We recently compiled a list of the 10 Best Mid-Cap Healthcare Stocks To Buy Now. In this article, we are going to take a look at where Xenon Pharmaceuticals Inc. (NASDAQ:XENE) stands against the other mid-cap healthcare stocks.
Global Healthcare Market: Growth Projections, Challenges, and Tech-Driven Innovations
According to projections by ReportLinker, the market for healthcare services will increase from $7.5 trillion in 2022 to $7.975 trillion in 2023. Through 2027, it is projected to grow at a compound annual growth rate (CAGR) of 6.3%, or $9.8 trillion. Hospitals, digital health, and healthcare services are some of the segments that make up the global healthcare market. Between 2024 and 2029, the hospital market alone is expected to increase by 4.18% annually, reaching a market value of $5.19 trillion.
In December 2023, the World Health Organization reported that global healthcare spending hit a record $9.8 trillion in 2021, or 10.3% of global GDP. However, spending was unevenly distributed, with low-income countries experiencing a decline in government health spending, relying more on external aid. While 11% of the global population lived in countries spending less than $50 per person on health, high-income countries spent around $4,000 per capita. Despite rising public health spending during COVID-19, this growth is unlikely to continue as countries face economic challenges like slow growth, high inflation, and increased debt.
Dr Bruce Aylward, WHO Assistant Director-General, Universal Health Coverage, Life Course, said:
“Sustained public financing on health is urgently needed to progress towards universal health coverage. It is especially critical at this time when the world is confronted by the climate crisis, conflicts, and other complex emergencies. People’s health and well-being need to be protected by resilient health systems that can also withstand these shocks.”
The Centers for Medicare and Medicaid Services (CMS) estimates that national healthcare expenditures would grow at an average rate of 5.6% between 2027 and 2032, with spending on healthcare expected to reach an estimated $4.8 trillion in 2023.
The healthcare market is undergoing a tech-driven, patient-centered revolution. Telehealth, boosted by the pandemic, is now mainstream, with the global market valued at $60.15 billion in 2023 and expected to grow steadily. Precision medicine, driven by genomics, is set to become a $50.2 billion market by 2028, offering personalized treatments based on genetic makeup. AI is also transforming healthcare, with $31.5 billion in equity funding from 2019 to 2022 and potential annual US savings of $360 billion within five years. Remote patient monitoring (RPM) is rising, with the global market at $71.9 billion in 2023 and projected to grow, supported by wearable technology.
Our Methodology
In our methodology, we focused on selecting healthcare stocks with market capitalizations between $2 billion and $10 billion that also had a strong/moderate buy rating and high institutional ownership. After identifying these stocks, we ranked them in ascending order based on their number of hedge fund holders as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A team of scientists in lab coats studying a biopharmaceutical molecule in a lab.
Xenon Pharmaceuticals Inc. (NASDAQ:XENE)
Hedge Fund Holders: 51
Xenon Pharmaceuticals (NASDAQ:XENE) has emerged as one of the most promising mid-cap stocks in the biopharmaceutical sector, particularly in the field of neuroscience. The company specializes in developing innovative therapeutics for neurological disorders, with a focus on epilepsy and other central nervous system conditions.
Xenon’s lead candidate, XEN1101, is currently in Phase 3 trials for focal onset seizures. In its Q2 2024 financial results, Xenon reported continued progress in its Phase 3 epilepsy program. The company also highlighted the successful completion of patient enrollment in X-TOLE2, a key milestone in advancing its lead candidate XEN1101.
Beyond epilepsy, Xenon Pharmaceuticals (NASDAQ:XENE) is exploring XEN1101’s potential in other neurological disorders, including major depressive disorder. This expansion into new therapeutic areas could substantially increase the drug’s market potential and drive future revenue growth.
Christopher Kenny, the Pharmaceutical/Biotech industry executive and board-certified neurologist at Xenon Pharmaceuticals (NASDAQ:XENE) mentioned in the Q2 earnings call transcript:
“Beginning with our Phase 3 epilepsy program, which includes X-TOLE2 and X-TOLE3 in focal onset seizures and X-ACKT in primary generalized tonic-clonic seizures, our Phase 3 FOS studies continue to advance with the first top-line data readout of X-TOLE2 anticipated in the second half of 2025. Our plan remains to submit results from X-TOLE2, along with the existing data package from our Phase 2b X-TOLE clinical trial and additional safety data from other clinical trials to meet regulatory requirements in the U.S. for approval.”
As of Q2 2024, around 51 hedge fund holders held stakes in the stock with VenBio Select Advisor being the largest stakeholder with 5,666,666 shares worth $220,943,307.
Overall XENE ranks 2nd on our list of the best mid-cap stocks to buy. While we acknowledge the potential of XENE as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than XENE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
