Growth stocks may have struggled over the past year, but a select few names have defied this broad downward trend in growth equities. Within healthcare, pharma companies developing cutting-edge medicines have been a particular bright spot. Several companies with new Food and Drug Administration (FDA) approvals and/or promising clinical trial data have soared while the broader markets have slumped. The key reason is that life-saving medicines aren't subject to macroeconomic headwinds.
Apellis Pharmaceuticals (APLS -0.57%) and BridgeBio Pharma (BBIO -1.44%) are prime examples. These two biopharma companies have been storming higher of late in response to high-value catalysts. Here's why these two biotech stocks are poised for further gains in April and beyond.
Apellis Pharmaceuticals
Apellis stock has gained a stately 27% through the first three months of 2023, thanks to the FDA approval of its geographic atrophy medicine, Syfovre, in February. Geographic atrophy is an advanced form of age-related macular degeneration that can often results in total vision loss over time. Prior to Syfovre's approval, there were no FDA-approved medicines for this fairly common retinal disease. Wall Street analysts think this groundbreaking medication could achieve peak sales in excess of $3 billion per year. That's an enormous sum for a company with a market cap of $7.3 billion at the time of this writing.
Why is Apellis stock poised for further gains this month? Over the weekend, Bloomberg reported that Apellis is receiving takeover interest from multiple large pharmaceutical companies right now. Although the report notes that Apellis' management prefers to stay independent for the time being, the company is said to be considering its options.
All things considered, Apellis would likely fetch a tender offer in the neighborhood of $9 billion to perhaps $11 billion, based on the recent history of takeover premiums in the space. Regardless of whether these buyout rumors lead to a formal tender offer, Apellis stock is arguably undervalued relative to Syfovre's sizable commercial opportunity.
BridgeBio Pharma
BridgeBio's shares have already gained 117% so far this year. The biotech's stock has been on fire in 2023 in response to impressive mid-stage results for the achondroplasia (short stature) treatment infigratinib. After posting results that compared favorably to BioMarin's FDA-approved achondroplasia therapy, Voxzogo, BridgeBio announced plans to advance infigratinib into a pivotal-stage trial later this year. Top-line data from this proposed study could be available as soon as mid-2025, according to comments from the biotech's CEO, Neil Kumar.
What's the investing thesis behind BridgeBio? Despite this enormous gain in 2023, BridgeBio's shares could have a lot more room to run in April and beyond. Infigratinib could rake in peak sales topping $1.2 billion in the achondroplasia setting, per multiple analyst estimates. What's more, BridgeBio is also attracting takeover interest from larger pharmas, according to a recent report from Bloomberg.
Like Apellis, though, BridgeBio said that it may decide to eschew any takeover offers in the near term in order to benefit from a spate of upcoming clinical catalysts. This decision could result in the company ultimately commanding a higher tender offer down the road. That's not a surefire outcome, but the company does seem confident in its clinical pipeline.
