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With all the attention on mega-cap tech stocks in 2023 that soared amid the AI fever, biotech stocks, the darlings of the pandemic, lagged the market. Now, that the prospect of rate cuts is on the horizon, investors are returning to the capital-hungry sector.
The biotech sector, as measured by the S&P Biotechnology Select Industry Index is up 14% in the past month, while the S&P 500 has gained 4% in the same period.
There is reason to be enthusiastic about the potential for a biotech comeback. Biotech companies, especially those that are years away from having a viable therapy, will benefit from a drop in borrowing costs when they raise money to invest in research, and acquisitions will increase in the sector.
There are plenty of biotech stocks out there with promise, and in this article, we dive into our top 10 picks.
An Overview of the Best Biotech Stocks to Invest in 2024
Here are our picks for the 10 best biotech stocks for long-term investment. All of these stocks have shown great growth potential or are already increasing revenue.
Regeneron Pharmaceuticals: The large-cap has two blockbuster drugs that are increasing revenue, Eylea in eye therapy, and Dupixent, an auto-immune therapy, from which it shares sales with Sanofi.
Medpace Holdings: The mid-cap U.S. company is a contract research organization that provides clinical trial resources that used by new biotech companies. It forecasts 28% revenue growth this year.
Amphastar Pharmaceuticals: The small-cap, which makes generic and proprietary injectable, inhalation, and intranasal products, last year spent $500 million upfront, with $575 million of payments due later, to buy Baqsimi, a low blood sugar therapy, from Eli Lilly.
BioMarin Pharmaceutical: The U.S. biotech company focuses on therapies to treat rare, life-threatening diseases, which means it has higher margins and fewer competitors than other biotech companies.
Vertex Pharmaceuticals: This large-cap already has the lion’s share of the cystic fibrosis market and the shares are lited by the approval of blood disorder gene therapy Casgevy in Europe and the U.S.
Amgen: The large-cap stock is considered the most successful biotech company. Since its initial public offering 40 years ago, Amgen shares have increased by nearly 800%, including more than 6% this year.
Arcutis Biotherapeutics: The small-cap focuses on the treatment of immune-mediated skin diseases, revenue is growing and it has just got a key approval. The stock has more than tripled in value this year.
Pliant Therapeutics: The small-cap clinical-stage biotech company has a promising liver disease therapy, bexotegrast. The drug, in trials, has been effective in treating idiopathic pulmonary fibrosis (IPF).
Alnylam Therapeutics: The company has six products and more than 20 clinical programs focusing on treatments that use ribonucleic acid interference (RNAi) to treat genetic and central nervous system disorders.
Axsome Therapeutics: The mid-cap biotech firm specializes in central nervous system therapies, including depression, Alzheimer’s disease agitation, migraine, narcolepsy and fibromyalgia.
A Closer Look at the Best Biotech Stocks to Buy
Here is a more detailed look at the best biotech stocks that investors are looking at right now:
1. Regeneron Pharmaceuticals – Overall Best Biotech Stock to Buy
Regeneron’s shares have increased 26% over the past year and are up nearly 10% this year as the biotech firm with two flagship drugs, eye therapy Eylea, and auto-immune therapy Dupixent, keeps delivering earnings that beat analyst expectations.
Fourth-quarter revenue was up 1% to $3.43 billion, beating analysts’ estimates by a considerable margin. Eylea sales were $1.46 billion, including $123 million from the higher dose version of the drug, Eylea HD. This drug got Food and Drug Administration (FDA) approval last year to treat wet age-related macular degeneration, diabetic macular edema, and diabetic retinopathy.
Dupixent also has a good chance of adding indications, including to treat chronic obstructive pulmonary disease (COPD) as well as pediatric eosinophilic esophagitis, a chronic inflammatory disease that can damage the esophagus. Fourth-quarter global sales of the drug, recorded by partner Sanofi, increased 31% to $3.22 billion year on year. Oncology therapy Libtayo sales jumped 44%. Adjusted earnings per share (EPS) in the quarter was $11.86, down from $12.56 a year earlier.
It also has two promising oncology therapies that may be able to launch this year – Odronextamab, to treat patients with relapsed/refractory follicular lymphoma, and Linvoseltamab, a treatment for multiple myeloma, which had promising trial results.
On top of that, the company’s strong balance sheet, with $16.2 billion in cash, will allow it to pursue acquisitions that could bolster its therapy portfolio, such as the $109 million purchase of Decibel Therapeutics, known for its gene-editing programs to treat hearing loss, last year.
