U.S. biotech companies are expected to outperform the broader market over the next six to 12 months due to faster drug approvals by the FDA, as well as more mature product pipelines, says Dr. Jim Birchenough, a Managing Director at BMO Capital Markets Corp.
“We’re excited about the record number of product approvals that we’ve had over the last 12 to 18 months. We have seen a dynamic where there has been a bias toward shorting new product launches because of the time it takes to typically gain traction with novel drugs, but we’re at a point in time where we think that some of the slower launches last year will start to accelerate,” he said.
Birchenough points to Regeneron Pharmaceuticals, Inc., (REGN) as an example of a biotech company in the midcap space, where product launches have accelerated recently, and he expects to see more activity this year. He says Regeneron has a best-in-class entrant in the eye disease segment, a $5 billion category in the U.S., with Eylea.
“We’ve seen companies like Regeneron, a midcap company, more than double on a strong launch of their eye disease drug Eylea,” Birchenough said. “We expect Regeneron to be highly profitable off of Eylea as early as late this year, and off of that opportunity alone we think there is upside on the stock.”
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