January 23, 2013
Celgene Corporation (NASDAQ: CELG) [
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and Gilead Sciences, Inc. (NASDAQ: GILD) [
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both reported impressive results in the last J.P. Morgan Conference earlier this month, with Celgene corporation outlining a plan that will drive revenue to
a year by 2017, and with Gilead Sciences announcing promising results on its late-stage pipeline candidates for the treatment of chronic hepatitis C virus (HCV) infection. With both companies showing signs of considerable growth within the next few years, it begs the question: is now a good time to invest in these biotech giants?
Investors have always been cautious to jump at opportunities presented by biotechnology firms because of the high-risk nature of the industry. Positive news from successful clinical trials cause stock prices to rise, while unsuccessful trials can cause them to hit rock bottom. Furthermore, with long research and development (R&D) phases, biotech firms earn little revenue before any of their products are approved by the FDA.
Earlier this month, Gilead went public with its positive results of its late-stage candidates for the treatment of chronic hepatitis C infection (HCV). How profitable can this be for the company? The global market for Hepatitis C is estimated at
and it is also expected to reach up to
in the next ten years. If Gilead becomes the first company to get approval for the next generation drug for Hepatitis C, the company will earn significant revenue. The company also earns a significant amount from its HIV franchise. In light of these events, Barclays Capital increased their target price on shares of Gilead from
Meanwhile, Celgene has reported its accomplishments of 2012 and its outlook for 2013. The company is advancing three new programs that will increase revenue from
a year by 2017. Celgene is currently waiting for the FDA to approve Pomalyst, its multiple myeloma drug. The company is also to file Apremilast and Abraxane for approval later this year. Sales growth for each year between 2013 and 2017 is expected to be 13% for the existing business. 15% will be added from the sales of Abraxane and 19% more from Apremilast.
Since Celgene and Gilead are on their way to secure approvals for their new drugs, both stocks have a high potential to deliver great returns provided that they do not suffer any serious setbacks. Many are optimistic about these stocks, expecting them to shoot up even higher if things unfold as expected for both companies.