In this article, we discuss 10 cheap pharmaceutical stocks for 2022. If you want to skip our detailed analysis of these stocks, go directly to 5 Cheap Pharmaceutical Stocks For 2022.
The pharma industry is in the midst of a fundamental transformation as disruptive technologies like artificial intelligence, machine learning, and natural language processing become dominant trends in new drug development. The pharma markets in the United States and Europe are leading this tech-related disruption. These markets are expected to be worth $635 billion and $315 billion in sales respectively by 2024. Compared to the global pharma market size of 2020, which stood at nearly $402 billion, this represents an explosive leap forward.
One of the major trends expected to shape the pharma universe in 2022 will be an emphasis on research related to the side-effects of vaccines. This comes amid a lot of hue and cry around the side effects of the COVID-19 vaccines and the impact this has had on the wider adoption of the vaccines. The digital transformation of the industry is also lowering research and development spending. Top pharma firms in the US introduced 106 new drugs between 2013 and 2021, spending an average of $2.8 billion on testing and market approval for these products.
As data analytics accelerates innovation in the industry, investors eager for an entry point into the pharma world should consider investing in some cheap biotech stocks that have explosive growth potential. Some of the cheap pharma stocks to buy for 2022 include Agile Therapeutics, Inc. (NASDAQ:AGRX), Kaleido Biosciences, Inc. (NASDAQ:KLDO), and Leap Therapeutics, Inc. (NASDAQ:LPTX), among others discussed in detail below.
Our Methodology
The companies that operate in the pharma sector and are trading at relatively cheap prices compared to peers were selected for the list. The business fundamentals and analyst ratings for these firms are also discussed to provide readers with some additional context for their investment choices. All the stocks listed below are priced under $20 per share as of February 14. The share price of each stock is mentioned alongside other details for further clarity.
Data from around 900 elite hedge funds tracked by Insider Monkey in Q3 2021 was used to identify the number of hedge funds that hold stakes in each firm.
Cheap Pharmaceutical Stocks For 2022
10. Collegium Pharmaceutical, Inc. (NASDAQ:COLL)
Number of Hedge Fund Holders: 13
Real-Time Share Price as of February 15: $19.90
Collegium Pharmaceutical, Inc. (NASDAQ:COLL) is a specialty pharma firm that concentrates on the development of medicines for pain management. On February 14, the firm announced that it had agreed to purchase BioDelivery Sciences International, a pharma firm focusing on treatments for chronic conditions, in a deal worth $604 million. The deal will result in synergies worth $75 million for Collegium Pharmaceutical, Inc. (NASDAQ:COLL).
On February 14, Cantor Fitzgerald analyst Brandon Folkes upgraded Collegium Pharmaceutical, Inc. (NASDAQ:COLL) to Overweight from Neutral and raised the price target to $26 from $18, noting the diversification in revenue that the merger with BioDelivery would bring.
At the end of the third quarter of 2021, 13 hedge funds in the database of Insider Monkey held stakes worth $144 million in Collegium Pharmaceutical, Inc. (NASDAQ:COLL), compared to 16 in the preceding quarter worth $209 million.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Rubric Capital Management is a leading shareholder in Collegium Pharmaceutical, Inc. (NASDAQ:COLL), with 2.6 million shares worth more than $48 million.
Just like Agile Therapeutics, Inc. (NASDAQ:AGRX), Kaleido Biosciences, Inc. (NASDAQ:KLDO), and Leap Therapeutics, Inc. (NASDAQ:LPTX), Collegium Pharmaceutical, Inc. (NASDAQ:COLL) is one of the stocks that growth investors have their eye on.
9. Takeda Pharmaceutical Company Limited (NYSE:TAK)
Number of Hedge Fund Holders: 15
Real-Time Share Price as of February 15: $15.06
Takeda Pharmaceutical Company Limited (NYSE:TAK) makes and sells pharmaceutical products. On January 31, the company announced that it had received FDA approval for Vonvendi, an oral therapeutic developed for the treatment of routine prophylaxis in patients with Willebrand disease. The blood disorder is among the most common in the US, with approximately three million patients.
On January 10, Takeda Pharmaceutical Company Limited (NYSE:TAK) had announced that it would be acquiring Adaptate Biotherapeutics, a British company focused on developing antibody-based therapeutics. The former will gain the cell-engager platform of the latter as part of the deal, in addition to pipeline programs.
Among the hedge funds being tracked by Insider Monkey, New York-based firm ARK Investment Management is a leading shareholder in Takeda Pharmaceutical Company Limited (NYSE:TAK), with 13 million shares worth more than $221 million.
At the end of the third quarter of 2021, 15 hedge funds in the database of Insider Monkey held stakes worth $443 million in Takeda Pharmaceutical Company Limited (NYSE:TAK), compared to 19 in the preceding quarter worth $551 million.
