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2 Top Biotech Stocks to Buy Right Now

By Adria Cimino - May 30, 2021 at 6:00AM

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One is growing revenue. And the other may soon launch its first product.

When looking for a great biotech stock to buy, I focus on the future. That could mean the months to come -- or it could mean years down the road. I ask myself about the next catalysts for revenue and share performance. If the catalysts are just ahead, now may be a good time to consider getting in on the story.

That's the case with the two exciting biotech companies I'll talk about here. One has a product on the market. And regulators recently granted that product another approval -- used as a combination therapy with a blockbuster drug. And the other company is about to file for authorization for its very first product: a coronavirus treatment. Let's take a closer look at each.

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Image source: Getty Images.

Exelixis

Exelixis' (EXEL 0.57%) flagship molecule is called cabozantinib. It's commercialized the drug as Cabometyx for advanced renal cell carcinoma (RCC) and hepatocellular carcinoma (HCC) -- and Cometriq for a type of thyroid cancer. The molecule works by blocking the action of enzymes known as tyrosine kinases. Studies have shown that tyrosine kinases play a role in cancer.

So cabozantinib's potential may be huge. It could treat many types of cancer. The company is exploring that right now. It's studying the molecule in more than 70 clinical trials across 15 types of cancer. Eight of those studies are in phase 3.

Earlier this year, the U.S. Food and Drug Administration approved the use of Cabometyx in combination with Bristol Myers Squibb's blockbuster Opdivo as a first-line treatment for advanced RCC. Exelixis says it saw "strong uptake" of that therapy in the first quarter. It's likely we'll see even more growth ahead. That should be a catalyst for share price increases.

And here's even more: During the current quarter, Exelixis expects to report results from a phase 3 trial of cabozantinib and atezolizumab as a first-line treatment for advanced HCC. That may drive the shares -- and positive trial results signal the possibility of another approved indication for cabozantinib in the near future.

Exelixis' annual revenue has soared over the past five years thanks to cabozantinib. And the company expects that this year total revenue will top $1 billion for the first time. Exelixis shares may gain 39% within the coming 12 months according to Wall Street's average estimate. Considering all of these elements, now sounds like a good time to buy shares of this biotech company on the rise.

Humanigen

Humanigen (HGEN -5.41%) calls itself "the cytokine storm company." You man have heard about cytokine storm when reading about severe cases of coronavirus. That's when infection triggers an abnormal immune response: Inflammatory proteins attack the body's own cells. Humanigen's monoclonal antibody, lenzilumab, acts by neutralizing a key cytokine involved in that process.

Humanigen is testing lenzilumab in five clinical trials including cancer and COVID-19. The COVID-19 program is the most advanced. In fact, a major catalyst may be right around the corner. Humanigen said that its lenzilumab phase 3 trial showed the antibody improved survival in COVID-19 patients suffering from low oxygen levels in the body's tissues. By taking the antibody treatment, the patients didn't require mechanical ventilation.

Now, Humanigen says it will file for Emergency Use Authorization by the end of this month. The company plans to file for authorization in the U.K. in the second quarter. And Humanigen also aims to apply for emergency authorization in Europe.

If authorized, lenzilumab would become Humanigen's first commercialized product. This is important for two reasons. First, it represents a revenue source. Lenzilumab could be a significant tool in the fight against severe coronavirus. It would be the only authorized treatment specifically designed to address cytokine storm. Treatments are crucial because patients with cytokine storm often have worse outcomes.

And here's the second reason. Authorization would support Humanigen's technology. We would see the antibody works and that regulators acknowledge that. This would be a good sign for lenzilumab in other indications moving forward.

So, should you buy Humanigen shares right now? It's best to invest in Humanigen only if you have some appetite for risk. I always say this about companies that don't yet have a product on the market. But lenzilumab may change that story for Humanigen -- and soon. So if you don't buy the shares right now, they definitely are ones to add to your watchlist.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Bristol Myers Squibb. The Motley Fool recommends Exelixis. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Bristol Myers Squibb Company Stock Quote
Bristol Myers Squibb Company
BMY
$75.33 (1.59%) $1.18
Humanigen, Inc. Stock Quote
Humanigen, Inc.
HGEN
$0.32 (-5.41%) $0.02
Exelixis, Inc. Stock Quote
Exelixis, Inc.
EXEL
$19.33 (0.57%) $0.11

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