The biotech sector witnessed a see-saw performance in 2024. Though the year started on a positive note, those gains were erased in the second half due to disappointing third-quarter results, guidance cuts, pipeline setbacks and the appointment of vaccine skeptic Robert F. Kennedy Jr. as the head of Health and Human Services.
Despite these setbacks, the sector continued to attract investors’ attention due to demand for innovative medicines, especially in areas with great commercial potential, like obesity, immunology and gene therapy. New drug approvals, pipeline progress and an increase in M&A activity were some of the positives in the sector in 2024.
Here, we discuss three drug/biotech stocks that took a beating in 2024 but are likely to bounce back in 2025 based on anticipated regulatory approvals and/or positive pipeline updates. These are Immunocore Holdings IMCR, Allogene Therapeutics ALLO and Day One Biopharmaceuticals DAWN.
Immunocore Holdings
IMCR is a commercial-stage biotech focused on developing a novel class of TCR bispecific immunotherapies called ImmTAX targeting a broad range of diseases, which include cancer, autoimmune and infectious diseases. Kimmtrak, the sole-marketed drug in the company’s portfolio, is the first FDA-approved immunotherapy for metastatic uveal (ocular) melanoma, a rare form of cancer. In the first nine months of 2024, sales of the drug rose 32% year over year to $226 million, driven by increased demand.
Despite the encouraging top-line growth, the stock has plummeted 58% year to date. This downside can be attributed to investor-perceived risks in pipeline development. The most advanced candidate in Immunocore’s pipeline is brenetafusp, which is being evaluated across two separate clinical studies – a late-stage study for cutaneous melanoma and a phase I/II study for multiple solid tumors, including ovarian, non-small cell lung cancer (NSCLC), and endometrial carcinoma.
Several Wall Street analysts have expressed concerns over brenetafusp’s efficacy beyond cutaneous cancer, given the company’s delay in reporting results from the NSCLC cohort of the phase I/II study. Some analysts also stated that the company’s data on the drug in cutaneous melanoma (reported earlier this year) was ‘underwhelming’.
The stock is anticipated to experience a major upside in early 2025 as Wall Street expects IMCR to provide a positive update on the early-stage study of an investigational HIV therapy. The company is also evaluating Kimmtrak in two separate late-stage studies — one as a second or later-line treatment for cutaneous melanoma and another as an adjuvant treatment for uveal melanoma. It is also moving multiple oncology candidates to clinical development. Earlier this month, management started dosing patients in two separate early-stage studies on IMC-R117C and IMC-P115C across advanced gastrointestinal cancer and advanced solid tumors, respectively.
Immunocore Holdings PLC Sponsored ADR Price
Immunocore Holdings PLC Sponsored ADR price | Immunocore Holdings PLC Sponsored ADR Quote
IMCR currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Loss per share estimates for 2025 have improved from $2.33 to $1.57 in the past 60 days.
Allogene Therapeutics
ALLO is developing allogeneic CAR T therapies for treating cancer, especially hematologic indications with high unmet needs. Shares of Allogene have lost 35% year to date due to the strategic changes in Allogene’s pipeline, announced at the start of this year. Based on this change, management decided to upgrade the development of its lead pipeline drug cema-cel from being a third-line therapy in large B cell lymphoma (LBCL) patients to a frontline therapy.
Though the pivot does expand management’s target market to a wider patient population, investors took the news with a grain of salt since it delayed the company’s initial plans to bring the product to market by at least a couple of years. A regulatory submission to the FDA for the drug is now expected in 2027.
Apart from cema-cel, Allogene is also developing engineered allogeneic CAR-T cell therapy candidates for multiple myeloma and renal cell carcinoma in separate phase I studies. Management is also planning to explore the potential of allogeneic CAR-T cell therapies in autoimmune diseases and start an early-stage study with a new candidate in lupus/systemic lupus erythematosus indication by first-quarter 2025.
Allogene Therapeutics, Inc. Price
Allogene Therapeutics, Inc. price | Allogene Therapeutics, Inc. Quote
Allogene currently carries a Zacks Rank #2 (Buy). Loss per share estimates for 2025 have improved from $1.45 to $1.34 in the past 60 days.
Day One Biopharmaceuticals
A commercial-stage biotech, Day One is focused on developing therapies targeting pediatric cancer. Currently, DAWN has only one marketed drug in its portfolio, Ojemda, which received the FDA’s accelerated approval in April for children aged six months and above with relapsed or refractory BRAF-altered pediatric low-grade glioma (pLGG). Commercially launched in the second quarter, the drug has generated more than $28 million in product revenues in the first nine months of 2024.
Ojemda’s approval was a milestone for Day One as it marked the company’s first approval for a marketed drug. The drug is currently the only systemic therapy for pLGG in the country and requires once-weekly administration, with or without food, as a tablet or oral suspension. The ex-U.S. rights of the drug have been out-licensed to Ipsen as part of a licensing deal signed in July.
DAWN is also evaluating Ojemda in the pivotal late-stage FIREFLY-2 study as a front-line therapy for pLGG patients aged six months to 25 years. The potential success of this study could further expand the drug's eligible patient population. In addition to Ojemda, the company’s pipeline also consists of two other investigational candidates — the recently acquired antibody-drug conjugate (ADC) drug DAY301 and a MEK 1/2 inhibitor pimasertib. Day One aims to dose the first patient in the phase I study on DAY301 to treat solid tumors by early 2025.
Year to date, shares of Day One Biopharmaceuticals have lost over 13%.
Day One Biopharmaceuticals, Inc. Price
Day One Biopharmaceuticals, Inc. price | Day One Biopharmaceuticals, Inc. Quote
DAWN currently carries a Zacks Rank #2. Loss per share estimates for 2025 have improved from $2.03 to 99 cents in the past 60 days.
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