In this article, we will be taking a look at the 10 cheap biotech stocks to invest in now.
Biotech Stocks Face Uncertainty Despite Interest Rate Cuts
Biotechnology stocks are among the most volatile in the market due to their high risk. The outcomes of FDA clinical trials and the effectiveness of their therapies in the real world might cause significant fluctuations in their pricing. The introduction of COVID-19 vaccinations in 2020 caused the biotech industry to soar to prominence. As Big Pharma started investing in acquisitions, investor interest increased in late 2023 and early 2024. But the momentum faded, and for months, biotech stocks did not move. Few M&A transactions and initial public offerings (IPOs) broke the otherwise quiet period in the second quarter, which saw a steep fall in biopharma deal activity. This slowdown followed a thriving first quarter in which pharmaceutical companies began using their enormous cash reserves for acquisitions.
However, the reaction was unexpectedly subdued, even though the industry expected a drop in the federal interest rate. The Federal Reserve lowered interest rates by half a percentage point earlier in September, which was a bigger drop than anticipated. Although it’s a good step, Mizuho Securities analyst Jared Holz thinks it’s unlikely that there will be a spike in fundraising, M&A transactions, or IPOs. A lot of biotech businesses have canceled programs and made large layoffs to save money in an attempt to survive in volatile markets. Holz thinks it’s hard to gauge the impact, even though the tax drop would inspire some scientific endeavors to be revived. However, the analyst noted that small-cap stocks have experienced “a bit more momentum” since the rate cut, which is encouraging for the biotech industry:
“When I look at biotech, I just view it as a nichey, highly academic kind of component of small-cap equities. If small-cap stocks continue to trade well, biotech will probably do fine. And if not, then maybe there’s a point in which there’s a little bit of stagnation in terms of the index.”
Holz added that the recent rate decline has drawn more attention, but he clarified that the notion that interest rates might forecast the success of biotech companies is still relatively new. Interest rates have minimal impact on biotech equities before 2020. The pandemic changed the environment as investors flocked to the sector and significant sums of money poured into businesses that specialized in medicines.
Biotech Market Poised for Trillion-Dollar Growth Despite High Risks
Precedence Research projects that the worldwide biotech market will reach a valuation of $4.61 trillion by 2034, growing at a compound annual growth rate of 11.5%. Favorable government regulations, more investment, the need for synthetic biology, and a rise in chronic illnesses like cancer, heart disease, and high blood pressure are all predicted to contribute to this growth. The market is expanding as a result of government measures to improve reimbursement policies and update laws. Global drug spending is expected to reach $2.30 trillion by 2028, with a compound annual growth rate (CAGR) of 5% to 8%, according to IQVIA. Treatments for obesity and cancer are anticipated to be the main drivers of this growth, whereas immunology spending may decline as biosimilars become available. By 2028, biotech is expected to reach $892 billion, or 39% of total spending, with cell and gene therapies seeing the fastest rise.
Particularly, the U.S. biotechnology industry was valued at $246.18 billion in 2023 and is expected to increase at a compound annual growth rate (CAGR) of 11.6% from 2024 to 2034 to reach approximately $830.31 billion. North America had a revenue share of 37.79%, while Asia Pacific had a revenue proportion of 23.99%. In 2023, the biopharmacy segment had a 41.73% revenue share by application, while the bioindustry application segment contributed 24.33% of overall revenue.
Despite its potential, investment in biotech startups has several dangers. The industry has a high failure rate, with 90% of initiatives failing and drug development taking more than ten years. Companies that fail to meet clinical trial endpoints or lack sufficient funds before product launch may face bankruptcy. Biotech is often regarded as a “high-risk, high-reward” investment because of its substantial dangers and growth potential. Given this, we will take a look at some of the best cheap biotech stocks.
A laboratory technician researching a sample of cells in a biotechnology laboratory.
Our Methodology
For our methodology, we looked up biotech stocks with a PE ratio below 18 and a market cap over 300 million and then ranked these stocks in ascending order based on their P/E ratios as of February 4th, 2025.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Here is our list of the 10 cheap biotech stocks to invest in now.
