Which biopharma stocks should investors have their eyes on for 2015? J.P. Morgan has a few ideas. With JPM analysts predicting the sector can take its hot streak into 2015, they've ID'd companies ranging from tiny BioMarin to whopper Bristol-Myers Squibb that should stand out from the crowd. Their picks:
- Alexion ($ALXN): With the rare-disease outfit already boasting a success story with Soliris, the world's most expensive drug, it's expected to roll out its second product--asfotase alfa for hypophophatasia--in 2015. JPM figures the company will put some "intense focus" on the launch, which it thinks can result in 2015 sales of $59 million. Some analysts see the new med eventually topping $500 million.
- BioMarin ($BMRN): California-based BioMarin holds a special position in the biotech world, JPM analysts believe. In addition to a growing portfolio of marketed drugs and a promising late-stage pipeline, it's got an orphan drug focus that's both lucrative and en vogue these days. Next year will be a big one for the company, JPM predicts, pointing to expanding sales of enzyme replacement therapy Vimizim and in-development compounds such as BMN-111 for achondroplasia and BMN 190 in Batten disease.
- Bristol-Myers Squibb ($BMY): The immuno-oncology field is hot and only getting hotter, and with a lead in that market, Bristol-Myers is poised to shine, JPM says. While BMS's shares may already reflect about $6 billion in peak immuno-oncology sales--Yervoy and new FDA approval Opdivo will be pulling those in--analysts see "the potential for further upside to this figure (and BMY shares) from a number of important updates," they wrote in a recent report. And every $1 billion in peak immuno-oncology sales will translate to roughly $3 a share for the stock, they figure.
- Illumina ($ILMN): Sequencing company Illumina is well-positioned in an area that's seeing increasing use in the clinic. Life sciences, reproductive and genetic health and oncology represent three of its 5 core positions that should help it see serious growth next year. Its "ability to out-innovate and extend its competitive lead" won't hurt either, JPM notes.
- Jazz Pharmaceuticals ($JAZZ): Ever the buzzed-about takeover target, Ireland's Jazz Pharmaceuticals may just play the dealmaker role itself next year, JPM analysts figure. They predict the company, looking to diversify beyond key drug Xyrem for narcolepsy, will stay active on the business development front over the next 12-18 months, with a focus on commercial-stage assets in the U.S. And it'll do so with a $3 billion borrowing capacity, JPM analysts estimate, not including any cash flows from a potential future pickup.
- Valeant ($VRX): Now that a months-long takeover battle for Allergan has ended in failure, Valeant's shares are set to head upward, analysts figure. They believe "the uncertainty around its hostile bid for Allergan" had been depressing valuation--something the Canadian pharma can overcome with "solid" organic growth and a return to its usual M&A game. While the analysts don't expect serial dealmaker and CEO J. Michael Pearson to get himself into another hostile takeover battle anytime soon, they believe "there are a range of private and public companies that would make sense under Valeant's efficient cost model."
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