trial for alpha-1 antitrypsin deficiency (AATD). The single dose of WVE-006 restored wild-type M-AAT protein, offering a potential treatment for AATD-related lung and liver disease.
In terms of the trailing-12-month asset turnover ratio, WVE’s 0.50x is 22.6% higher than the 0.41x industry average.
WVE’s revenue for the second quarter that ended on June 30, 2024, was $19.69 million. For the same quarter, the company’s net total other income stood at $2.07 million. Moreover, as of June 30, 2024, the company’s total liabilities were $204.42 million, compared to $227.45 million as of December 31, 2023.
WVE surpassed the consensus revenue estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 210% to close the last trading session at $14.54.
WVE’s POWR Ratings reflect a robust outlook. It has a B grade for Sentiment. It is ranked #81 out of 161 stocks in the Medical – Pharmaceuticals industry. To see WVE’s additional grades for Growth, Value, Momentum, Stability, and Quality, click here.
Poseida Therapeutics, Inc. (PSTX)
PSTX, a clinical-stage biopharmaceutical company, focuses on developing therapeutics for patients with high unmet medical needs. The company's development candidates for hematologic malignancies include P-BCMA-ALLO1, P-CD19CD20-ALLO1, P-BCMACD19-ALLO1, and P-CD70-ALLO1.
On October 17, 2024, PSTX announced the nomination of a new allogeneic, dual CAR-T therapy development candidate under its collaboration with Roche, triggering a $15 million milestone payment. This extends PSTX’s cash runway into early 2026, with a focus on treating hematologic malignancies, including multiple myeloma.
For the fiscal second quarter (ended June 30, 2024), PSTX’s total revenues increased 29.8% year-over-year to $25.97 million. The company’s net other income was $2.64 million, up 4% from the previous year’s quarter. In addition, the company’s total assets came in at $298.69 million, compared to $273.89 million as of December 31, 2023.
Analysts expect PSTX’s revenue for the quarter ended September 30, 2024, to increase 73.8% year-over-year to $16.25 million. It surpassed the EPS estimates in three of the trailing four quarters. Over the past six months, PSTX’s stock has gained 14.6% to close the last trading session at $2.47.
It’s no surprise that PSTX has an overall rating of B, which translates to a Buy in our proprietary POWR Ratings system.
It has a B grade for Value, Sentiment, and Quality. It is ranked #34 in the Medical - Pharmaceuticals industry. Beyond what we stated above, we also have given PSTX grades for Growth, Momentum, and Stability. Get all the PSTX’s ratings here.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
VRTX shares were trading at $470.05 per share on Wednesday afternoon, down $4.86 (-1.02%). Year-to-date, VRTX has gained 15.52%, versus a 22.75% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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