10. Halozyme Therapeutics, Inc. (NASDAQ:HALO)
P/E Ratio: 19.08
Halozyme Therapeutics, Inc. (NASDAQ:HALO) is a biopharmaceutical company focused on innovative drug delivery technologies, primarily through its Enhaze platform. This technology, based on the rHuPH20 enzyme, enables the subcutaneous administration of drugs typically delivered intravenously by improving absorption and dispersion.
Halozyme Therapeutics, Inc. (NASDAQ:HALO) continues to solidify its position as an attractive biotech stock for investors seeking growth potential. For those looking for cheap biotech stocks to buy, Halozyme presents a compelling opportunity given its strong financial performance and innovative drug delivery technology. In its Q3 2024 financial report, the company showcased impressive growth with total revenues rising 34% to a record $290 million. Royalty revenue grew 36% to $155 million, both marking new highs for the company. Additionally, earnings per share (EPS) surpassed expectations at $1.27 compared to the anticipated $0.98. Halozyme Therapeutics, Inc. (NASDAQ:HALO) has raised its full-year guidance, now projecting total revenue growth between 17% and 23% and adjusted EBITDA growth between 40% and 47%.
The company’s growth is driven by the success and adoption of its Enhanze drug delivery technology, which has propelled key product sales. Darzalex Subcutaneous sales increased by 23% to $3 billion in a single quarter, while Phesgo experienced a 58% rise in sales, reaching CHF 1.2 billion in the first nine months of 2024. Analysts predict Phesgo could become a $3.5 billion brand by 2028. Additionally, Tecentriq Hybreza, newly approved in the U.S. for all adult IV indications, is expected to generate $5 billion in sales by 2028.
Halozyme Therapeutics, Inc. (NASDAQ:HALO)’s market strength is bolstered by recent FDA approvals for subcutaneous formulations of Tecentriq and Ocrevus using Enhanze technology. With Vyvgart Hytrulo projected to reach $5 billion in sales by 2028, the company is poised for continued growth and innovation.
As of Q3 2024, 23 hedge funds held stakes in the company as tracked by the Insider Monkey database. The largest stakeholder was Millennium Management with stakes worth $70.2 million.
9. Harmony Biosciences Holdings, Inc (NASDAQ:HRMY)
P/E Ratio: 18.65
Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY) is a commercial-stage pharmaceutical company that develops and commercializes therapies to treat neurological disorders. Its product, Wakix, is a chemical that binds to H3 receptors and stimulates histamine transmission in the brain. For those with uncommon neurological conditions, the firm has one of the best pipelines.
As of right now, Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY) has three orphan rare franchises that treat illnesses related to the central nervous system. With a $1 billion to $2 billion peak sales potential for each of its brands, investors are optimistic about the company. Eight assets are also part of the company’s pipeline, which spans 13 development programs, three of which are in crucial Phase 3 trials, and a fourth is at the beginning stage.
Thus, if successful, Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY)’s present pipeline might generate over $3 billion in net revenue in the future. The corporation keeps up its business development efforts and is growing its pipeline. As of September 30, 2024, the company had around $505 million in cash, cash equivalents, and investments, putting it in a solid financial position to embark on more commercial development opportunities.
8. United Therapeutics Corporation (NASDAQ:UTHR)
P/E Ratio: 15.56
United Therapeutics Corporation (NASDAQ:UTHR) is a biotechnology company that specializes in treating infectious diseases, pediatric oncology, and uncommon, life-threatening illnesses, especially cardiovascular conditions like pulmonary arterial hypertension (PAH) and pulmonary hypertension associated with interstitial lung disease (PH-ILD). The company manufactures pharmaceutical drugs such as Adcirca (tadalafil) for PAH, Unituxin (dinutuximab) for high-risk neuroblastoma in pediatric oncology, and prostacyclin analogs (Remodulin, Tyvaso, Orenitram) for PAH and PH-ILD.
