If you're looking for biotech stocks that can quadruple your money in a single year, AnaptysBio Inc. (ANAB 0.33%) ticked this box not long ago, and BeiGene Ltd. (BGNE -3.14%) isn't far behind. Chasing momentum is a great way to lose money, but that doesn't mean these highflying drugmakers can't keep climbing into the long run. Here's what you need to know about two of the best-performing stocks of the past 12 months.
1. BeiGene Ltd.: Get ready for a flood
China recently overtook Japan as the world's second-largest market for prescription drugs, but it's still roughly one-fourth the size of the U.S. market. When it comes to exporting new therapies, the Middle Kingdom is just getting started. BeiGene stock hit an all-time high recently because it looks like it will play an important role on both fronts.
Image source: Getty Images.
Most U.S. investors don't realize this, but the China Food and Drug Administration (CFDA) didn't start accepting clinical trial data generated outside the country until the second half of last year. Rather than repeat a process that can last a decade, most international drugmakers just didn't bother. As a result, around two-thirds of new drugs approved in the U.S. and EU between 2001 and 2016 still aren't available in China.
While the CFDA works through a backlog of applications around 300 files thick, BeiGene will begin marketing popular therapies from Celgene (CELG) that have already earned the Agency's approval. That includes Revlimid, a multiple myeloma drug with annual sales that hit $8.2 billion last year. The CFDA finally expanded Revlimid's addressable patient population to include newly diagnosed patients in February, so expect some rapid sales growth in the quarters ahead.
Revenue from selling Celgene's therapies will fund the company's late-stage pipeline, which boasts three new cancer therapy candidates in pivotal trials. Celgene will help fund a study with BeiGene's lung cancer hopeful, tislelizumab, and in return pay BeiGene royalties on any U.S. sales of the drug.
Once data from ongoing pivotal trials start rolling in, BeiGene stock could soar much further. Tislelizumab and zanubrutinib work in a manner similar to some of today's most successful new cancer therapies. Then again, BeiGene sports a sky-high, $8.2 billion market cap that could come crashing back to Earth if investors catch a whiff of trouble for its late-stage drug candidates.
Image source: Getty Images.
2. AnaptysBio Inc.: Look out, Dupixent
This precommercial stage biotech can boast about a Celgene partnership as well, but impressive data for drugs AnaptysBio owns outright are what's been lifting the stock. Investors hoping stellar early data for ANB020 will eventually lead to a blockbuster drug launch have lifted the stock around 346% over the past year.
During its first trial, AnaptysBio's lead candidate helped all 12 eczema patients treated to achieve a 50% clear skin goal 57 days after receiving a single injection. That was the trial's predetermined goal, but a second measurement suggests it can knock Dupixent off its perch a few years from now. Just 15 days after receiving a single injection of ANB020, three-quarters of patients achieved 75% clear skin.
Millions of eczema patients underserved by topical steroid creams are expected to drive annual Dupixent sales past the $4 billion mark for partners Sanofi (SNY -0.95%) and Regeneron (REGN -0.49%), but it looks as if ANB020 will provide fierce competition. During a study that led to Dupixent's approval, injections every other week, combined with topical steroid creams helped 69% of patients achieve 75% clear skin, after 16 weeks of treatment.
While ANB020 has Dupixent beat in terms of convenience, we really can't make an apples-to-apples efficacy comparison without a head-to-head study. We also need to remain wary of the fact a few outliers among the first 12 patients treated could make ANB020 look more effective than it really is. The company is currently enrolling patients into a pivotal eczema trial that will accommodate between 200 and 300 eczema patients. Management expects data from mid-stage studies with asthma and peanut allergy patients before the end of the year.
If either study opens up another avenue for AnaptysBio, its recent $2.7 billion market cap could swell much further. If not, the company has an interesting psoriasis candidate that should produce mid-stage data next year, plus partnerships with Tesaro and Celgene to fall back on.
What to look for next
AnaptysBio hasn't even started ANB020's pivotal eczema trial yet, but we'll know if the candidate has a shot at a peanut allergy indication before the end of the month. In the second quarter, the company will share results from an adult eosinophilic asthma trial.
Hiring doctors and statisticians to run those studies will get expensive. Luckily AnaptysBio finished 2017 with $324 million cash balance that should be enough to keep operations humming along through the end of 2019.
AnaptysBio's war chest is commendable for a company in its position, but it doesn't hold a candle to BeiGene's. After losing just $99 million for the entire year, the company finished December with $838 million in cash, cash equivalents, and short-term investments. Then, a successful secondary offering in January added another $800 million to the Chinese company's cash coffers.
There can be no guarantees of future success, but both of these biotechs have what it takes to produce market-thumping gains over the long run: exciting assets to develop and plenty of resources to do it with.
