The biotech industry can be attractive for several reasons. Many leading biotechs develop innovative, life-saving therapies, a business that will only be phased out once we find an all-purpose cure for all illnesses. Further, biotechs often deliver better-than-average financial results during economic downturns because the products they sell are considered necessary goods.
Of course, not every biotech company is worth investing in. Let's consider two that are a buy this month, or in most months, for that matter: Amgen(NASDAQ: AMGN) and Sarepta Therapeutics(NASDAQ: SRPT).
1. Amgen
Amgen hasn't been at its best over the past couple of years. Revenue growth has been slow, at best, regulatory progress hasn't been as groundbreaking as it would have liked, and the new medicines tasked to replace older ones haven't lived up to expectations, at least not yet. That includes Amjevita, the first biosimilar for Humira to be launched in the U.S.
Though AbbVie's Humira hit peak annual sales of $21.2 billion, the fierce competition following its loss of patent exclusivity meant Amgen's product was unable to generate enough sales to make a serious dent in the company's total top line. It would be a mistake to give up on Amgen despite these issues. It is one of the largest biotechs and boasts a vast pipeline that should eventually lead to significant breakthroughs.
Like many leading drugmakers, Amgen is going after the weight loss market. The company delivered an encouraging phase 1 clinical trial for one of its leading candidates in this area, AMG133. The investigational medicine showed meaningful weight loss, and, importantly, patients were able to keep the weight off for up to 150 days after treatment ended.
That's an important factor since, for many currently approved anti-obesity therapies, post-treatment durability is a bit of an issue that Amgen is looking to address. The biotech will also rely on a recent acquisition, that of Horizon Therapeutics, for about $28 billion. Horizon brings with it a portfolio of approved medicines and pipeline candidates, none more important than Tepezza, a therapy for thyroid eye disease (TED).
Though Tepezza is the first and only TED treatment on the market, it has yet to reach its full potential, with roughly 100,000 patients in the U.S. that could still benefit from the medicine, according to Amgen. It should be an important growth driver for Amgen for years. Meanwhile, the biotech's pipeline features more than four dozen programs.
Further, Amgen is an excellent dividend stock. It sports a competitive yield of 3.26% and has raised its payouts by 55% in the past five years. The biotech will appeal to risk-off, long-term, income-seeking investors.
2. Sarepta Therapeutics
Sarepta Therapeutics specializes in developing treatments for rare diseases. Though it isn't one of the most recognizable names in the biotech industry, the company has proven innovative abilities. It has successfully developed several therapies for Duchenne muscular dystrophy (DMD), a rare, progressive genetic disorder that causes muscle degeneration. Sarepta's most important product yet is Elevidys, the first gene therapy for DMD to be approved by the U.S. Food and Drug Administration (FDA).
The biotech is awaiting a potential label expansion for Elevidys that would lift age and ambulatory status restrictions on the medicine. Elevidys is already contributing meaningfully to Sarepta Therapeutics' financial results despite being approved in mid-2023. Last year, the biotech's revenue increased by 33.3% to $1.2 billion. Elevidys contributed a solid $200 million in revenue for the year.
If the FDA grants it the expected label expansion, which could happen by late June, demand will grow and the medicine's sales should increase even more rapidly. Sarepta is still developing therapies for DMD; many of the company's more than 40 programs target the disease. However, the biotech is also looking to diversify its lineup. In January, Sarepta Therapeutics started a phase 3 clinical trial for a potential therapy for Limb-Girdle muscular dystrophy, a group of rare diseases that affect patients' muscles.
Sarepta may not have as much name recognition as Amgen, but the rare disease experts' strong innovative abilities should allow it to continue developing breakthrough medicines while delivering solid financial results and stock market performances.
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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool recommends Amgen. The Motley Fool has a disclosure policy.
