Biotech Stocks: Top 5 To Watch Amid A Blazing Hot Run

Biotech stocks have been on a roller-coaster ride, but they’re still outperforming the broader market.




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In 2020, the industry was overshadowed by the pandemic as Pfizer (PFE) and its partner BioNTech (BNTX), together with New Age (mRNA) and Johnson & Johnson (JNJ), by sending 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 fell by the wayside. Investor’s Business Daily’s shares of the biotechnology industry group fell sharply for 16 months.

After hitting a six-year low in mid-June, biotech stocks appeared to be taking a hit this fall. Now, shares are heading towards the bigger side. That comes amid struggles for the wider market, however. The group is ranked No. 16 out of 197 industry groups tracked by Investor’s Business Daily. Meanwhile, the drug group ranks No. 153.

But looking at specific measures is critical when examining stocks. In terms of fundamental and technical measures as well as 12-month performance, today’s top biotech stocks are:

  • Catalytic Pharmacy (CPRX)
  • Genmab (GMAB)
  • Harmony Biosciences (HRMY)
  • Vertex Pharmaceuticals (VRTX)
  • Dynavax Technologies (DVAX)

Stock No. 1 Biotech

Catalyst is the No. 1 biotech stock. 1, which leads an industry group of more than 800 companies.

Its only product is Firdapse, a treatment for Lambert-Eaton myasthenic syndrome, or LEMS. LEMS is a rare autoimmune condition that spares muscle strength and often occurs in lung cancer patients.

Although sales are increasing, the company is looking to acquire a second or third product – either through an outright buyout or a licensing agreement.

Now, the biotech stock is forming a cup base with a buy point at 17.32, MarketSmith.com shows.

Catalyst shares are also on the Technical Leaders list. Shares rank second on the IBD 50 list of elite growth stocks.

Currently, shares of CPRX have a best possible Composite Rating of 99, according to IBD Digital. That puts the biotech stock in the top 1% of all stocks in terms of fundamental and technical measures. Its 12-month performance, as measured by the Relative Strength Rating, is also in the top 1% of all stocks.

Cancer Treatments Are Key

Genmab sells a small number of treatments for cancer. The company partners with big names in biopharmaceuticals, including abbVie (ABBV), Johnson & Johnson (JNJ), Horizon Therapeutics (HZNP) and Sean (SGEN).

In the September quarter, earnings and sales rose bullishly to 53 cents per share and $551 million, respectively. Both measures also easily topped forecasts.

Now, Genmab is expanding its line of medicines to new solid tumors and blood cancers.

Shares have a tip-top Composite Rating of 99, and a strong Relative Strength Rating of 95. Also, its RS line is at a new high. In addition, Genmab is a Technical Leader and ranks No. 14 on the IBD 50. Genmab stock is forming a long cup base with a buy point at 49.17.

Harmony pipeline in product

Harmony Biosciences is making a name for itself with one product: pitolisant. The company sees the drug “as a portfolio in a product opportunity.”

Today, pitolisant is approved as a narcolepsy treatment named Wakix. But Harmony is also investigating pitolisant in other conditions, including a sleep disorder called idiopathic hypersomnia, a genetic disorder called Prader-Willi syndrome and myotonic dystrophy, a muscle weakness disease.

Harmony is also testing an earlier stage product in Prader-Willi syndrome. Prader-Willi causes a number of behavioral and intellectual problems. It can also lead to short stature.

The biotech stock is also a Technology Leader and ranks ninth on the IBD 50.

Harmony stock broke out of a cup-to-handle base with a buy point at 52.62, and is above its 50-day line. Shares have a perfect Composite Rating of 99 and a strong RS Rating of 97.

Moving Beyond Cystic Fibrosis

Vertex is one of the largest biotech stocks in terms of market cap. He is in fourth place behind him Amgen (AMGN), Gilead Sciences (GILD) and Regeneron Pharmaceuticals (REGN).

The company is the de facto leader in the cystic fibrosis drug market. Third quarter sales – led by Trikafta’s triple reign – rose 18% to $2.33 billion.

But it is now expanding into other efforts. A partnership is made with Vertex Crispr Therapy (CRSP) on a gene-editing approach to a pair of blood diseases. Additionally, Vertex recently announced its $320 million plan to buy its diabetes treatment partner, privately held ViaCyte. The companies are testing a cell replacement drug in type 1 diabetes.

In addition, Vertex is testing treatments for liver and kidney disease, Duchenne muscular dystrophy and pain.

The biotech stock has a perfect Composite Rating and a Relative Strength Rating of 95. Shares are well above their 50-day moving average and recently broke out of a flat base with a buy point at 306.05, according to MarketSmith.com.

He is also the company’s Technical Lead.

Leveraging Vaccine Technology

Dynavax is one of the smaller biotech stocks on the list, but its shares are gaining steam.

The company sells a hepatitis B vaccine called Heplisav-B and has emergency authorization in India for its Covid vaccine in partnership with India-based Biological E. Limited. Dynavax is also testing its vaccine adjuvant for pertussis, shingles and plague. Adjuvants boost the normal immune response to vaccines.

During the September quarter, Dynavax reported $167.7 million in sales. Sales increased 55% and beat expectations with $159.4 million, according to FactSet. Adjusted earnings were 43 cents per share, reversing a year-earlier loss and topping forecasts by 13 cents.

The biotech stock has been climbing steadily since hitting a recent bottom in late September. Shares have a Relative Strength Rating of 84 and a bullish Composite Rating of 97. Dynavax stock has recently risen above its main moving average.

Dynavax stock has landed on the Technical Leaders list.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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