Forget Alexion, Buy these 4 Biotech Stocks Instead

New Haven, CT-based Alexion Pharmaceuticals, Inc.’s ALXN fourth quarter results were mixed with the company reporting in-line earnings while revenues were just shy of expectations. Alexion’s guidance for 2017 also fell short of expectations. Although flagship drug, Soliris, will continue to benefit from a steady number of new patients with paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic-uremic syndrome (aHUS) across the world, sales will nevertheless be affected by patient recruitment for Alexion’s ongoing and planned ALXN1210 studies as well as other studies -- this will impact Soliris revenues by $70 million to $110 million during the year. Moreover, Soliris will continue to be impacted by access challenges in Latin America.

Within the metabolics franchise, growth will remain moderate with Strensiq revenue per patient expected to be less compared to 2016 as younger patients start treatment.

Meanwhile, although Alexion continues to progress with its pipeline, there are limited near-term catalysts.

Over the last 7 days, earnings estimates for 2017 are down 8.8% while 2018 estimates are down 12.7%. The company, which is known for its focus on developing treatments for rare disorders, has underperformed the Zacks categorized Medical-Biomed/Genetics industry YTD with the shares gaining 5.3% compared to the industry gain of 7.1%. Alexion has underperformed the industry over the last one year as well with shares declining 11.4% compared to the industry decline of 3.3%.

With Alexion being a Zacks Rank #4 (Sell) stock, we advise investors to consider biotech stocks which sport a strong Zacks Rank -- Zacks Rank #1 (Strong Buy) or #2 (Buy) -- and have interesting pipelines/products and growth potential.

Our Picks

Celgene Corporation CELG: Summit, NJ-based Celgene is focused on the discovery, development and commercialization of innovative therapies for the treatment of cancer and inflammatory diseases. Blood cancer treatment, Revlimid, is the key contributor to the top-line and continues to deliver impressive growth. Moreover, the company has been diversifying its portfolio with other drugs like Pomalyst and Otezla -- both drugs crossed sales of $1 billion in 2016. Otezla (psoriasis, active psoriatic arthritis) has immense potential with sales being driven by demand, an expanded U.S. footprint, growing market share and launch in new markets.

Celgene has a rich and promising pipeline which represents upside potential. In addition to working on expanding the labels of currently marketed products like Revlimid, Pomalyst and Otezla, the company has several late-stage candidates including ozanimod (ulcerative colitis and relapsing multiple sclerosis with regulatory filing expected by year end) and GED-0301 (Crohn’s disease and ulcerative colitis) in the inflammation and immunology therapeutic area and CC-486 (myelodysplastic syndromes and acute myeloid leukemia), enasidenib (acute myeloid leukemia – regulatory application submitted in the U.S. with a decision expected in the second half of 2017) and luspatercept (myelodysplastic syndromes and beta-thalassemia) within hematology. What makes the pipeline more attractive is that quite a few of these candidates have blockbuster potential.

Celgene’s price performance over the last one year shows that the company has outperformed the Zacks categorized Medical-Biomedical/Genetics industry. The company has been witnessing an upward revision in earnings estimates for 2017 over the last 30 days.

Ligand Pharmaceuticals Incorporated LGND: San Diego, CA-based Ligand’s business model is based on developing or acquiring royalty revenue generating assets and coupling them with a lean corporate cost structure. The company is focused on the development and licensing of biopharmaceutical assets. Ligand’s Captisol formulation technology has allowed it to enter into several licensing deals and generate royalties. The company’s partners include big names like Amgen.

Fate Therapeutics, Inc. FATE: San Diego, CA-based Fate is focused on the development of programmed cellular immunotherapies for cancer and immune disorders. The company’s immuno-oncology pipeline includes off-the-shelf NK- and T-cell cancer immunotherapies derived from engineered induced pluripotent cells, and immuno-regulatory programs, including hematopoietic cell immunotherapies for protecting the immune system of patients undergoing hematopoietic cell transplantation and for regulating autoimmunity. Immuno-oncology is one of the most lucrative and highly sought after therapeutic areas.

Exelixis, Inc. EXEL: South San Francisco, CA-based Exelixis is focused on bringing cancer treatments to market. Approved products include Cabometyx (advanced kidney cancer), Cometriq (certain forms of thyroid cancer) and Cotellic (advanced melanoma). Cabometyx is experiencing rapid and broad uptake in the market with label expansion opportunities leaving room for upside. The company has quite a few pipeline catalysts lined up for the coming quarters.

While Celgene, Ligand, Fate and Exelixis are all Zacks Rank #2 stocks, you can see the complete list of today’s Zacks #1 Rank stocks here.

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Alexion Pharmaceuticals, Inc. (ALXN): Free Stock Analysis Report
 
Celgene Corporation (CELG): Free Stock Analysis Report
 
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Fate Therapeutics, Inc. (FATE): Free Stock Analysis Report
 
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