Biotech stocks have been on a rollercoaster ride and have started to turn positive in early 2024.
prescription to succeed in the market may make your head spin. On this episode of “Industry Insights,” we’ll discuss what factors to consider with biotech stocks. We also examine how FDA approvals influence sector performance over the long term.” vid-name=”Biotech Stocks Are Shooting Higher. Here’s How You Can Play Them.” vid-cat=”Industry Insights” vid-date=”12/19/2023″ vid-date-tmsp=”1702977121″ vid-image=”https://www.investors.com/wp-content/uploads/2023/12/pXpNIwoM-640×360.jpg” vid-authors=”MEREDITH HEYMAN”>
In 2020, the industry entered the spotlight of the pandemic as Pfizer (PFE) and its partner BioNTech (BNTX), along with modern (mRNA) and Johnson & Johnson (JNJ), launched a trio of vaccines against Covid. But as society learned to live with Covid — and other concerns about the economy and politics took center stage — interest in biotech fell by the wayside.
Now interest seems to be returning. In the first month of 2024, Investor’s Business Daily’s biotech industry group mostly traded sideways. Stocks still remain well below the February 2021 high, but experts say the trend looks positive. The group now has a relative strength rating of 99, according to IBD Digital. This places it in the top 1% of all industry groups in terms of 12-month performance.
In particular, some companies are fighting plans for Medicare to begin negotiating the prices of more expensive drugs.
The biotech group ranks second out of 197 industry groups tracked by IBD. Meanwhile, the pharmacological group ranks 84th.
But it is essential to observe specific measures when reviewing stocks. In terms of fundamental and technical metrics, the top biotech stocks trading above 10 right now are:
- Amphastar Pharmaceuticals (AMPH)
- Neurocrine Bioscience (NBIX)
- immunogen (IMGN)
- Vertex Pharmaceuticals (VRTX)
- Therapeutics with harpoons (HARP)
Stock No. 1 Biotechnological: Amphastar
Amphastar Pharmaceuticals, a leader among biotechnology stocks, develops, manufactures and markets a variety of injectable drugs. It also works on drugs that can be inhaled or delivered through the nose.
During the third quarter, Amphastar’s sales rose 50% to $180.56 million. Adjusted earnings rose 203% to $1.15 per share.
This follows the acquisition of Baqsim, a nasal medicine for people with diabetes and low blood sugar. Baqsimi brought in $28.7 million in sales in the third quarter. Amphastar bought Baqsim from Eli Lilly (LLY). Lilly is still selling Baqsim but will soon transfer distribution to Amphastar.
Also during the quarter, sales of glucagon, a treatment for low blood sugar, rose 107% to $29.5 million. Glucagon is the biggest money maker in Amphastar. Revenue from the Primatene Mist asthma inhaler rose 35% to $24.8 million.
But sales of a man-made form of vitamin K fell 47% and revenue from an overdose medication fell 31%.
Amphastar stock broke out of a cup-with-handle base, hitting a buy point at 58.35 on Dec. 1, according to MarketSmith.com. But shares fell as much as 7.4% below their Dec. 15 entry. That was enough to trigger a sell order. Smart investors are encouraged to cut their losses when a stock falls 7%-8% below its entry.
The stock recently dipped below its 50-day moving average. But the biotech stock has a perfect composite score of 99 and a relative strength score of 87.
Amphastar Biotech Shares is a Technical Leader.
Neurocrine faces recent hurdles
Despite recent setbacks for the treatment of seizures and depression, Neurocrine Biosciences is once again a valued biotech stock.
Neurocrine recently reported mixed fourth quarter earnings. Adjusted earnings of $1.44 per share beat expectations, according to FactSet. But sales came in slightly below forecasts at $515.2 million. The street projected $518.5 million.
The company is best known for Ingrezza, a treatment for tardive dyskinesia. Fourth quarter sales rose more than 25% to $502 million.
On a new note, Neurocrine said in November that its treatment for focal-onset seizures did not demonstrate a significant reduction in seizure frequency. Further, a treatment for depression failed to meet the goal of a proof-of-concept study. Neurocrine tested it on people with anhedonia, the inability to feel pleasure.
In December, the Food and Drug Administration granted Neurocrine a new therapy designation for its treatment of congenital adrenal hyperplasia. CAH is a genetic disease that can affect a child’s normal growth and development.
The biotech stock broke out of a cup-with-handle base and a buy point at 119.29 on Dec. 6. Shares are now well above the buy zone, but below a profitable zone, which runs from 143.15 to 149.11. Smart investors are encouraged to take some profits when a stock rises 20% to 25% above its entry.
Neurocrine biotech stock also remains above its 50-day and 200-day moving averages.
The stock has a composite rating of 98, albeit a lower relative strength rating of 89.
Neurocrine Stock is also a Technical Leader.
Ride the ADC Rollercoaster
ImmunoGen is known for its targeted cancer treatment, Elahere, which is approved for patients with fallopian tube cancer and primary peritoneal cancer. At the end of November, AbbVie (ABBV) announced its $10.1 billion plan to acquire ImmunoGen.
In the third quarter, Elahere’s sales were $105.2 million, accounting for the lion’s share of $113.4 million in revenue. Revenue beat the expectations of analysts polled by FactSet for $103.7 million. ImmunoGen also reported its first profit in 11 quarters.
AbbVie says ImmunoGen’s late-stage testing efforts for Elahere provide it with an opportunity to move into reaching patients earlier in the treatment paradigm.
Elahere belongs to the class of antibody drug conjugates, or ADCs. These drugs deliver toxic chemicals directly to tumors, limiting their damage to nearby healthy tissue. This area of medicine has received a lot of attention since then PfizerThe acquisition of ADC expert Seagen, which closed earlier this month.
Shares of ImmunoGen broke out of the trough with a buy point at 20.69 on Nov. 30, the day AbbVie pledged to pay $31.26 a share for the biotech stock. ImmunoGen stock is well above its major moving averages with a perfect relative strength rating of 99. ImmunoGen also has a composite rating of 97.
The stock also lands on the Tech Leader list.
Moving beyond cystic fibrosis
Vertex is one of the largest biotech stocks in terms of market cap. She follows alone Amgen (AMGN), and now leads Regeneron Pharmaceuticals (SHI) duck Gilead Sciences (NUTS).
The company is the de facto leader in the cystic fibrosis drug market. Fourth-quarter sales, dominated by its Trikafta triple regimen, rose 9% to $2.52 billion. This beat expectations. Regarding its gains, Vertex said a next-generation version of its triple regimen outperformed Trikafta in two studies. But analysts were mixed on whether the drug will be widely absorbed.
Vertex is now expanding into other endeavors. Vertex and partner Crispr Therapeutics (CRSP) just won FDA approval for a gene-editing approach to sickle cell disease, a blood disorder marked by severe episodes of pain called vaso-occlusive crises. The drug, now known as Casgevy and also approved in the UK, will cost $2.2 million for a single treatment.
Vertex also acquired its diabetes treatment partner, privately held ViaCyte. Companies are testing a cell replacement drug in type 1 diabetes.
Importantly, Vertex recently said that its alternative to opioids in the treatment of pain reduced pain levels by 50% for 30% of patients, and of more than 20% of patients reported a 70% reduction in pain levels. At three doses, patients with diabetic peripheral neuropathy reported at least a 2-point reduction in pain on an 11-point scale.
In another study, the pain medication proved to be non-inferior to opioids in post-abdominal patients. But the drug appeared inferior to an opioid in managing pain after a bunionectomy.
Vertex stock broke out of a flat base with a buy point at 387.42 on Dec. 13, rising on painkiller news. Shares are now well above the buy zone, which runs from 387.42 to 406.79.
The biotech stock has a composite score of 95 and a relative strength score of 84. The stock is also above its major moving averages.
Vertex is also a Technical Lead.
Stock Biotech: Focusing on Cancer
Harpoon Therapeutics is working on immuno-oncology drugs that unleash the immune system’s ability to kill cancer cells. Recently, Merck (MRK) agreed to buy it for 680 million dollars.
Harpoon has partnered with Rocha (RHHBY) in a drug trial in small cell lung cancer and an aggressive cancer called neuroendocrine prostate cancer. The pair is also testing that drug, called HPN328, in other neuroendocrine tumors. These cancers involve special cells called neuroendocrine cells, which are similar to nerve cells and hormone-producing cells, according to the Mayo Clinic.
Harpoon also owns only two other drugs in testing for multiple myeloma and solid tumors. Further, the company has four drugs in laboratory testing for other undetected cancers, including one in partnership with AbbVie.
It’s important to note that Harpoon still doesn’t sell a product and is still reporting a loss per share. This is consistent with most pre-commercial biotech companies, which are investing deeply in research and development.
But biotech stocks have floundered recently, rising from dollar stock status. Harpoon shares rose again on news of the Merck acquisition. The stock has a perfect relative strength rating of 99, though an average composite rating of 78.
Harpoon is also an IBD Technical Lead.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
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