8. Viatris Inc. (NASDAQ:VTRS)
Number of Hedge Fund Holders: 55
Real-Time Share Price as of February 15: $15.03
Viatris Inc. (NASDAQ:VTRS) makes and sells generic drugs. On February 3, the company announced that it had obtained FDA approval for a generic version of Restasis, a drug that works to reduce inflammation in the tear glands. Restasis was developed by the drug giant AbbVie. Viatris Inc. (NASDAQ:VTRS) plans to launch the generic version immediately.
Viatris Inc. (NASDAQ:VTRS) stock has been trending higher in the past few weeks amid speculation that Mylan, a unit of the company, is in talks with Biocon, an Indian pharma firm, for a merger that could raise the total valuation of the combined unit to around $10 billion.
At the end of the third quarter of 2021, 55 hedge funds in the database of Insider Monkey held stakes worth $1.4 billion in Viatris Inc. (NASDAQ:VTRS), up from 53 in the preceding quarter worth $1.5 billion.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Laurion Capital Management is a leading shareholder in Viatris Inc. (NASDAQ:VTRS), with 33 million shares worth more than $457 million.
In its Q1 2021 investor letter, Mittleman Brothers, an asset management firm, highlighted a few stocks and Viatris Inc. (NASDAQ:VTRS) was one of them. Here is what the fund said:
“Our other new position in Q1 (in addition to AMA Group) is Viatris (VTRS), which is the old stock of the generic drug manufacturer Mylan Labs after it merged with Pfizers’s Upjohn unit late last year, via a tax-efficient Reverse Morris Trust. VTRS’s current market capitalization of ~$17B is less than 6x its estimated FCF of $3B (before restructuring costs) estimated for 2022, and the current enterprise value of $40B is only 6.4x EBITDA of $6.25B. Consider that Mylan Labs stock (MYL, predecessor to VTRS) was nearly $67/share on a $40B buy-out offer from Teva in 2015. Mylan rejected that seemingly very reasonable bid. In merging with Pfizer’s spin-off of Upjohn, Viatris became an equal (in sales, about $17B for each company) to the largest player in generic pharmaceuticals globally, Teva, Mylan’s former suitor. Viatris is an orphan, but its pedigree is tarnished (the reputation of Mylan’s management in rejecting the Teva bid, and other mistakes, still lingers), even though the new CEO and CFO come from Pfizer, the Chairman and President from Mylan remain. Also, ETFs that owned Pfizer had to sell the VTRS shares that they received, which added considerable forced selling.”
7. Dynavax Technologies Corporation (NASDAQ:DVAX)
Number of Hedge Fund Holders: 19
Real-Time Share Price as of February 15: $12.51
Dynavax Technologies Corporation (NASDAQ:DVAX) is a biopharma firm focused on the development of novel vaccines. On January 5, Goldman Sachs analyst Madhu Kumar reinstated coverage of the stock with a Buy rating and a price target of $38, noting the potential of the pipeline drugs of the firm for the treatment of Hepatitis-B.
Dynavax Technologies Corporation (NASDAQ:DVAX) shares have climbed in the past weeks amid the approval of a COVID-19 vaccine developed by Valneva that uses CpG 1018 adjuvant developed by Dynavax Technologies Corporation (NASDAQ:DVAX).
At the end of the third quarter of 2021, 19 hedge funds in the database of Insider Monkey held stakes worth $397 million in Dynavax Technologies Corporation (NASDAQ:DVAX), up from 15 in the previous quarter worth $101 million.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Marshall Wace LLP is a leading shareholder in Dynavax Technologies Corporation (NASDAQ:DVAX), with 5 million shares worth more than $98 million.
6. Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD)
Number of Hedge Fund Holders: 27
Real-Time Share Price as of February 15: $10.67
Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) is a Boston-based healthcare firm. On January 10, the firm announced that it expected US net sales of Linzess, a premier drug of the firm, to climb above $1 billion in 2021. It also revealed that during the fourth quarter of 2021, the company had repurchased $27 million worth of shares under a share repurchase program of up to $150 million that is valid under the end of 2022.
In November last year, Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) had signed a collaboration deal with COUR Pharmaceutical Development Company, a biotech firm concentrating on the development of novel treatments for autoimmune diseases.
Among the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm Sarissa Capital Management is a leading shareholder in Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD), with 16 million shares worth more than $214 million.
At the end of the third quarter of 2021, 27 hedge funds in the database of Insider Monkey held stakes worth $442 million in Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD), compared to 28 in the previous quarter worth $498 million.
Alongside Agile Therapeutics, Inc. (NASDAQ:AGRX), Kaleido Biosciences, Inc. (NASDAQ:KLDO), and Leap Therapeutics, Inc. (NASDAQ:LPTX), Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) is one of the stocks on the radar of institutional investors.
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Disclosure. None. 10 Cheap Pharmaceutical Stocks For 2022 is originally published on Insider Monkey.
