Biotech stocks have been on a roller-coaster ride, but continue to outperform the broader market.
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In 2020, the industry was thrust into the pandemic limelight as 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 fell by the wayside.
Investor’s Business Daily’s biotech industry group hit a downward slope from February 2021 to June 2022. Now, biotech stocks are coming back after skewing lower through late March on the banking crisis and as the Centers for Medicare and Medicaid Services plans to soon begin negotiating the prices of the costliest drugs. Today, the entire group has a Relative Strength Rating of 93, which puts it in the top 7% of all stocks in terms of 12-month performance, according to IBD Digital.
The biotech group ranks 18th out of 197 industry groups that IBD tracks. Meanwhile, the pharma group ranks No. 94.
But it’s key to watch specific measures when examining stocks. In terms of fundamental and technical metrics, the best biotech stocks trading above 10 today are:
- Amphastar Pharmaceuticals (AMPH)
- Arcturus Therapeutics (ARCT)
- Vertex Pharmaceuticals (VRTX)
- Enliven Therapeutics (ELVN)
- Kiniksa Pharmaceuticals (KNSA)
The No. 1 Biotech Stock: Amphastar
Amphastar Pharmaceuticals develops, manufactures and sells a variety of injectable drugs. It also works on drugs that can be inhaled or delivered via the nose.
During the first quarter, Amphastar’s sales surged 16% to $140.02 million and adjusted earnings climbed 32% to 62 cents per share. Both measures easily beat expectations, according to FactSet.
The strongest growth came from glucagon, a treatment for low blood sugar. Sales skyrocketed 134% to $25.7 million. Glucagon is also Amphastar’s biggest moneymaker. Meanwhile, revenue from asthma drug Primatene Mist sank 5% to $23.48 million.
Amphastar also announced plans to acquire Eli Lilly‘s (LLY) Baqsimi, a nasally administered glucagon medicine 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 44.15, MarketSmith.com shows. Shares are now in a profit-taking zone.
Biotech stock Amphastar is a Tech Leader.
Shares have a perfect Composite Rating of 99 and a Relative Strength Rating of 96.
Arcturus Nears First Approval
Arcturus Therapeutics is a pre-commercial biotech company working on messenger RNA treatments.
In the first quarter, Arcturus submitted its application for a next-generation Covid vaccine in Japan. This puts it on deck for a potential approval in 2023. The company also is 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 below its 50-day moving average but above its 200-day line.
Shares also have a strong Composite Rating of 98 and a Relative Strength Rating of 97.
Further, Arcturus is a Tech Leader.
Vertex: Moving Beyond Cystic Fibrosis
Vertex Pharmaceuticals is one of the biggest biotech stocks in terms of market cap. It ranks fourth behind Amgen (AMGN), Gilead Sciences (GILD) and Regeneron Pharmaceuticals (REGN).
The company is the de facto leader of the cystic fibrosis drug market. First-quarter sales, dominated by its triple regimen Trikafta, grew 13% to $2.37 billion. Vertex also recently gained approval for another drug, Kalydeco, in infants less than one year old with cystic fibrosis.
But it’s now expanding into other efforts. Vertex is partnered with Crispr Therapeutics (CRSP) on a gene-editing approach to a pair of blood diseases. Further, 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 in type 1 diabetes.
Beyond that, Vertex is testing treatments for liver and kidney diseases, Duchenne muscular dystrophy and pain.
The biotech stock has a Composite Rating of 97 and a Relative Strength Rating of 84. Shares are forming a flat base with a buy point at 354.46.
The stock also is a Tech Leader.
Cancer Treatments Drive Enliven
Enliven Therapeutics is working on treatments for numerous cancers. Its latest-stage testing is in chronic myeloid leukemia, lung cancer and other solid tumors.
The company also is working on several early-stage cancer drugs for solid tumors. These cancers have no approved therapies, according to Enliven. It’s important to note, Enliven doesn’t yet sell a product, so it doesn’t have any sales. The company is also expected to report several more years of losses.
Enliven is a newer biotech stock, having gone public in 2020. After tumbling through mid-2022, shares have rebounded bullishly. Now, the biotech stock has a best-possible Relative Strength Rating of 98 and a Composite Rating of 86.
The biotech stock recently retook its 50-day moving average, and shares are consolidating with a buy point at 25.34.
Enliven stock is also a Tech Leader.
Pericarditis Drives This Stock Higher
Kiniksa Pharmaceuticals is known for its pericarditis treatment, Arcalyst. Pericarditis is swelling of the tissues surrounding the heart. But the company is also developing treatments for other cardiovascular diseases and arthritis.
In the first quarter, Kiniksa beat expectations with $48.3 million in sales. Losses were steeper than expected at 18 cents per share, however.
For the year, Kiniksa expects Arcalyst to bring in $200 million to $215 million in sales. That would fall year over year, though analysts have stronger forecasts for $223.4 million, according to FactSet.
The biotech stock has a strong Relative Strength Rating of 95 and a nearly perfect Composite Rating of 98. Shares are forming a cup base with an entry at 17.20.
Kiniksa is also an IBD Tech Leader.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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