This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Amgen, Alexion And Repligen: Biotech Stocks For The Long Haul

Daniel Cross, Kapitall: Biotech stocks are part of an industry that can be hard for investors to gauge, but here are three to consider. 

Many biotech companies spend years in development on a single product generating very little revenue, until it's finally released, which makes analyzing standard figures like price-to-earnings ratios highly misleading. Biotechnology has applications in every corner of the economy from drugs to improved food production to chemical and environmental protection.

[Read more from Kapitall: New PM Excites Market for Australian Raw Materials]

New drugs developed by a biotech firm must go through a lengthy three-stage approval process that can take between four and seven years. According to figures from the FDA, less than 1 in 10 drugs pass through every stage of the approval process to final implementation. This, coupled with large research and development costs, means a biotech company may spend an inordinate amount of time with negative earnings on a product that may not ever be approved for general use. This risk means it's extremely important to find companies working on multiple projects with a balance sheet that's capable of withstanding long periods of little or no revenue.

Here are three such biotech companies.

Click on the interactive chart below to see analyst ratings over time. 

All three have a positive operating margin, which means they have a relatively steady income stream versus their expenses. They also have current assets greater than three times in excess of current liabilities, giving them plenty of downside protection if a product has to be redesigned or the approval process takes longer than expected.

Amgen (AMGN) is a familiar stock for most investors. This $84 billion dollar company is currently engaged in heart failure and cholesterol drugs. The new drug, labeled AMG 423 is wrapping up Phase 2 testing by the first quarter of 2014 and expected to enter Phase 3 afterward.

Amgen recently acquired ONYX Pharmaceuticals for $10.4 billion. This gives the company a strong leg up in the cancer research market, predicted to be a $50 billion dollar industry by 2023, through ONYX's liver and kidney cancer drug Nexavar and a myeloma treatment drug called Kyprolis. The myeloma drug is currently only U.S.-approved, but is in Phase 3 trials for European markets – the results of which come in at the end of this year.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.49 -1.40%
FB $116.21 -0.45%
GOOG $691.70 0.10%
TSLA $240.96 -2.70%
YHOO $36.33 -0.71%


Chart of I:DJI
DOW 17,701.94 -128.82 -0.72%
S&P 500 2,055.32 -20.49 -0.99%
NASDAQ 4,751.4360 -53.8550 -1.12%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs