Longer patent periods and lower clinical and regulatory risks make biologics an attractive investment opportunity, says Dr. Jason Kantor, a senior analyst at RBC Capital Markets.
“I think we’re still very much in the middle of a long-term trend moving towards biologics,” Kantor said. “Pharma companies have realized that they need to drive a substantial portion of their revenue and their pipeline from these types of products.”
The path to generic biologics is paved with technical and legislative hurdles, which also bodes well for the space right now. Over the longer term, Kantor likes Seattle Genetics (SGEN), a pure-play antibody company.
“They have a lead drug, which has just demonstrated very robust activity in Hodgkin’s lymphoma and a rare form of T-cell lymphoma, and they are planning to take that to the market themselves next year,” Kantor said. “They’ve got a pipeline of drugs behind that, and along with the partners as well. It’s one of the small-cap companies that has all the essential ingredients to grow from a $1 billion- to $2 billion-market-cap company into the true mid-cap range of $2 billion to $5 billion over time.”
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