United Therapeutics Corporation (NASDAQ:UTHR) delivered impressive financial results for Q3 2024, positioning itself as a promising choice for investors interested in cheap biotech stocks to buy and affordable healthcare stocks. The company reported a 23% year-over-year revenue increase, reaching $748.9 million, largely driven by a 33% rise in Tyvaso sales, which totaled $433.8 million. Products like Orenitram and Unituxin also showed strong revenue gains, while Remodulin and Adcirca saw minor declines. Net income climbed 16% to $309.1 million, with diluted earnings per share rising 19% to $6.39. The robust performance was propelled by growing demand for pulmonary hypertension treatments, particularly Tyvaso. United Therapeutics Corporation (NASDAQ:UTHR) anticipates significant clinical and regulatory developments in 2025 to further support its expansion.
Analysts hold a consensus Moderate Buy rating on the stock. As of Q3 2024, 39 hedge funds held shares in the company as tracked by the Insider Monkey database. The largest shareholder in the company was VenBio Select Advisor with stakes worth $1.02 billion.
7. Protagonist Therapeutics, Inc. (NASDAQ:PTGX)
P/E Ratio: 14.06
Protagonist Therapeutics, Inc. (NASDAQ:PTGX) is a biopharmaceutical company specializing in peptide-based therapies for blood disorders and inflammatory diseases, including polycythemia vera and ulcerative colitis. The company’s proprietary peptide platform enables the development of highly potent and specific drug candidates, including rusfertide which is a promising treatment for polycythemia vera with favorable clinical trial results.
Protagonist Therapeutics, Inc. (NASDAQ:PTGX)’s strategic collaborations, such as a global agreement with Takeda Pharmaceutical, have secured a $300 million upfront payment and up to $630 million in milestone payments. The company also partners with Johnson & Johnson for JNJ-211 which is an oral IL-23 receptor antagonist.
Financially, the company maintains a robust position, with cash, cash equivalents, and marketable securities totaling $583.3 million as of September 30, 2024, compared to $341.6 million at the end of 2023. For Q3 2024, the corporation reported $4.7 million in license and collaboration revenue and a net loss of ($33.2) million which reflected a slight improvement from the previous year’s quarterly loss. However, the first nine months of 2024 marked a turning point, with a net income of $143.5 million due to a $300 million upfront payment from its collaboration with Takeda Pharmaceutical.
This partnership and Protagonist Therapeutics, Inc. (NASDAQ:PTGX)’s expanding pipeline signal strong growth potential. Key upcoming milestones include top-line results for JNJ-2113 Phase 3 trials in psoriasis by Q4 2024 and Phase 2b results in ulcerative colitis by Q1 2025. Additionally, rusfertide Phase 3 results in polycythemia vera are expected in early 2025, along with the nomination of a development candidate for an oral IL-17 peptide antagonist.
Analysts hold a consensus Strong Buy rating on the stock. Analysts recently set a 12-month average price target of $58.14 for Protagonist Therapeutics (NASDAQ:PTGX), with forecasts ranging from $47.00 to $67.00. This represents a potential 58.55% increase from its current price of $36.67.
6. Royalty Pharma plc (NASDAQ:RPRX)
P/E Ratio: 12.38
Royalty Pharma plc (NASDAQ:RPRX) plays a major role in supporting new drug development and is the biggest buyer of biopharmaceutical royalties. The company works with many partners, such as universities, research hospitals, non-profits, biotech companies, and big pharmaceutical firms.
Royalty Pharma (NASDAQ:RPRX) makes money from royalties on the sales of top therapies in its portfolio, which includes over 35 approved products and 15 drugs still in development. The company reported solid Q3 2024 results on November 6, with a 15% rise in both Portfolio and Royalty Receipts. In 2024, they spent $2.6 billion acquiring royalties on new therapies. Recent additions include royalties for treatments targeting schizophrenia (Cobenfy), glioma (Voranigo), and ulcerative colitis (Tremfya), which are expected to drive future growth.
Royalty Pharma (NASDAQ:RPRX) has solid financial strength, with $3 billion in available resources. This includes $950 million in cash, ongoing cash flow from its business, and access to loans if needed. The company carries $7.8 billion in debt at a low 3.1% interest rate, with an average repayment period of 12 years to match the lifespan of its royalty investments. Its debt level is about three times its adjusted earnings, and it still has $1.8 billion available through unused credit.
