Biotech stocks have had a rollercoaster ride, but continue to outperform the broader market.
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In 2020, the industry was thrust into the pandemic spotlight as Pfizer (PFE) and its partner BioNTech (BNTX), as well as Modern (ARNM) and Johnson & Johnson (JNJ), launched a trio of Covid vaccines. But as society learned to live with Covid – and other concerns about the economy, inflation and politics took center stage – interest in biotechnology was dropped.
Shares of the biotech industry group from Investor’s Business Daily saw a downward slope from February 2021 to June 2022. Now biotech stocks are coming back after falling until the end of March due to the banking crisis and while the Centers for Medicare and Medicaid Services plan to begin negotiating prices for the most expensive drugs soon. Today, the group as a whole has a relative strength rating of 95, which puts it in the top 5% of all stocks in terms of 12-month performance, according to IBD Digital.
The group ranks tenth out of 197 industry groups. Meanwhile, the pharmaceutical group ranks No. 42.
But it is essential to monitor specific metrics when reviewing stocks. In terms of fundamental and technical metrics, the best biotech stocks trading above 10 today are:
- Amphastar Pharmaceuticals (AMPH)
- Vertex Pharmaceuticals (VRTX)
- Therapeutic Arcturus (ARCT)
- Facilitate therapy (ELVN)
- Therapeutic Horizon (PNZH)
Biotech action n°1: Amphastar
Amphastar Pharmaceuticals develops, manufactures and sells a variety of injectable drugs. It also works on medications that can be inhaled or administered through the nose.
During the first quarter, Amphastar’s sales jumped 16% to $140.02 million and adjusted earnings climbed 32% to 62 cents per share. Both metrics easily exceed expectations, according to FactSet.
The strongest growth came from glucagon, a treatment for hypoglycemia. Sales soared 134% to $25.7 million. Glucagon is also Amphastar’s biggest silver maker. Meanwhile, revenue from asthma drug Primatene Mist fell 5% to $23.48 million.
Amphastar also announced its intention to acquire Eli Lilly’s Baqsimi, a nasally administered glucagon drug for people with diabetes and hypoglycemia. Baqsimi generated $139.3 million in global sales last year.
Amphastar shares recently broke from a cup-with-handle buy point at 44.25, shows MarketSmith.com. Stocks are now floating in and out of the buy zone.
Biotechnology stock Amphastar is a technology leader.
The stocks have a perfect composite rating of 99 and a relative strength rating of 96.
Vertex: going beyond cystic fibrosis
Vertex Pharmaceuticals is one of the largest biotech stocks by market capitalization. He ranks fourth behind Amgen (AMGN), Gilead Sciences (GILD) and Regeneron Pharmaceuticals (REGN).
The company is the de facto market leader in cystic fibrosis drugs. First-quarter sales, led by its triple diet Trikafta, rose 13% to $2.37 billion. Vertex has also recently gained approval for another drug, Kalydeco, for infants with cystic fibrosis under the age of one month.
But it is now expanding to other endeavors. Vertex is a partner of Crispr Therapeutic (CRSP) on a gene editing approach for a pair of blood diseases. Additionally, Vertex also announced its $320 million plan to buy its diabetes treatment partner, privately held ViaCyte. Companies are testing a cell replacement drug in type 1 diabetes.
Beyond that, Vertex is testing treatments for liver and kidney disease, Duchenne muscular dystrophy, and pain.
The biotech stock has a composite rating of 98 and a relative strength rating of 90. The stock recently broke out of a cut base with a buy point at 325.29. Vertex action is now within its 5% hunt zone.
The stock is also a technology leader.
Arcturus nears first approval
Arcturus Therapeutics is a pre-commercial biotechnology company working on messenger RNA therapies.
In the first quarter, Arcturus filed its application for a next-generation Covid vaccine in Japan. That puts it on deck for potential approval in 2023. The company is also working on an early-stage treatment for patients with cystic fibrosis.
Analysts expect Arcturus to begin reporting product sales for the first time in the September quarter, according to FactSet.
The biotech stock is trading well above its major moving averages.
The stocks also have a perfect composite rating of 99 and a relative strength rating of 98.
Additionally, Arcturus is a technology leader.
Cancer treatments lead to animate
Enliven works on treatments for many cancers. Its late-stage tests include chronic myeloid leukemia, lung cancer and other solid tumors.
The company is also working on several early-stage cancer drugs for solid tumors. These cancers have no approved therapies, according to Enliven. It is important to note that Enliven does not yet sell any product, so it has no sales. The company is also expected to report several years of additional losses.
Enliven is a newer biotech stock that went public in 2020. After falling through mid-2022, the stock has rebounded higher. Now, the biotech stock has a perfect relative strength rating of 99 and a strong composite rating of 92.
The biotech stock remains below its 50-day moving average, but stocks are consolidating with a buy point at 25.44.
Enliven stock is also a technology leader.
Horizon: an imminent takeover of Amgen
Amgen’s nearly $28 billion takeover of Horizon Therapeutics isn’t a sure thing, and Horizon shares are yo-yoing as a battle with the Federal Trade Commission looms.
Horizon is well known for its drug, Tepezza, a treatment for thyroid eye disease. The company also makes a gout treatment known as Krystexxa. In the first quarter, Tepezza’s sales fell 19% to $405.3 million, but Krystexxa’s revenue jumped 33% to $187 million.
Now, the FTC says the acquisition of Horizon could allow Amgen to bundle Tepezza and Krystexxa for pharmacy benefit managers and insurers, creating a monopoly for the two products. The two companies said they have no plans to bundle the two products.
Horizon is also working on treatments for immune diseases called neuromyelitis optica spectrum disorder and Sjögren’s syndrome.
Horizon stock is consolidating with an entry at 113.93. The stocks have a strong relative strength rating of 91 and a composite rating of 92.
The biotech stock is also a Tech Leader.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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