2. Medpace Holdings – A Solid Pick-and-Shovel Biotech Stock
The contract research organization (CRO) provides full-services clinical development services to the biotech, pharmaceutical and medical device industries. The U.S. company has employees spread across 41 countries.
In the fourth quarter, revenue increased 26.5% from a year earlier to $498.4 million. Net income was $78.3 million, or $2.46 per share, versus $68.7 million, or $2.12 per diluted share, a year earlier.
The company forecasts 2024 revenue in the range of $2.15 billion to $2.20 billion, which would mean growth of 14.0% to 16.7% over 2022 revenue of $1.89 billion. It also forecasts 2024 net income in the range of $326.0 million to $348.0 million, compared with $282.8 million last year.
The expense and expertise needed to bring drug candidates through clinical trials and the regulatory process has increased the need for CROs such as Medpace. The company’s yearly revenue is on pace for a compound annual growth rate (CAGR) of 28.3% to 29.7% over the past five years while five-year net income growing at a CAGR of 31.5% to 32.9%.
3. Amphastar Pharmaceuticals – Capitalizing on Experience
Amphastar has more than 20 branded products, such as inhalers and injectables, and it focuses on those with a high level of technical expertise, giving it a decent-sized moat.
The stock is up 34% in the past year. In the fourth quarter, revenue rose 32% from a year earlier to $178.1 million, with its diabetes portfolio, led by Glucagon, driving growth. EPS of $0.88 rose from $0.73 a year earlier. The drug brought in $31.2 million in the quarter, up 70%, year over year. Sales for Primatene Mist, the FDA-approved asthma inhaler available over-the-counter, rose 10% to $24.5 million.
The company has increased revenue with a (CAGR) of 14.4% over the past five years and annual EPS by a CAGR of 75% over that same period. JP Morgan analysts began covering the stock in March, with a price target of $60, a 30% upside, and an “Overweight” recommendation.
4. BioMarin Pharmaceutical – Focus on Rare Diseases Pays Off
The large-cap U.S. biotech company uses gene therapies to fight rare diseases. In the fourth quarter, the company reported revenue of $646.2 million, up 20%, year over year, and net income of $20.4 million, up from a loss of $0.2 million in the same quarter a year ago.
The company’s top-selling therapy is Vimizim, the only treatment for Morquio A Syndrome, a rare enzyme disorder that can cause short bones, difficulty moving and breathing, clouding of the eyes and hearing loss. The drug brought in $175.6 million in the quarter, up 15% year over year.
BioMarin’s second top-selling therapy is Voxzogo, which, considering its sales growth, will likely be the top-selling therapy for BioMarin. Voxzogo was responsible for $145.7 million in sales in the quarter, up 118% over the third quarter of 2022. The drug gained a key approval in October with the FDA allowing the therapy to be used on children with the rare bone-growth disorder achondroplasia, regardless of age. BioMarin started selling gene therapy Roctavian for for hemophilia A last year to be used in the U.S. and Europe and will further expand its networks this year. While the company estimates that only 2,500 patients in the U.S. will be eligible for the therapy, it will likely bring in a great deal as it The Institute for Clinical and Economic Review said the upper price for the therapy would be $1.9 million per treatment.
BioMarin reported $2.42 billion in 2023 full-year revenue. It’s forecasting 2024 revenue of between $2.7 billion and $2.8 billion The company also said it expects adjusted EPS of $2.60 to $2.80, compared with $2.08 in 2023.
5. Vertex Pharmaceuticals – Expanding Its Portfolio
Vertex’s big margins, due to its various cystic fibrosis therapies, has given the company the luxury to develop and broaden its portfolio. Thanks mainly to its leading CF therapy, Trikafta, being licenced in some age groups for children and sales of the drug outside the U.S. Fourth-quarter revenue jumped 9% to $2.52 billion. Net income rose 18% to $968 million from a year earlier.
On the authorisation front, Casgevy, a CRISPR-gene editing therapy that Vertex developed in collaboration with Crispr Therapeutics (NASDAQ: CRSP), was granted conditional approval by the U.K. and Bahrain to treat patients 12 or older who have severe sickle cell disease (SCD) or transfusion-dependent beta thalassemia (TDT), making it the first CRISPR gene-editing therapy to gain approval anywhere.
In December, the FDA gave its OK for Casgevy as a therapy for SCD in the U.S., which Vertex said was “momentous.” The therapy, which, during clinical trials, has been effective in ending the need for transfusions to treat SCD and TDT. In January, the FDA approved Casgevy for TDT. The approval by the FDA was followed by an authorisation of the treatment in both SCD and TFT from the European Union in in February.
Also in December Vertex’s non-opioid pain therapy, VX-548, had positive Phase 2 positive results to treat patients with diabetic peripheral neuropathy. The therapy is also in three different Phase 3 trials for acute pain, with the readouts scheduled early next year. Acute pain and peripheral neuropathy represent huge patient populations. The potential for an effective non-opioid pain reliever makes the therapy one of the company’s most exciting therapies.
Vertex estimates its full-year revenue at between $10.55 and $10.75 billion for 2024, based on its expectations for continued growth in CF therapies as well as the launch of Casgevy in approved indications and regions. Last year, the company reported revenue of $9.87 billion.
Amgen’s purchase of Horizon Therapeutics for $27.8 billion last fall has given it access to Horizon’s rare disease portfolio, led by two up-and-coming therapies in thyroid eye disease drug Tepezza and gout therapy Krystexxa.
The takeover already boosted revenue in the fourth quarter but weighed on profit. EPS declined 53% to $1.42 from $3.00, driven by acquisition-related and increased operating expenses from Horizon. Revenue rose 20% to $8.2 billion in the quarter from a year earlier, with nine brands posting record sales, with double-digit growth for cholesterol treatment Repatha, osteoporosis drugs Evenity and Prolia, as well as leukemia therapy Blincyto.
Amgen raised its quarterly dividend to be paid this year by 5.6% this year to $2.25, increasing it for a 12th consecutive year. The yield is around 3.25%, more than double the S&P 500 average.
7. Arcutis Biotherapeutics – Best Cheap Biotech Stock
Arcutis, which focuses on developing treatments for skin diseases, posted fourth-quarter revenue of $13.5 million, compared with $3 million a year earlier. Full-year revenue rose to $59.6 million from $3.7 million, driven by strong demand growth.
That jump was mostly due to sales of the company’s lead therapy, Zoryve, a cream used to treat plaque psoriasis. Its sales more than quadrupled from the same quarter a year earlier to $13.5 million in the quarter, growing 67% from the third quarter. Arcutis made a loss of $66.3 million, or $0.72 per share, narrowing from $72.0 million, or $1.18 per share a year earlier. ,
Even after a year-to-date increase of more than 200% in its price, it remains the best cheap biotech stock on this list. The share price was boosted as the company just raised $172.5 million in a public offering of more than 18 million shares at a price of $9.50 each.
An expanded approval for Zoryve it got recently from the FDA to use it as a topical foam to be used to treat seborrheic dermatitis in patients 9 and older will help drive sales. The company has said there are 10 million people in the U.S. with the skin disease, which often causes red, itchy patches on the scalp, face, upper chest and back.
The company is expecting new licenses for further uses, such as a cream version of Zoryve to treat atopic dermatitis (AD), the most common form of eczema. AD affecting 16.5 million people in the U.S., according to the Asthma and Allergy Foundation of America.
8. Pliant Therapeutics – Plenty of Potential Due to Blockbuster Therapy
Pliant focuses on cell therapies to treat fibrotic diseases, which are a group of conditions associated with an excessive buildup of scar tissue in various organs and tissues.The company had its IPO three years ago and now it is on the verge of getting its first drug to market.
Bexotegrast has received Fast Track Designation and Orphan Drug Designation from the FDA for idiopathic pulmonary fibrosis (IPF), which involves scarring of the lungs, and primary sclerosing cholangitis (PSC), which involves liver scarring, and Orphan Drug Designation from the European Medicines Agency in IPF and PSC. The therapy is in Phase 2 trials for both indications and so far has been shown to be effective.
The company has three other programs in its pipeline. PLN-101095 is in Phase 1 trials to treat solid tumors, PLN-1474 is about to start Phase 2 trials to treat fibrosis connected to nonalcoholic steatohepatitis (NASH), a type of fatty liver disease, and PLN-101325 is in preclinical development to treat various muscular dystrophies.
As a clinical-stage biotech, the company has no revenue yet, so there’s plenty of risk associated with holding its stock. However, it does have $$495.7 million in cash, enough Pliant says, to fund operations through the second half of 2026.
