While some people out there treat their illness with plant roots or low-frequency music or just praying to their imaginary friend and hope for the best, more and more companies are involved in discovering a new cutting-edge treatment for rare diseases.
What is biotechnology?
Biotechnology is a wide field of biology that involves the use of living systems and organisms to produce or manufacture products. It also overlaps with similar scientific fields, depending on the methods and applications used. Biotechnology has grown to include modern and complex sciences such as genomics, recombinant gene techniques, applied immunology, and the advancement of pharmaceutical therapies and diagnostic tests in the late 20th and early 21st centuries. Karl Ereky introduced the word “biotechnology” in 1919 to describe the manufacture of goods from raw materials with the assistance of living organisms.
In medicine, modern biotechnology has many applications in areas such as pharmaceutical drug discoveries and production, pharmacogenomics, and genetic testing (or genetic screening).
These 3 companies are performing in the modern medical field and have huge growth potential
1. Vertex Pharmaceuticals (VRTX)
Vertex, a Boston-based biotechnology company, has been around since 1989 and was one of the first companies to develop breakthrough medicines for HIV in the late ’90s.
Vertex was recognized in the 2000s as one of the first companies to develop a direct antiviral treatment for hepatitis C. Since 2010, its main focus has been on improving cystic fibrosis therapies. Vertex’s ultimate target is straightforward: to have treatments for all cystic fibrosis patients.
Cystic fibrosis is a difficult condition to diagnose and there are about 2,000 different genetic variants in the CFTR gene that can cause it. This means that a single therapeutic solution would not be successful for every CF patient.
Vertex has been concentrating its research and development efforts on drugs that it hopes can treat 90% of the CF population.
Vertex developed two treatments for cystic fibrosis: Kalydeco and Orkambi. A year of Kalydeco costs about $311,000, while Orkambi costs $259,000. Clearly, no one can afford that at these prices. Working with governments and insurance providers to obtain the requisite approvals for its products to be sold to patients via health insurance coverage is one of the most challenging tasks that Vertex faces as an organization.
How can Vertex charge so much?
Vertex has a 100% market share. There are literally no FDA-approved alternatives right now.
By 2025, the demand for cystic fibrosis therapeutics is expected to expand at a compound annual growth rate of nearly 17%. The market is estimated to be worth $14 billion. In such a high-growth market, with Vertex’s dominant position, on top of its gross margins, I expect it to be valued at about a 12 enterprise-value-to-sales ratio (EV/Sales).
Action to Take: Buy Vertex Pharmaceutical (VRTX) up to $220 per share.
2. Regeneron Pharmaceuticals (REGN)
Leonard Schleifer and George Yancopoulos launched Regeneron more than 30 years ago and they still run the company.
The first 20 years of the organization were spent writing research papers and conducting clinical trials. It kept the lights on by doing contract manufacturing for other pharmaceutical companies. However, the FDA approved Regeneron’s first drug, Arcalyst, in 2008. Following that, it approved Eylea, Regeneron’s major moneymaker, in 2011.
Regeneron’s revenues skyrocketed after the FDA approved Arcalyst and Eylea. Revenue increased from $125 million to $4.1 billion between 2007 and 2015, the year before the first approval. For that eight-year stretch, the compounded growth rate was 55%.
Regeneron made $6.7 billion in sales in 2018, with Eylea accounting for 60.7 percent of it. The majority of its sales came largely from partnerships with pharmaceutical behemoths Sanofi and Bayer HealthCare.
Regeneron announced fantastic news in April
Regeneron and Sanofi finished their collaborative Phase 3 cervical cancer trial for Libtayo early due to overwhelmingly positive results. The Independent Data Monitoring Committee (IDMC), a body of experts charged with evaluating the efficacy, scientific validity, and credibility of clinical trials, recommended that the trial be terminated early.
There is also some exciting news about Regeneron’s COVID-19 antibody cocktail. Its Phase 3 trial found that the lower 1,200 mg dose decreased the risk of hospitalization or death by 70%. Furthermore, the antibody mixture cut the length of symptoms by four days. This demonstrates comparable efficacy to its 2,400 mg dose, which has already earned FDA emergency use authorization (EUA).
In addition, Regeneron discovered that doses as low as 300 mg result in equal viral reductions for all patients dosed. Regeneron would be able to offer more drugs to people if lower doses show comparable effectiveness. And, since consumers usually do not pay for the quantity of the medication, but rather for the cure, this could result in increased sales.
Action to take: Regeneron Pharmaceuticals (REGN) is a buy up to $650 a share.
3. BioMarin (BMRN)
BioMarin was created in 1997 with the aim of developing therapies for a variety of genetic disorders using its patented enzyme technology.
Its first medication was approved in 2003. It’s called Aldurazyme, and it’s an enzyme replacement treatment for a condition known as Mucopolysaccharidosis (MPS I). MPS I is caused by a lack of a lysosomal enzyme, which prevents the body from removing waste and debris from its cells.
BioMarin has since received FDA approval for six additional medications for the treatment of different genetic disorders.
Vimizim, BioMarin’s current bestseller, is the only enzyme replacement therapy approved for people with Morquio A, a genetic disorder that causes skeletal deformities and internal organ problems.
On March 20, the company published excellent updated data on Vosoritide at the Endocrine Society’s Annual Meeting
Vosoritide will be the first pharmacological treatment for achondroplasia, the most common form of excessive short stature (dwarfism) in humans. Achondroplasia affects approximately one in every 25,000 births worldwide.
The revised data from the Phase 3 extension analysis revealed that the benefits of Vosoritide lasted for more than two years. Patients on Vosoritide grew 1.4 centimeters faster per year than patients on the existing standard of care for achondroplasia.
Last month, BioMarin’s potential blockbuster drug Roctavian received positive news. Roctavian is a gene therapy used to treat Hemophilia A, a genetic condition that causes blood to not clot properly due to a lack of blood-clotting proteins.
The FDA designated Roctavian as a Regenerative Medicine Advanced Therapy (RMAT).
RMAT is a streamlined program designed to expedite the creation and analysis of regenerative medicine therapies such as Roctavian.
This classification contributes to Roctavian’s approval.
Roctavian has already shown its effectiveness. Its clinical trials have reduced the total number of bleeding episodes each year from 16.5 to none. This effect has lasted for three years.
The only treatment for Hemophilia A is Roctavian. The new standard of treatment only addresses symptoms. And Hemophilia A is a severe condition, with approximately 60% of cases classified as severe.
Vosoritide and Roctavian approvals are expected in 2021, making 2021 an exciting year for BioMarin. Following acceptance, shares would skyrocket.