Biotech stocks have been on a roller-coaster ride, but continue to outperform the broader market.
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In 2020, the industry was thrust into the pandemic limelight as Pfizer (PFE) and its partner BioNTech (BNTX), along with Moderna (MRNA) and Johnson & Johnson (JNJ), launched a trio of Covid vaccines. But as society learned to live with Covid — and other concerns around the economy, inflation and politics took center stage — interest in biotech fell by the wayside.
Shares of Investor’s Business Daily’s biotech industry group hit a downward slope from February 2021 to June 2022. Recently, biotech stocks have been under pressure amid the banking crisis and as the Centers for Medicare and Medicaid Services plans to soon begin negotiating the prices of the costliest drugs. Today, the entire group has a Relative Strength Rating of 73, which puts it in the top 27% of all stocks in terms of 12-month performance, according to IBD Digital.
The group is ranked No. 40 out of 197 industry groups. Meanwhile, the pharma group ranks No. 36.
But it’s key to watch specific measures when examining stocks. In terms of fundamental and technical measures, the best biotech stocks trading above 10 today are:
Catalyst Pharmaceuticals (CPRX)
Amphastar Pharmaceuticals (AMPH)
Vertex Pharmaceuticals (VRTX)
Genelux (GNLX)
Enliven Therapeutics (ELVN)
The No. 1 Biotech Stock
Catalyst is the No. 1 biotech stock, leading an industry group of almost 800 companies.
Catalyst recently added a second product to its lineup. Through a deal with Eisai (ESALY), Catalyst now sells anti-seizure medicine Fycompa in the U.S. Catalyst also sells Firdapse, a treatment for Lambert-Eaton myasthenic syndrome, or LEMS. LEMS is a rare autoimmune condition that saps muscle strength and often occurs in lung cancer patients.
Sales are growing, but Teva Pharmaceutical (TEVA) recently said it plans to launch a generic version of Firdapse. Teva says the patents covering Firdapse are invalid and not enforceable. Catalyst must now respond to Teva’s filing.
Shares of Catalyst tumbled below their 50-day moving average on the Teva news, MarketSmith.com shows. But, following a strong fourth-quarter report, the biotech stock recently edged above that line.
Catalyst stock remains on the Tech Leaders list.
Bullishly, CPRX shares have a best-possible Composite Rating of 99, according to IBD Digital. This puts the biotech stock in the top 1% of all stocks in terms of fundamental and technical measures. Its 12-month performance, measured by the Relative Strength Rating, is also in the top 4% of all stocks.
Injectable And Inhaled Drugs
Amphastar develops, manufactures and sells a variety of injectable drugs. It also works on drugs that can be inhaled or delivered in the nose.
In its fourth quarter, Amphastar’s sales jumped 12% and adjusted earnings surged 74%. Sales of its biggest product, Primatene Mist, edged 4% higher to $22.3 million. Primatene Mist is an asthma inhaler.
The company also sells prefilled syringes of epinephrine, a substance used to treat emergency allergy reactions. In the December quarter, sales climbed 14% to $21.4 million. Other big products include local anesthetic lidocaine and blood sugar hormone called glucagon. Sales of those products grew a respective 19% and 10%. But revenue from an injection for bleeding disorders, phytonadione, fell 16%.
Shares have a Composite Rating of 97 and a Relative Strength Rating of 94.
Shares are forming a cup base with a buy point at 44.56.
Amphastar stock is also a Tech Leader.
Moving Beyond Cystic Fibrosis
Vertex is one of the biggest biotech stocks in terms of market cap. It ranks fourth behind Amgen (AMGN), Gilead Sciences (GILD) and Regeneron Pharmaceuticals (REGN).
The company is the de facto leader of the cystic fibrosis drug market. Fourth-quarter sales, dominated by its triple regimen Trikafta, grew 11% to $2.3 billion.
But it’s now expanding into other efforts. Vertex is partnered with Crispr Therapeutics (CRSP) on a gene-editing approach to a pair of blood diseases. Further, Vertex also announced its $320 million plan to buy its partner in diabetes treatment, privately held ViaCyte. The companies are testing a cell replacement drug in type 1 diabetes.
Beyond that, Vertex is testing treatments for liver and kidney diseases, Duchenne muscular dystrophy and pain.
The biotech stock has a Composite Rating of 96 and a Relative Strength Rating of 86. Shares recently broke out of a cup base with an entry at 325.29.
The stock also is a Tech Leader.
Genelux, A Newer Biotech Stock
Genelux is a new biotech stock. Shares went public in late January. The company is working on a new approach to immunotherapy. Its technology, dubbed oncolytic immunotherapy, uses viruses to selectively replicate and kill tumor cells, while leaving normal cells alone.
The company is testing treatments for ovarian, lung and pancreatic cancers. It’s also working on blood cancers and other solid tumors. Genelux doesn’t have any sales yet, however, and it’s expected to report growing losses through at least 2025. That’s normal for early-stage biotech companies.
The biotech stock has a best-possible Relative Strength Rating of 99 and a strong Composite Rating of 94.
It’s also a Tech Leader.
Cancer Treatments Drive Enliven
Enliven is working on treatments for numerous cancers. Its latest-stage testing is in chronic myeloid leukemia, lung cancer and other solid tumors.
The company also is working on several early-stage cancer drugs for solid tumors. These cancers have no approved therapies, according to Enliven. It’s important to note, Enliven doesn’t yet sell a product, so it doesn’t have any sales. The company is also expected to report several more years of losses.
Enliven is a newer biotech stock, having gone public in 2020. After tumbling through mid-2022, shares have rebounded bullishly. Now, the biotech stock has a perfect Relative Strength Rating of 99 and a strong Composite Rating of 82.
But the biotech stock recently sliced through its 50-day line.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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