Biotech stocks have been on a rollercoaster ride, but continue to outperform the broader market.
In 2020, the industry came under the spotlight of the pandemic 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 faded.
Shares of Investor’s Business Daily’s biotech industry group fell from February 2021 to June 2022. Now biotech stocks are bouncing back after falling lower through the end of March due to the banking crisis and as the Centers for Medicare and Medicaid Services plan to close soon start negotiating the prices of the most expensive drugs. Today, the entire group has a Relative Strength Rating of 95, placing it in the top 5% of all stocks in terms of 12-month performance, according to IBD Digital.
The group ranks 11th out of 197 industry groups. Meanwhile, the pharmaceutical group is at number 50.
But it’s important to follow specific measures when researching stocks. In terms of fundamental and technical measures, the top biotech stocks trading above 10 today are:
- Amphastar Pharmaceuticals (AMPH)
- Arcturus Therapeutics (ARCT)
- Vertex Pharmaceuticals (VRTX)
- Enliven therapies (ELVN)
- Horizon therapies (HZNP)
The No. 1 Biotech Stock: Amphastar
Amphastar Pharmaceuticals develops, manufactures and markets 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 revenue increased 16% to $140.02 million and adjusted earnings increased 32% to 62 cents per share. Both measures far exceed expectations, according to FactSet.
The strongest growth came from glucagon, a treatment for low blood sugar. Sales increased 134% to $25.7 million. Glucagon is also Amphastar’s biggest money maker. Meanwhile, sales of the asthma drug Primatene Mist fell 5% to $23.48 million.
Amphastar also announced plans to acquire Eli Lilly‘s (LLY) Baqsimi, a nasally administered glucagon drug for people with diabetes and low blood sugar. Baqsimi generated $139.3 million in global sales last year.
Amphastar shares recently broke out of a cup-with-handle buy point at 44.25, MarketSmith.com shows. Stocks are now just above the buy zone.
Biotech stock Amphastar is a Tech Leader.
Stocks have a perfect composite rating of 99 and a relative strength rating of 95.
Arcturus is nearing initial approval
Arcturus Therapeutics is a pre-commercial biotech company working on messenger RNA treatments.
In the first quarter, Arcturus filed its application for a next-generation Covid vaccine in Japan. This puts it on deck for possible 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.
Stocks also have a perfect composite rating of 99 and a relative strength rating of 98.
Furthermore, Arcturus is a Tech Leader.
Vertex: Going beyond cystic fibrosis
Vertex Pharmaceuticals is one of the largest biotech stocks in terms of market capitalization. It is behind in fourth place Amgen (AMGN), Gilead Sciences (GUILD) and Regeneron Pharmaceuticals (REGN).
The company is the de facto leader of the cystic fibrosis drug market. First-quarter sales, dominated by the Trikafta triple regime, grew 13% to $2.37 billion. Vertex also recently received approval for another drug, Kalydeco, in infants less than one year old with cystic fibrosis.
But it’s now expanding into other endeavors. Vertex partners with Crispr therapies (CRSP) on an approach to gene editing for a few blood diseases. Furthermore, 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 for type 1 diabetes.
In addition, Vertex is testing treatments for liver and kidney disease, 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 a buy point at 325.29. Vertex stock is now within the 5% chase zone.
The stock is also a Tech Leader.
Cancer treatments stimulate reviving
Enliven is working on treatments for numerous cancers. The latest tests target chronic myelogenous 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 is not yet selling any product, so it has no sales. The company is also expected to report losses for several more years.
Enliven is a newer biotech stock, which went public in 2020. After falling in mid-2022, stocks are bullish again. Now the biotech stock has a perfect relative strength score of 99 and a strong composite rating of 92.
The biotech stock recently recaptured its 50-day moving average and the stock is consolidating with a buy point at 25.44.
Enliven Stock is also a Tech Leader.
Horizon: An imminent takeover by Amgen
Amgen’s nearly $28 billion acquisition of Horizon Therapeutics isn’t a certainty, and Horizon shares yo-yo as a battle with the Federal Trade Commission looms.
Horizon is known for its drug Tepezza, a treatment for thyroid eye disease. The company also makes a treatment for gout known as Krystexxa. In the first quarter, Tepezza’s sales fell 19% to $405.3 million, but Krystexxa’s sales increased 33% to $187 million.
Now the FTC says the Horizon acquisition could allow Amgen to bundle Tepezza and Krystexxa for pharmacy benefit managers and insurers, entrenching the monopoly for the two products. Both companies have 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 Sjogren’s syndrome.
Horizon shares consolidate with an entry at 113.93. Stocks have a strong Relative Strength Rating of 86 and a Composite Rating of 91.
The biotech stock is also a Tech Leader.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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