The biopharma industry has been focused on the COVID-19 vaccine or drug development since the beginning of the pandemic. But the industry’s myopia has done well by investors, as evidenced by iShares Nasdaq Biotechnology ETF’s (IBB) 38.7% return over the past year. However, while the industry has clearly gained significant traction, major companies not actively involved in the COVID-19 vaccine or drug development have been overshadowed and to a degree overlooked by investors.
Some of these under the radar companies have impressive product pipelines, however, with state-of-the-art research and development facilities. They have been making substantial progress in the rare diseases and critical ailments field, for example.
Because the ongoing coronavirus vaccination drive is expected to inoculate most Western countries’ populations this year, the focus of the biopharma industry could shift to other life-threatening diseases soon. Thus, we think relatively low-priced companies like Takeda Pharmaceutical Company Limited (TAK) and SIGA Technologies, Inc. (SIGA) could witness significant gains in the foreseeable future.
Takeda Pharmaceutical Company Limited (TAK)
Based in Japan, TAK is a value-based, research and development driven Biopharmaceutical Company engaged in the manufacture and sale of pharmaceutical products, general medical products, quasi drugs and healthcare products. The Company's research and development functions are concentrated in four therapeutic areas: oncology, digestive system diseases, rare diseases and neurology.
TAK recently announced the completion of sale of its portfolio of select products to Hypera Pharma for a total value of $825 million. The divestment includes select over the counter and prescription pharmaceutical products. The proceeds from the sale will be used to reduce TAK’s debt.
Last month, TAK earned an industry-leading position within the 2021 Access to Medicine (AtM) Index. Specifically, the company ranked sixth overall and is leading the pharmaceutical industry in Governance of Access criteria. The accolade recognizes TAK’s strong performance in the areas of health system strengthening, compliance and R&D capacity building.
TAK’s operating profit has increased 120.7% year-over-year to $3.48 billion for the nine-month period ended December 31, 2020. Its net profit has increased 320.8% from its year-ago value to $1.74 billion over the nine-month period, yielding an EPS of $1.11, up 319.5% year-over-year.
Analysts expect TAK’s revenues to grow 2.7% year-over-year to $7.39 million in the current quarter (ending March 31, 2021). A consensus EPS estimate of $0.69 in the fiscal 2021 (ending March 31, 2022) represents a 430.8% improvement year-over-year. The stock has gained 2.6% over the past three months to close yesterday’s trading session at $17.53.
TAK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
TAK has an A grade for both Growth and Value, and a B grade for Stability. In the 482-stock Biotech Industry, it is ranked #7.
In total, we rate TAK on eight different levels. Beyond what we stated above, we have also given TAK grades for Momentum, Industry, Quality and Sentiment. Get all TAK’s ratings here.
SIGA Technologies, Inc. (SIGA)
Based in New York, SIGA is a commercial-stage pharmaceutical company focused on the health security market. TPOXX is one of SIGA’s leading products known for the treatment of smallpox.
In the third quarter of 2020, SIGA delivered approximately 134,000 courses of oral TPOXX to the strategic national stockpile (SNS), generating revenue of approximately $78 million from the deliveries. . In October, the company delivered a further approximately 112,000 courses of oral TPOXX to the SNS.
SIGA’s domestic business is being complemented by a growing international business, with the most recent activity being the decision by the Public Health Agency of Canada to purchase up to approximately $33 million of oral TPOXX within five years.
SIGA’s revenues have increased 446.9% year-over-year to $44.30 million in the third quarter ended September 30, 2020. DBX’s operating profit has increased 4600% from the year-ago value to $32.90 million, while its net income has increased 2116.7% to $32.70 million over the three-month period, yielding an EPS of $0.31.
Analysts expect SIGA’s EPS to rise slightly over the next five years. The stock has gained 43.6% over the past year to close yesterday’s trading session at $6.46.
It’s no surprise that SIGA has an overall rating of A, which equates to Strong Buy in our POWR Ratings system. SIGA has an A grade for Value and Quality and a B grade for Growth and Momentum. In the 482 stocks of the same industry, it is ranked #1.
Click here to see the additional POWR Ratings for SIGA (Stability and Sentiment).
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TAK shares fell $0.03 (-0.17%) in after-hours trading Thursday. Year-to-date, TAK has declined -3.68%, versus a 4.50% rise in the benchmark S&P 500 index during the same period.
About the Author: Rishab Dugar
Rishab is a financial journalist and investment analyst. His investment approach is to focus on quality stocks, trading at low prices, with business models that he readily understands.
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