With rapid innovations in biotechnology, companies are developing groundbreaking therapies and diagnostic tools that address chronic diseases and improve patient outcomes. This continuous advancement is not only enhancing healthcare quality but also attracting attention from investors seeking to capitalize on the sector's transformative potential.

Amid this backdrop, fundamentally robust biotech stocks such as Illumina, Inc. (ILMN), Alnylam Pharmaceuticals, Inc. (ALNY), and Gilead Sciences, Inc. (GILD) could offer significant return potential owing to their pipelines that are awaiting FDA approvals.

The biotechnology industry is experiencing significant growth, driven by increasing demand for personalized medicine and breakthroughs in treating chronic diseases. The approval of new drugs by the Food and Drug Administration (FDA) has also played a crucial role in this expansion.

This year alone, the FDA has approved 30 novel drugs targeting conditions ranging from lung cancer to Alzheimer’s disease and various other chronic ailments.

A recent survey by GlobalData highlights this positive momentum, revealing that 44% of healthcare industry professionals worldwide feel optimistic or extremely optimistic about the recovery of biotech funding in the upcoming twelve months. This sentiment reflects confidence in the sector's ability to innovate and meet rising healthcare demands.

Additionally, ongoing advancements and advanced diagnostics are propelling the biotechnology field forward. The transformative potential of Generative AI in drug discovery further amplifies this growth.

According to the McKinsey Global Institute, Generative AI could contribute up to $110 billion annually in economic value for the pharmaceutical and medtech sectors, indicating a bright future for biotechnology.

Furthermore, as per a report by Precedence Research, the global biotechnology market is expected to expand at a CAGR of 11.5%, reaching approximately $4.61 trillion by 2034.

Considering these factors, let’s discuss the fundamentals of three Biotech stocks, starting with #3.

Stock #3: Illumina, Inc. (ILMN)

ILMN provides sequencing- and array-based solutions for genetic and genomic analysis. It operates through two main segments: Core Illumina and GRAIL. The company is also engaged in a research collaboration, option, and license agreement which focuses on discovering novel dual tumor-associated antigens (TAA) that target trispecific antibodies.

On August 27, ILMN received FDA approval for its TruSight™ Oncology (TSO) Comprehensive test and two companion diagnostic (CDx) indications. The TSO Comprehensive test profiles over 500 genes in solid tumors, increasing the chance of identifying actionable biomarkers for targeted therapies or clinical trials.

The approval could strengthen ILMN’s position in oncology diagnostics, likely driving higher demand for its products. The expanded market presence could positively impact its stock price as precision medicine grows.

In the fiscal 2024 second quarter that ended June 24, ILMN reported a total revenue of $1.11 billion with a gross margin of 64.8%. Its non-GAAP operating profit rose 2.4% from the year-ago value to $84 million. Plus, the company’s non-GAAP net income and EPS came in at $57 million and $0.36, up 14% and 12.5% year-over-year, respectively.

ILMN's EPS for the fiscal 2024 third quarter, ending September 2024, is expected to grow 164.8% year-over-year to $0.87. Moreover, the company's EPS for the fiscal 2024 fourth quarter ending December 2024 is forecasted to rise by 573.7% from the prior year’s period to $0.94.

In parallel, the company has surpassed the consensus revenue estimates in three of the trailing four quarters, which is impressive.

The stock has gained 21.2% over the past three months to close the last trading session at $131.20.

ILMN’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

ILMN has a B grade for Growth, Sentiment, and Quality. Within the Biotech industry, it is ranked #28 out of 333 stocks.

To see the other ILMN ratings for Value, Momentum, and Stability, click here.

Stock #2: Alnylam Pharmaceuticals, Inc. (ALNY)

ALNY focuses on discovering, developing, and commercializing novel therapeutics based on ribonucleic acid interference. The company’s pipeline of investigational RNAi therapeutics focuses on genetic medicines, cardio-metabolic diseases, hepatic infectious diseases, and central nervous system (CNS)/ocular diseases.

On August 30, ALNY reported detailed results from the Positive HELIOS-B Phase 3 Study of vutrisiran, an investigational RNAi therapeutic for ATTR amyloidosis with cardiomyopathy. The study showed significant improvements in all primary and secondary endpoints. Vutrisiran reduced all-cause mortality and recurrent cardiovascular events by 28%.

