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Putting your hard-earned money into a bear market can be scary. But for growth-oriented investors, it’s the right time to exit the long-term horizon. Interestingly, there are some stocks like biotech companies. Exelixis (XL 1.30%) And Bristol-Myers Squibb (BMI 1.49%)which stand out against the bear market.
While S&P 500 This year it decreased by 13%, while the share of Exelixis and Bristol-Myers increased by 15% and 23%, respectively. Let’s dive into what is attracting investors with these two biotechs.
FBIOX total return rate data by YCharts
Exelixis
This biotech company’s efforts to treat hard-to-treat cancers — using gene therapies — is driving progress. Exylysis’ star drug product is Cabometyx (cabozantinib), which treats advanced renal cell carcinoma (RCC), a type of kidney cancer, and some types of liver cancer. The drug is also used in combination with Bristol-Myers’ drug Opdivo (nivolumab) to treat advanced RCC in patients who have not received any prior treatment for the disease.
Cabometyx is expected to bring in $1 billion in revenue by 2021. It contributed the highest amount (around $339 million) to total revenue in the last second quarter. Another formulation of cabozantinib, Cometriq, used to treat thyroid cancer, contributed about $7.9 million in the quarter. Quarterly total revenue rose $385 million to $419 million in Q2 2021. Adjusted net income, however, fell to $90 million from $118 million in the prior quarter.
Moreover, Cambometics is conducting several other clinical trials to develop a standalone therapy or combination therapy that could continue to generate revenue for the company.
Despite the success of the star drug, Exelesis management recognizes the risks of relying on a single product for success. In the second half of the year, the company expects positive results from “clinical compounds in the developing pipeline, including XL092, XB002, XL102 and XL114,” he said. For 2022, the company expects revenue to be in the range of $1.5 billion to $1.6 billion.
I believe that the company’s current products and future medicines will reap great rewards in the long run. Exelixis ended the quarter with cash, cash equivalents, restricted cash equivalents and $2 billion in investments to support its pipeline.
Bristol-Myers Squibb
In the year In November 2019, Bristol-Myers closed on its acquisition of biotech powerhouse Celgene, which focused on cancer treatments and autoimmune diseases. The move boosted its portfolio by adding quality drugs including cancer treatments Revlimid, Pomalyst/Imnovid, Abraxane and Reblozyl, as well as bone marrow disorders.
In addition to these, Bristol-Myers has its own impressive lineup of products that will drive its Q2 earnings. Anti-clotting drug Eliquis jumped 17 percent to $6.4 billion in sales, while Revlimid, which treats multiple myeloma, contributed the second-highest volume with sales of $5.2 billion. Orencia, which treats moderate to severe rheumatoid arthritis, posted an 8% increase in sales to $1.6 billion from a year ago.
Total revenue in Q2 rose 6 percent to $23 billion from the year-ago period. Meanwhile, adjusted earnings per share (EPS) jumped 18% to $1.90 per share.
Bristol-Myers faces the challenge of patent expirations in the next few years for its strong products such as Eliquis, Opdivo, Pomalyst, Revlimid and Yarvoy. It also lowered its 2022 guidance, keeping EPS in the range of $2.71 to $3.01, compared with estimates of $2.92 to $3.22, which may concern investors.
But a healthy pipeline of new quality drugs should keep it going strong even in choppy market times. Management believes the new drug suite “has the potential to generate more than $25 billion in risk-adjusted revenue by 2029.”
An additional benefit is that the company is a dividend stock, yielding 3%, double S&P 500yield 1.5%
Long-term benefits of investing in health care
Healthcare is one sector that is never out of demand. In particular, biotech companies whose businesses are based solely on the development of drugs for various chronic and fatal diseases will continue to generate revenue and profitability. Oncology is a competitive field, but it is growing very fast. According to a preliminary research study, the oncology market is likely to grow at an annual rate of 8% to reach $536 billion by 2029. This is why I believe investing in these two biotech stocks will be very beneficial in the long run.
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