5. Entrada Therapeutics, Inc. (NASDAQ:TRDA)
P/E Ratio: 9.72
Entrada Therapeutics, Inc. (NASDAQ:TRDA) is a clinical-stage biopharmaceutical company developing Endosomal Escape Vehicle (EEV) therapeutics to deliver drugs like oligonucleotides and antibodies directly into cells, targeting diseases once deemed untreatable. The company stands fifth among the cheap biotech stocks to buy now. It is focused on neuromuscular, immunology, oncology, and central nervous system disorders, and collaborates with partners like Vertex Pharmaceuticals for revenue. Its innovative EEV platform aims to treat rare genetic conditions such as Duchenne muscular dystrophy (DMD) and myotonic dystrophy type 1 (DM1) by overcoming challenges in intracellular drug delivery.
Entrada Therapeutics, Inc. (NASDAQ:TRDA) reported strong Q3 2024 financial results, with a cash position of $449.3 million, up from $352.0 million at the end of 2023. Despite a drop in collaboration revenue to $19.6 million from $43.7 million, R&D and G&A expenses rose to $31.3 million and $10.0 million, respectively. The company posted a net loss of $14.0 million compared to a net income of $35.5 million in Q3 2023. The increase in cash was driven by a $100 million direct offering and a $75 million milestone payment from Vertex Pharmaceuticals, extending its cash runway into 2027.
The corporation offers investment potential due to its innovative EEV platform, which aims to revolutionize intracellular drug delivery for untreatable diseases. Entrada Therapeutics, Inc. (NASDAQ:TRDA)’s pipeline features promising candidates for Duchenne muscular dystrophy (DMD), including ENTR-601-44 and ENTR-601-45, moving toward Phase 2 trials.
4. Voyager Therapeutics, Inc. (NASDAQ:VYGR)
P/E Ratio: 8.58
Voyager Therapeutics, Inc. (NASDAQ:VYGR) develops gene therapies for neurological diseases like Alzheimer’s, Parkinson’s, and ALS. The company’s unique TRACER platform allows for the creation of novel AAV capsids that can better cross the blood-brain barrier, enabling more targeted delivery of gene therapies to the central nervous system.
As of September 30, 2024, Voyager Therapeutics, Inc. (NASDAQ:VYGR) has a cash position of $345 million, extending its runway into 2027. Its pipeline includes four wholly-owned programs and 14 partnered programs, with partnerships with Novartis, Neurocrine, and Alexion. The company recently completed enrollment for its VY7523 trial for Alzheimer’s disease with data expected in 2025. The company’s strong financial position and promising Alzheimer’s program make it an attractive investment in the biotech sector.
Analysts hold a consensus Strong Buy rating on the stock. Analysts set a 12-month average price target for Voyager Therapeutics, Inc. (NASDAQ:VYGR) of $18.00, with a high of $30.00 and a low of $14.00. This represents a 256.44% increase from the current price of $5.05.
3. Galapagos NV (NASDAQ:GLPG)
P/E Ratio: 6.52
Galapagos NV (NASDAQ:GLPG) is a Belgian biotech company focused on developing innovative medicines, primarily targeting oncology and immunology. The company specializes in small molecules and cell therapies, including a decentralized CAR-T manufacturing platform that enables fast, personalized treatments. Its pipeline includes promising CAR-T candidates like GLPG5101 and GLPG5201, which are targeting lymphoma and leukemia. Galapagos NV (NASDAQ:GLPG) aims to address unmet medical needs with a focus on conditions like rheumatoid arthritis, Crohn’s disease, and cancer, using cutting-edge science and collaborative approaches.
In Q3 2024, Galapagos NV (NASDAQ:GLPG) reported net revenues of €37.4 million, an 86% decrease from €269.1 million in Q3 2023 due to the divestment of its Jyseleca business. However, the company achieved an operating profit of €66.0 million, up from €23.0 million, driven by lower expenses and increased other operating income. For the first nine months of 2024, total net revenues increased by 11% to €200.1 million, while R&D expenses rose by 42%. The corporation reported a net profit of €48.8 million and a €125.6 million operating loss. The company has €3.3 billion in cash and investments and is expanding its manufacturing capabilities with a new decentralized unit in San Diego to support its clinical trials.
