Citigroup Expands Biotech Coverage

Citigroup expanded its biotech coverage on Wednesday by adding five more stocks to the roster, including:

• Amgen (NASDAQ:AMGN)
• Biogen (NASDAQ:BIIB)
• Gilead (NASDAQ:GILD)
• Regeneron (NASDAQ:REGN)
• Vertex (NASDAQ:VRTX)

Ratings Overview

The firm initiated coverage on Gilead and Vertex with Buy ratings, citing solid growth drivers, while Amgen, Biogen, and Regeneron received Neutral ratings due to certain market challenges and pipeline uncertainties.

Amgen

Citigroup analysts highlighted the potential of its obesity and diabetes drug, MariTide, while expressing caution over competitive pressures in the GLP-1 market. They believe that Amgen’s growth outlook “hinges on MariTide clinical success and, to a lesser degree, the trajectory for newer products,” including Tepezza, Uplizna, Krystexxa, and Imdelltra.

Vertex

Vertex earned a Buy rating primarily for its leadership in cystic fibrosis treatments and potential benefits from new therapies, such as the vanzacaftor triple combination for CF and suzetrigine for acute pain. Analysts noted that with consistent growth and multiple PDUFA dates in early 2025, they are very optimistic about Vertex's growth trajectory.

Biogen

While Biogen received a Neutral rating, the firm acknowledged an erosion in its core franchises. However, near-term growth could arise from new launches in Alzheimer’s (e.g., Leqembi) and potential mergers. Citi cautions that “Biogen’s pipeline still looks to have higher clinical risk overall,” as crucial data is expected for Alzheimer’s, multiple sclerosis, and Parkinson’s treatments in the next two years.

Gilead

Gilead, receiving a Buy rating, is viewed positively for its strong HIV business and future potential from its HIV prevention drug, lenacapavir, expected to launch in 2025. The firm sees Biktarvy as the cornerstone of Gilead’s HIV business, noting that it continues to dominate the market with a >49% share.

Regeneron

Citi’s Neutral stance on Regeneron is attributed to expected declines in its Eylea franchise because of biosimilar competition. Despite this, long-term growth potential exists, bolstered by key franchises like Dupixent and Libtayo. Significant Phase 3 results in melanoma and non-small cell lung cancer are anticipated to be crucial growth catalysts for Regeneron, with important data expected by late 2024 and 2025.