Integrating artificial intelligence and biotechnology could make 2024 a landmark year. The utilization of AI, machine learning and big data is nowadays a part of research and development (R&D) procedures in most pharmaceutical companies, positioning them well to expedite the approval of new drugs for the market. This could mark the beginning of a new era for some next-gen biotech stocks.
Insilico Medicine is known as one of the first organizations to receive FDA approval for initial clinical trials of AI-designed medication. This small firm is focused solely on this technology and has reached an important milestone in biotech breakthroughs.
AI capabilities gained a lot of attention towards the end of 2022, but major pharmaceutical companies have already used AI to accelerate drug development cycles. They have explored computational means to streamline discrete stages, if not the entire design process. For investors, the reduced risks associated with major firms make them a preferred choice of prospects when compared to start-ups.
The potential for AI to reduce costs associated with discovering, developing, and testing new medications is clear. These stages involve substantial risks before a drug’s efficacy can be evaluated in clinical trials. The efficiency gained from utilizing AI in biotechnology can potentially improve certain companies’ profit margins in the long term, paving the way for a new era of next-gen biotech stocks.
Certain pharmaceutical companies enjoy a stronger position due to their relative experience and success with AI. These next-gen biotech companies, led by AI, employ AI in various ways, contributing to the narrative of biotech breakthroughs.
We’ll discuss the following stocks in detail that are leading the way forward in biotech.
Pfizer (PFE)
Pfizer (NYSE:PFE) is one of the industry leaders in digital transformation, leveraging AI and data analytics to drive drug discovery. This positions it as a promising candidate within the realm of next gen biotech stocks.
The company has applied AI in R&D since 2014. It notes that AI helped accelerate the design and development of Paxlovid, its “Covid-19” therapeutic approved in 2022. This demonstrates its utility in AI as early as 2020. Pfizer is also exploring AI techniques to diagnose rare diseases earlier. Its product pipeline contains 83 programmes in development. This includes four in regulatory review awaiting approval from the FDA and 23 in late-stage Phase III clinical trials.
In guidance issued on 13 December, Pfizer forecast sales growth of 8-10% for the current year, with EPS anticipated within a range of $2.05 to $2.25. With a price-to-earnings (P/E) ratio of approximately 15.5, Pfizer also offers investors a prospective dividend yield of 5.9% on a forward basis.
Exscientia (EXAI)
Exscientia (NYSE:EXAI) is a listed AI-driven biotechnology company that stands out among the next gen biotech stocks due to its strategic collaborations with major pharmaceutical firms. It has partnered with several of them to expedite AI and ML-based drug discovery and development.
Exscientia has advanced three independently-discovered drug candidates into its internal pipeline.
The company is currently rated by four equity research analysts, with 75% recommending either a “buy” or “strong buy” and an average 12-month price target of $8.67 per share.
GlaxoSmithKline (GSK)
GlaxoSmithKline (NYSE:GSK) holds a strategic partnership with Hong Kong-based Insilico Medicine to utilize the latter’s AI capabilities for drug discovery and development. This arrangement resembles Pfizer’s collaboration with BioNTech (NASDAQ:BNTX). The smaller biotechnology company leverages its breakthrough scientific work, which the larger pharmaceutical firm takes forward into late-stage clinical trials and commercialization. By leveraging Insilico’s AI capabilities, GSK contributes to biotech breakthroughs and shapes the industry’s future.
GSK anticipates completing 13 clinical trials next year while submitting seven new medicinal products to the FDA for final marketing approval.
With a PE ratio of approximately 10.5 times, GSK also provides shareholders with a generous forward dividend yield of 3.5%. During the third quarter, the company achieved sales growth of 10% at constant exchange rates while EPS increased by 17% YOY.
On the date of publication, Stavros Tousios did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