Wall Street analysts set a 12-month price target for Galapagos NV (NASDAQ:GLPG) at an average of $29.75, with a high of $32.00 and a low of $26.00, representing a 24.06% increase from the current price of $23.98.
2. Agios Pharmaceuticals, Inc. (NASDAQ:AGIO)
P/E Ratio: 2.95
Agios Pharmaceuticals, Inc. (NASDAQ:AGIO) is a biopharmaceutical company located in Cambridge, Massachusetts. It focuses on studying and developing treatments related to cellular metabolism and blood-related diseases, with several therapies still in early-stage development.
Agios Pharmaceuticals, Inc. (NASDAQ:AGIO) recently secured $1.1 billion in milestone payments following the FDA’s approval of vorasidenib, an anti-cancer drug developed by Agios Pharmaceuticals (NASDAQ:AGIO). This sum includes a $905 million payment from Royalty Pharma, stemming from the vorasidenib royalty purchase agreement. The company announced in May 2024 a $200 million payment from Servier, linked to Agios’s sale of its oncology division in 2021.
In addition to the milestone payments, the company has about $1.7 billion in cash, cash equivalents, and marketable securities as of Q3 2024. Agios Pharmaceuticals, Inc. (NASDAQ:AGIO) plans to use this money, along with expected interest income and product sales, to prepare for the possible launch of its Pyrukynd treatment for thalassemia and sickle cell disease. Pyrukynd could be the first treatment approved for all types of thalassemia. The company also intends to use its financial strength to further develop its current programs and expand its pipeline when the right opportunities arise.
Meridian Growth Fund stated the following regarding Agios Pharmaceuticals, Inc. (NASDAQ:AGIO) in its Q2 2024 investor letter:
“Agios Pharmaceuticals, Inc. (NASDAQ:AGIO) is a leader in cellular metabolism and pyruvate kinase activation pioneering therapies for rare diseases. The stock appreciated in the quarter after it announced positive Phase 3 testing results of mitapivat, a therapy for adults with non-transfusion dependent thalassemia, an anemia blood disorder. With these results, we expect an FDA filing for the drug in the back half of this year for approval. The company also sold its 15% royalty on a cancer drug, which provided a boost to its cash position that could be used to further develop and market mitapivat. We trimmed our position in the company based on our valuation discipline as the share price appreciated.”
1. Roivant Sciences Ltd. (NASDAQ:ROIV)
P/E Ratio: 1.89
Roivant Sciences Ltd. (NASDAQ:ROIV) is a biopharmaceutical company focused on developing innovative medicines and technologies and tops the list for being the cheapest biotech stock to buy. It uses a unique “hub-and-spoke” model, creating subsidiary companies, or “Vants,” each dedicated to specific therapeutic areas. The company identifies overlooked drug candidates and advances them through clinical trials and commercialization. The company targets markets in immunology, oncology, hematology, and dermatology.
Roivant Sciences Ltd. (NASDAQ:ROIV) reported strong financial results for the third quarter ended December 31, 2023, with a net income of $5.1 billion, compared to a net loss of $384.9 million in the same quarter of the previous year. The company had $6.7 billion in consolidated cash, cash equivalents, and restricted cash as of December 31, 2023. VTAMA generated $20.7 million in net product revenue for the quarter, with a 28.5% gross-to-net yield.
The company’s financial position improved significantly, mainly due to the sale of Telavant to Roche for $7.1 billion upfront, plus an additional $150 million in potential milestone payments. This sale resulted in a gain of approximately $5.3 billion, strengthening Roivant Sciences Ltd. (NASDAQ:ROIV)’s balance sheet and providing resources for future research and development. Revenue growth was also fueled by the increasing adoption of VTAMA, with over 300,000 prescriptions written by about 14,000 unique prescribers since its launch.
As of Q3 2024, 50 hedge funds held stakes in the company as tracked by the Insider Monkey database. The largest stakeholder in the company was QVT Financial with stakes worth $759.2 million.
Overall, ROIV ranks first among the 10 cheapest biotech stocks to buy now. While we acknowledge the potential of biotech companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ROIV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
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