Amgen (AMGN -0.19%) and Vertex Pharmaceuticals (VRTX -1.02%) run the gamut of biotech stocks. Amgen is more established and has a dividend, while Vertex is one of several companies looking for therapies using the CRISPR Cas/9 gene-editing technique, which won the Nobel Prize just two years ago.
What both stocks have in common, though, is that they're up while most other biotech stocks are taking a hit this year. That's because both companies are profitable with growing revenue and have shown the ability to expand their base of therapies.
Amgen is a big, balanced innovator
Amgen helped pioneer biotechnology and sells its therapies in more than 100 countries. It's that rare biotech stock that's a value stock because of its size and dividend. It focuses on novel and biosimilar therapies in oncology, bone health, inflammation, cardiovascular disease, nephrology, and neuroscience.
While the iShares Biotechnolgy ETF has fallen a little more than 20% this year, Amgen is up more than 14%. Over the past decade, Amgen stock has risen nearly 200% while it has grown its dividend by 439% and its earnings per share (EPS) by 114%.
In the second quarter, the company reported revenue of $6.6 billion, up 1% year over year, driven by double-digit revenue increases for cholesterol therapy Repatha (up 14%), small cell lung cancer drug Lumakras (up 466% because it was just launched last year), plaque psoriasis drug Prolia (up 13%), and osteoporosis drug Evenity (up 46%).
Investors should also keep an eye on asthma drug Tezspire, which the company launched earlier this year after a collaboration with AstraZeneca; it had second-quarter revenue of $29 million, representing more than 300% growth sequentially from the first quarter.
Last year, the company had nine therapies that brought in $1 billion or more annually in revenue, led by autoimmune blockbuster Enbrel, which brought in $4.4 billion, but only represented 19% of the company's overall revenue (down from 23% two years ago), and by Prolia, which brought in $3.2 billion. In addition, the company has more than 40 compounds in various stages of its pipeline.
Amgen increased its dividend by 10% this year to $1.94 per quarterly share. Since it first began offering a quarterly dividend in 2011, it has raised it every year. At its current price, its yield is 3.08%, nearly double the S&P 500 average dividend yield of 1.82%.
Between the company's solid and relatively balanced portfolio and history of dividend increases, it's a smart choice to hold as a long-term investment. It's not likely to show phenomenal growth, but it will deliver consistent returns.
Vertex is on the verge of something big
Vertex Pharmaceuticals specializes in gene-editing therapies. Initially, the company focused on treatments for cystic fibrosis (CF), an inherited disorder that damages the lungs and other organs. After building a CF franchise led by blockbuster Trikafta, the company has begun to branch out into treating genetic blood disorders, chronic pain, kidney disease, and diabetes.
The company's stock is up more than 35% this year, and over the past five years its shares have risen 93% while its EPS is up 766% and its revenue has climbed 204%.
Trikafta brought in $3.65 billion through the first six months of 2022, up nearly 50% year over year. Over that period, the company reported $4.3 billion in revenue, up 22% from the same period last year, while EPS was $6.09, more than double the $2.75 it earned in the first six months of 2021.
The next exciting step for Vertex is exa-cel, a gene therapy that it is developing with CRISPR Therapeutics to potentially cure two rare genetic blood disorders, transfusion-dependent beta-thalassemia (TDT) and severe sickle cell disease (SCD). Both disorders often require frequent transfusions and can significantly shorten lives.
This past June, Vertex and CRISPR presented Phase 2/3 trials data showing that of the 75 patients in the study, 31 with SCD were free of the painful vaso-occlusive crises common to SCD patients; and of the 44 with TDT, all but two patients no longer required transfusions after treatment. The other two patients needed 75% and 89% fewer transfusions.
That announcement was huge for both companies but also for all gene-editing companies. Based on that, Vertex is on track to submit exa-cel's approval for rolling review to the FDA next month, with the potential to submit its new drug application in the first quarter of 2023. And a submission in Europe could occur this quarter.
