3 Pharma Stocks to Watch as Gene Therapy Gains Momentum

In 2024, gene therapy is gaining momentum, driven by advances such as CRISPR technology and high-cost therapies. Increasing 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 might consider keeping an eye on strong pharmaceutical stocks: Vertex Pharmaceuticals Incorporated (VRTX), Wave Life Sciences Ltd.

Gene therapy is driving the growth of the pharmaceutical industry by addressing complex conditions through innovations such as recombinant AAV vectors and peptide-modified AAV capsids. These advances improve treatment options and patient outcomes, opening up market opportunities. Global pharmaceutical revenues are expected to reach $1.16 billion this year, at a CAGR of 6.2%, reaching $1.47 billion by 2028. Furthermore, the global gene therapy market is expected to grow at a CAGR of 18 .9% by 2030.

Furthermore, gene therapy is revolutionizing biotechnological innovation by shortening drug development timelines. Improved delivery methods and technologies like CRISPR improve precision and effectiveness, 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 propitious trends, let’s take a look at the fundamentals of the three pharmaceutical choices.

Vertex Pharmaceuticals Incorporated (VRTX)

VRTX is a biotechnology company that develops and commercializes therapies for the treatment of cystic fibrosis (CF). It sells TRIKAFTA/KAFTRIO, SYMDEKO/SYMKEVI, ORKAMBI and KALYDECO.

On 7 August 2024, VRTX announced a reimbursement agreement with NHS England for eligible patients with transfusion-dependent beta-thalassemia (TDT) 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 EBIT margin over the last 12 months, VRTX’s 40.61% is considerably higher than the industry average of 2.64%. Likewise, its leveraged FCF margin of 27.99% over the past 12 months is significantly higher than the industry average of 1.44%. Additionally, its trailing-12-month asset turnover ratio of 0.51x is 24.3% higher than the industry average of 0.41x.

VRTX’s net revenues for the fiscal second quarter ended June 30, 2024 increased 6.1% year over year to $2.64 billion. Its interest income grew 8.2% from the year-ago quarter to $156.50 million. Furthermore, as of June 30, 2024, the company’s total liabilities and equity are $20.13 Billion, compared to $22.73 Billion as of December 31, 2023.

The Street expects VRTX’s net product revenue for the quarter ending 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 has surpassed street EPS estimates in three of the last four quarters. Over the past year, VRTX shares have gained 31.2%, closing the last trading session at $474.91.

VRTX’s POWR Ratings Reflect Strong Outlook. POWR Ratings evaluate stocks by 118 different factors, each with its own weighting.

It is ranked 72nd out of 328 stocks in the biotechnology industry. It has a B grade for stability. Click here to see VRTX’s Growth, Value, Momentum, Sentiment and Quality rankings.

Wave Life Sciences Ltd.WVE)

Headquartered in Singapore, WVE is a clinical-stage genetic medicine company that designs, optimizes and produces novel stereopure oligonucleotides through PRISM, a drug discovery and 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 therapeutic RNA editing in humans in its RestorAATion-2 trial for alpha-1 antitrypsin deficiency (AATD). Single dose of WVE-006 restored wild-type M-AAT protein, offering a potential treatment for AATD-related lung and liver diseases.

In terms of the asset turnover ratio over the past 12 months, WVE’s 0.50x value is 22.6% higher than the industry average of 0.41x.

WVE’s revenue for the second quarter ended June 30, 2024 was $19.69 million. In the same quarter, the company’s other total net revenues were US$2.07 million. Furthermore, 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 has surpassed consensus revenue estimates in three of the last four quarters. Over the past nine months, the stock has risen 210%, closing the most recent trading session at $14.54.

WVE’s POWR Ratings reflect a robust outlook. It has a B grade in Feeling. It is ranked 81st 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 in its collaboration with Roche, triggering a milestone payment of US$15 million. This extends PSTX’s cash flow until early 2026, with a focus on treating hematological malignancies, including multiple myeloma.

For the second fiscal quarter (ending June 30, 2024), PSTX’s total revenues increased 29.8% year over year to $25.97 million. The company’s other net revenues were $2.64 million, an increase of 4% from the prior-year quarter. Furthermore, the company’s total assets reached $298.69 million, compared to $273.89 million as of December 31, 2023.

Analysts expect PSTX’s revenue for the quarter ending September 30, 2024 to increase 73.8% year over year to $16.25 million. It has surpassed earnings per share estimates in three of the last four quarters. Over the past six months, PSTX shares have risen 14.6%, closing the last trading session at $2.47.

It’s no surprise that PSTX has an overall rating of B, which translates to Buy in our proprietary POWR ratings system.

It has a grade of B in Value, Sentiment and Quality. It is ranked 34th in the Medical – Pharmaceutical industry. In addition to what we stated above, we also gave PSTX grades for Growth, Momentum, and Stability. Get all the PSTX rankings here.

What to do next?

43-year investment veteran Steve Reitmeister has just released his market outlook for 2024, along with his trading plan and top 11 picks for next year.

Stock market outlook for 2024 >

VRTX stock traded 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% increase in the benchmark S&P 500 index during the same period.

About the Author: Abhishek Bhuyan

Abhishek started 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. More…