With mortality reduced by 31% during the double-blind period and 36% over 42 months, vutrisiran demonstrates strong potential in treating cardiomyopathy. As a key pipeline asset, its success positions ALNY for future market growth. This could strengthen ALNY's portfolio, driving revenue and enhancing investor confidence, which could positively impact its stock price.

On April 7, ALNY announced positive results from the KARDIA-2 Phase 2 study, which evaluated the efficacy and safety of a single subcutaneous dose of zilebesiran. Zilebesiran, added to standard antihypertensives like indapamide, amlodipine, or olmesartan, demonstrated promising outcomes, advancing its development as a potential treatment for hypertension.

As an investigational RNAi therapeutic targeting liver-expressed angiotensinogen (AGT), zilebesiran offers the possibility of biannual dosing. Its success in the pipeline could significantly benefit ALNY by providing a long-acting hypertension treatment, potentially expanding its market presence and driving long-term revenue growth.

During the fiscal 2024 second quarter that ended June 30, ALNY’s net product revenues increased 34.1% year-over-year to $410.09 million. Its non-GAAP operating income came in at $137.90 million compared to an operating loss of $154.03 million in the previous year’s quarter.

Furthermore, the company’s non-GAAP net income amounted to $73.77 million or $0.56 per share, compared to a loss of $201.62 million or $1.62 per share recorded in the last year’s period.

Analysts predict ALNY’s revenue for the fiscal year ending December 2024 to increase 20.5% year-over-year to $2.20 billion. Moreover, the company’s revenue for the next fiscal year ending December 2025 is estimated to rise 13.2% from the prior year to $2.49 billion. The company has surpassed the consensus revenue estimates in three of four trailing quarters.

ALNY’s stock has surged 53% over the past nine months and 56% over the past year to close the last trading session at $273.88.

ALNY’s bright prospects are mirrored in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

ALNY has a B grade for Sentiment and Quality. It is ranked #27 among 333 stocks in the Biotech industry.

Click here to access additional ALNY ratings (Growth, Value, Momentum, and Stability).

Stock #1: Gilead Sciences, Inc. (GILD)

GILD is a biopharmaceutical company dedicated to advancing treatments for life-threatening diseases such as human immunodeficiency virus (HIV), viral hepatitis, COVID-19, and cancer.  Its portfolio of marketed products includes Biktarvy, Genvoya, Odefsey, Truvada, Harvoni, Vemlidy, and Veklury, among others.

On September 12, GILD shared interim analysis results from a pivotal Phase 3 clinical trial for lenacapavir, its twice-yearly injectable HIV-1 capsid inhibitor. The results revealed a remarkable 96% reduction in HIV infections compared to background HIV incidence (bHIV), positioning lenacapavir as a potential game-changer in HIV treatment and enhancing GILD's reputation in the field.

Earlier, on August 14, GILD announced the FDA's accelerated approval of Livdelzi® (seladelpar) for treating primary biliary cholangitis (PBC). The treatment, in combination with ursodeoxycholic acid (UDCA), achieved a 25% normalization rate of alkaline phosphatase (ALP) values after 12 months.

This improvement indicates a significant reduction in liver-related complications, enhancing patient outcomes. Together, these developments strengthen GILD's pipeline, potentially driving substantial revenue growth and solidifying its position as a leader in innovative therapies.

For the fiscal 2024 second quarter, which ended on June 30, GILD’s total revenues increased 5.4% year-over-year to $ 6.95 billion. The company’s non-GAAP operating income came in at $3.27 billion, rising 43.4% from the previous year’s quarter.

In addition, its non-GAAP net income attributable to GILD came in at $2.52 billion or $2.01 per share, up 49.2% and 50% year-over-year, respectively.

The consensus revenue and EPS estimates of $27.99 billion and $7.13 for the fiscal year ending December 2025 reflect a rise of 1% and 87.7% year-over-year, respectively. Also, the company has an excellent surprise history; it surpassed the consensus revenue estimates in all four trailing quarters.

GILD’s stock has surged 6.8% over the past nine months and 10.7% over the past year to close the last trading session at $83.94.

It’s no surprise that GILD has an overall A rating, equating to a Strong Buy in our POWR Ratings system.

GILD has an A grade for Value and a B for Quality. Within the same industry, it is ranked #5.

Beyond what is stated above, we’ve also rated GILD for Momentum, Stability, Growth, and Sentiment. Get all GILD ratings here.

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GILD shares rose $0.37 (+0.44%) in premarket trading Monday. Year-to-date, GILD has gained 7.41%, versus a 20.49% rise in the benchmark S&P 500 index during the same period.

Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.

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