AstraZeneca leads gains ahead of rival biopharma stocks GSK and PureTech
Biopharmaceutical stocks have experienced mixed fortunes so far in 2022. The AstraZeneca [AZN] share price’s year-to-date gain is in stark contrast to the declines of peers GlaxoSmithKline [GSK] and PureTech Health [PRTC]. As of 25 August, AZN was up 35% for the year, while GSK and PRTC were down 13.5% and 13.4%, respectively. The FTSE 100 was down 0.2% over the same period. The healthcare sector has been caught up in the broad market decline, as rising interest rates and inflation stoke fears of a recession. Companies like BioNTech [BNTX], down 36.3% year-to-date, have suffered amid the pressured economic environment as demand for Covid-19 vaccines tails off.
Despite the downturn, market experts still believe the sector has room to grow. Ali Urman, ARK Invest analyst, recently told the Opto Sessions podcast that, despite the broader sell-off in the biotech sphere, “science is getting better and better”. She highlighted the sector’s “$1.1tn potential market cap in 2026”.
AstraZeneca outperforms biotech peers
AstraZeneca became a household name during the coronavirus pandemic, thanks to its development of one of the most widely administered Covid-19 vaccines. As well as vaccines, the London-listed company is known for its oncology products and treatments for rare diseases, having acquired rare disease expert Alexion for $39bn last year.
The AstraZeneca share price has not only outperformed its UK-listed peers and the FTSE 100 this year, it has also fared much better than some of its US-listed biotech competitors, including fellow vaccine producers Moderna [MRNA] and Pfizer [PFE], which were down 40.6% and 15.9% year-to-date, respectively, as of 25 August.
Driving sentiment is the company’s strong second quarter results that it reported at the end of July, with revenues up 31% to $10.8bn, surpassing the Zacks consensus estimate of $10.4bn. According to The Wall Street Journal, 21 out of 27 analysts rate AstraZeneca shares a ‘buy’.
GSK’s share price overshadowed by legal challenges
Recent positive developments for biopharma giant GSK include teaming up with French pharma company Sanofi to develop a new Covid-19 shot. Its vaccine is believed to have fewer side effects and last longer than that of Pfizer-BioNTech or Moderna. GSK also recently completed a demerger in Europe, offloading its consumer venture Haleon [HLN], a move designed to reduce debt and free up cash for other mergers and acquisitions. Big pharma firms including Pfizer, which recently snapped up Global Blood Therapeutics [GBT], are increasingly focusing on biotech M&As as values plummet, which has helped drum up activity in the sector.
At the end of July, the company also reported its Q2 2022 results, with sales of $6.9bn up 13%. CEO Emma Walmsley said its results as a “newly focused biopharma company” were positive, highlighting “strong growth in speciality medicines”.
However, GSK has been struggling with legal action over allegations that its heartburn drug Zantac causes cancer, which have shaved billions off the company’s market value.
Although the GSK share price is down more than 13% this year, having closed at 1,399p on 24 August, it has regained some of its losses since falling to a 52-week low of 1,371p on 11 August.
PureTech Health boosted by Karuna trial result
Similar to GSK, PureTech’s share price is down just over 13% so far in 2022. The stock closed at 248p on 24 August. The company develops medicines to treat a range of diseases – from cancer to irritable bowel syndrome and pulmonary disorders – many of which are based on monoclonal antibody technology. At the time of its annual results announcement in April, it had a pipeline of 27 treatments and drug candidates, 13 of which were still in the clinical trial stage.
Despite its performance year-to-date, PureTech shares received a boost this month when Karuna Therapeutics [KRTX], in which PureTech holds a 3.5% stake, received positive results from a phase III trial of its schizophrenia treatment KarTX. The PureTech share price closed 15.6% higher on 8 August, the day of the announcement.
Despite the stock still being down year-to-date, the company is rated a consensus ‘buy’ by five analysts at The Wall Street Journal.
Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.