Alnylam, which develops treatments for genetic and central nervous system disorders, has five therapies for rare diseases and a pipeline of 20 clinical programs, including 10 in late-stage trials. The company said in December it plans to have Investigational NDAs for nine or more programs by the end of 2025.
Alnylam’s commercial RNAi therapeutic products include two therapies, Onpattro and Amvuttra, that treat the nerve pain caused by an illness called hereditary ATTR (hATTR) amyloidosis. Together, the two therapies brought in $254 million in the fourth quarter, up 10% year on year.
The company also has two therapies that treat ultrarare diseases in Oxlumo, to treat primary hyperoxaluria type 1 (PH1), a disease that can cause kidney damage, and Gilvaari, to treat acute hepatic porphyria, which causes severe abdominal pain. Together, they brought in $92 million in the quarter, up 11%, year over year. The company’s other marketed therapy is Leqvio, used to treat high cholesterol and atherosclerotic cardiovascular disease, but it is being developed and commercialized by Alnylam’s partner, Novartis (NYSE: NVS).
Alnylam posted fourth-quarter total revenue of $439.72 million, up 31% year over year. The company also updated guidance for 2024 collaboration revenue to be between $325 and $425 million and product revenue to be between $1.4 billion – $1.5 billion. Over the next two years, the company has a goal of 40% CAGR revenue growth.
Axsome isn’t profitable yet, but its triple-digit revenue growth shows it’s on its way there. In the fourth quarter, the company reported revenue of $71.5 million, up 193%, year over year. The surge was led by major depressive disorder (MDD) therapy Auvelity, which saw sales rise to $49 million from just $5.2 million a year earlier for the treatment, because it only launched in October 2022. Sunosi, a daytime sleepiness therapy, that recorded $22.5 million in revenue, rose 17%, year over year.
The company said it is on track for two NDAs in the first half of this year. In the first quarter, it said it plans an NDA for AXS-14 as a fibromyalgia therapy and in the first half of 2024, Axsome said it plans a resubmission of an NDA for AXS-07 as a migraine treatment. The drug’s first NDA received a Complete Response Letter, basically a temporary rejection, from the FDA in May of 2022 due to chemistry, manufacturing, and controls (CMC) considerations.
The company has several other solid late-stage pipeline candidates: AXS-05, which is trials as a smoking cessation drug and to treat agitation associated with Alzheimer’s Disease; AXS-12 to treat cataplexy (the sudden reduction or loss of muscle tone while awake) associated with narcolepsy; as well as potential new indications for Sunosi to treat attention deficit hyperactivity disorder (ADHD), binge eating disorder and shift work disorder.
eToro – The Best Platform for Buying Biotech Stocks
eToro has a wide range of biotech stocks available to buy on its platform, including all of the ones we have covered above.
There are roughly 496 biotech and pharma companies listed on eToro, and available to more than 30 million customers. Launched in 2007, eToro has risen to become the industry leader due to its range of innovative products, including social and copy trading.
This handy tool enables beginners to mirror trades of better-performing investors, minimizing the need for extensive research.
Risk disclaimer: 76% of retail CFD accounts lose money – your capital is at risk
eToro is also extremely well-regulated and holds licenses within the U.K., U.S., and much of Europe, meaning client funds are secured.
There is zero commission for trading biotech stocks on eToro, but there are charges for making trades, which come in the form of a spread. This makes eToro extremely competitive. The spread is the difference between the buying and selling price.
If you wanted to buy Regeneron Pharmaceuticals with eToro, the buy price as of writing is $949.26 and the selling price is $945.56, the difference is the spread. For comparison, IG charges up to $8 in commission.
Pros
Zero commission and competitive spreads
Strong regulation and reputation
Over 490 biotech stocks
Copy trading tools allow you to copy successful traders
The phrase is often misused to mean any healthcare company using new technology, such as AI or robotic surgery. However, a true biotech company focuses on using living organisms and their byproducts to develop therapies and processes, usually for healthcare and medical purposes.
Biotech companies vary. Some work to develop drugs and therapies, especially ones to treat cancer, autoimmune disorders and infectious diseases. Biotech companies also include those that create diagnostic tools, biofuels, and agricultural products.
There are also biotech companies that also provide research and development services, including clinical research organizations and companies that make life sciences equipment that is used by biotech companies.
What Are Examples of Biotechnology?
Techniques including stem cell technology, DNA fingerprinting, and genetic engineering are some of the faster-growing biotechnologies among the past few years. The demand for biologic medicines and stem cell therapies is being driven by the possibilities of personalized medicine.
