In this article, we will look at the 10 Best Mid Cap Biotech Stocks to Buy.
Is the Biotech Sector Oversaturated?
On March 6, Jared Holz, Mizuho health care equity strategist, appeared on CNBC’s ‘Power Lunch’ to discuss investing in biotech and the oversaturation in the sector. He said that looking at the denominator of biotech stocks in the public market, we’re standing at the 700-800 range, depending upon the day. Almost a quarter of these have enterprise values in negative territory. That basically means that investors and companies, in some respects, have exhausted options. For any value to be created, it is necessary to shift focus and devise another plan of attack through an asset they don’t currently own, and resuscitate the company.
In some respects, investors and analysts are always looking for a clear pathway for biotech as a sector to outperform. However, Holz said we are in a tough place if a quarter of the index is filled with companies with more cash than the market cap. That is why he suggested, which some people consider somewhat hyperbolic, getting rid of the tail here, as there are too many assets out there.
Thousands of biotech companies are competing against each other for tiny market or revenue opportunities. Holz opined that venture funds should stop making so many companies that end up superseding each other in a few years. It would be helpful to dissolve all the biotech stocks with negative values and return the cash to shareholders.
READ ALSO: 12 Best Diagnostics Stocks to Invest In Right Now and 7 Most Undervalued Biotech Stocks To Invest In.
How Can One Make Money in Biotech?
Biotechs pose a tempting scenario, as a company’s stock could be worth $5 with a potential blockbuster drug in the pipeline that could cure even cancer. The company’s stock could surge to hundreds of dollars if the clinical trial succeeds. However, at the same time, it could plunge down to $0 if the trial doesn’t. Holz thus says that the sector is incredibly tempting, and thousands of investors put their careers on the line daily to attempt to figure this out.
He characterized biotech as one of the only sectors in all of equities where single stock picking is the only way to make money. Building on his years-long experience covering the industry, he said that the index has barely been up since the past decade. It has been essentially flat. Meanwhile, every other index that one can find has doubled or more. Therefore, there is an obvious issue with the broader complex. But if you find the right asset, you can kill it in the sector.
With these trends in view, let’s look at the 10 best mid cap biotech stocks to buy.
A wide shot of a biotech lab, with scientists wearing lab coats and conducting research.
Our Methodology
We sifted through stock screeners, financial media reports, and ETFs to compile a list of 30 biotech stocks with a market cap between $2 billion and $10 billion. We then selected the top 10 with the highest number of hedge fund holders, as of Q4 2024, and ranked them in ascending order. We sourced the hedge fund sentiment data from Insider Monkey’s database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Best Mid Cap Biotech Stocks to Buy
10. Roivant Sciences Ltd. (NASDAQ:ROIV)
Market Cap: $7.61 billion
Number of Hedge Fund Holders: 44
Roivant Sciences Ltd. (NASDAQ:ROIV) is a biopharmaceutical company that develops transformative medicines, ranking it on our list of the best mid cap biotech stocks to invest in. Its product portfolio comprises Vtama, Batoclimab, Brepocitinib, Namilumab, and RVT-2001, which treat psoriasis, atopic dermatitis, thyroid eye disease, and other illnesses. Thus, its product candidates extend across various therapeutic areas, including oncology, immunology, dermatology, and hematology.
The company’s recent fiscal Q3 2024 earnings surpassed analyst estimates, reflecting considerable progress in its diversified drug pipeline. Revenue reached $9.02 million, exceeding the estimate of $5 million. EPS came in at $0.23, again surpassing estimates of a per-share loss of $0.25.
Leerink Partners analyst David Risinger reiterated their bullish stance on Roivant Sciences Ltd. (NASDAQ:ROIV), giving a Buy rating on March 21. He said the company reported notable data for its first-generation FcRn inhibitor, batoclimab, that treats myasthenia gravis and chronic inflammatory demyelinating polyneuropathy. This supports the company’s belief that improved clinical outcomes can be derived from significant IgG reductions, which lends a positive outlook for its next-generation FcRn inhibitor, IMVT-1402.
The analyst also said that Roivant Sciences Ltd. (NASDAQ:ROIV) is well-positioned to lead in various indications, with IMVT-1402 potentially being the first drug to market in Graves’ disease and other undisclosed indications. The company has a strategic market positioning and a robust pipeline, leading to bullish sentiments from the analyst. Tourlite Capital Management stated the following regarding Roivant Sciences Ltd. (NASDAQ:ROIV) in its Q4 2024 investor letter:
“We continue to believe Roivant Sciences Ltd. (NASDAQ:ROIV) offers an attractive risk-reward and multiple ways to win. Excluding Roivant’s cash balance and Immunovant (IMVT) stake, the remainder of Roivant (ROIV stub) is valued at less than $2 per share. We believe Roivant’s stake in Arbutus and its exposure to the LNP litigation could alone be worth up to $4. In addition to ROIV, we remain shareholders in Arbutus.”
9. BridgeBio Pharma, Inc. (NASDAQ:BBIO)
Market Cap: $6.99 billion
Number of Hedge Fund Holders: 48
BridgeBio Pharma, Inc. (NASDAQ:BBIO) is a commercial-stage biopharmaceutical company that discovers, creates, tests, and delivers transformative medicines to treat patients suffering from genetic diseases and cancers. Analysts are bullish on the stock after the late 2024 FDA approval of its leading drug acoramidis, now branded as Attruby.
Attruby treats transthyretin amyloid cardiopathy (ATTR-CM), a rare but life-threatening heart condition. Analysts expect the drug to attain blockbuster status by 2030. As of February 17, 2025, 1,028 unique patient prescriptions for the drug have been written by 516 unique prescribers since its FDA approval.
BridgeBio Pharma, Inc. (NASDAQ:BBIO) has another potential drug with blockbuster sales potential: infigratinib. Infigratinib is a drug in the pivotal-stage trial indicated for achondroplasia (short stature), and its top-line data is expected by mid-2025. BridgeBio Pharma, Inc. (NASDAQ:BBIO) ended fiscal Q4 2024 with $681 million in cash, cash equivalents, and short-term restricted cash. It expects to receive $105 million in regulatory milestones in the first half of 2025 from its drug acoramidis’ Europe and Japan approvals. The company takes the ninth spot on our list of the top mid cap biotech stocks to buy now.
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