How Are Biotech Stocks Different From Other Healthcare Stocks?
Biotechnology is an emerging field with high potential rewards. Biotech companies can develop breakthrough drugs or technologies that can lead to huge profits. However, many biotech companies are still in the early stages and are not yet profitable and some may never turn a profit.
That makes them riskier than other healthcare companies. The development of new biotech drugs can take longer than that of other therapies. For this reason, biotech stocks can be volatile, so they are unsuitable for risk-averse investors.
How to Find the Best Biotech Stocks
Follow industry news
Keep updated on new technologies, drug approvals, clinical trial results, and market trends. Industry publications and conferences can be useful resources, as well as the EMA and FDA websites.
Follow analyst reports
Consider insights from established firms, though individual analysts vary greatly on their opinions. The key is seeing if there appears to be consensus about a particular biotech stock.
Look at Varied Sources
There’s no straight line to success in biotech investing. For every Regeneron, Medpace Holdings or Amgen, there are hundreds of biotech companies that struggle. Unless you have inside knowledge, sometimes it’s hard to tell how a company is doing other than its financial reports. For clinical-stage biotech companies, financial reports aren’t always that useful. However, using various metrics, such as social media follows, AI scores and by comparing biotech companies against competitors, you can get a more complete picture.
Where to Get Biotech Stock Tips and Insights
There are a number of places where you can gather tips and insights on Biotech Stocks but we found eToro to be the best option. Here’s why:
Market Analysis: eToro’s research team analyzes historical price movements, industry trends and global research breakthroughs to identify any potential investment opportunities.
Social Sentiment: eToro taps into social media discussions to gauge investor sentiment towards specific energy companies and sectors.
Technical Indicators: Technical analysis tools like charts and indicators help investors identify credible entry and exit points.
On-Platform Insights: eToro curates analyst ratings, news feeds and popular investor positions within the Biotech sector offering valuable perspectives.
Conclusion
Biotechnology stocks were already gaining in value before the COVID-19 pandemic. The use of biotechnology in various COVID-19 vaccines and therapies really ignited the industry’s growth and investors’ interest in biotechnology stocks.
A report by Grandview Research puts the CAGR for the global biotechnology market at 13.96% through 2030, jumping from an estimated $1.44 trillion market in 2022 to a $3.88 trillion market by 2030. That type of growth potential shows that there are opportunities for investors who focus on biotechnology stocks.
The 10 stocks in this list are a good starting point for investors interested in the biotechnology sector. The key for success, even more so than usual, is keeping up with developing trends in the nascent industry.
Regeneron Pharmaceuticals is the leading pick among BioTech stocks. The company continues to show dependable revenue growth, has plenty of cash for acquisitions and has a burgeoning pipeline, along with two blockbuster therapies in Dupixent and Eylea.
What’s the best way to choose a biotech stock?
Biotech stocks, because they rely so much on promise over current profits, are more difficult investments. A service such as AltIndex can help investors see which stocks are on the rise, but it is also important to understand why a biotech company’s shares are rising. Sometimes it is as simple as a strong clinical trial that shows it will soon have a new marketed therapy and more revenue coming in. Other times, it may be that a competitor’s own therapy has done poorly in a clinical trial, increasing the chance for market domination for a particular company. As with any type of investment, it’s important to do your own research and to only invest in companies that you believe in and understand. It also makes sense to develop a diverse portfolio of biotech stocks to manage risk.
How do you measure a biotech company’s potential?
The traditional means, such as revenue and EPS growth matter, but with biotech companies, other factors may carry more weight. Take note of how far along are the company’s lead pipeline candidates. Those with only early-stage candidates may take years and lots of money to get to the point where they have an approved product that is producing revenue. It’s also important to understand the total addressable market for a company’s product or products. Don’t overlook those companies with rare disease therapies because that could mean less competition down the road. This list is not exhaustive, and past performance is not necessarily indicative of future results. Always conduct your own thorough due diligence before making any investment decisions.
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I am an experienced journalist who has also worked as an editor and writer at the Savannah Morning News, Salt Lake Tribune, USA Today, Stars and Stripes, and The Motley Fool. I spent the first half of my career in sports journalism, but in recent years have switched to writing about my other passion, stocks, particularly healthcare, real estate and consumer staples stocks. I've won numerous journalism awards from the Associated Press and state press associations and have been a judge for the Georgia Sportswriters Association. I've written one non-fiction book, Just One More Time, about Georgia Southern football, and…
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