In this article, we will be taking a look at the 10 oversold biotech stocks to buy now.
Biotech Sector Performance and Challenges in 2024:
Biotechnology stocks are among the most volatile in the market, primarily due to the high risks associated with their performance. The success or failure of FDA clinical trials and the real-world effectiveness of therapies often lead to significant price fluctuations. The biotech sector gained widespread attention in 2020, with the rapid development of COVID-19 vaccinations catapulting the industry into the spotlight. As major pharmaceutical companies began pursuing acquisitions, investor interest surged in late 2023 and early 2024.
However, the momentum soon faded, leading to a stagnation in biotech stocks. For months, the market saw little movement, with few mergers and acquisitions (M&A) or initial public offerings (IPOs) breaking the silence. The second quarter of 2024 experienced a sharp decline in biopharma deal activity, following a robust first quarter where pharmaceutical giants utilized their large cash reserves for acquisitions.
Despite the challenges biotech companies faced in 2024, JPMorgan maintains an optimistic outlook, forecasting significant growth for some firms in the coming months. Johan Hueffer, senior partner and principal of investments at Novo Holdings, addressed this shift on CNBC on November 28. While acknowledging the difficulties biotechs have had in raising funds over the past few years, Hueffer noted that recent quarters have seen a positive change, with investment conditions improving. The impact of these fluctuations has also extended to companies that support the pharmaceutical industry, including contract research organizations (CROs), contract manufacturing organizations (CMOs), and providers of tools for research and development.
Similarly, firms that manufacture production tools for the pharmaceutical and biotech sectors have faced similar challenges. Although these industries have experienced their share of ups and downs over the past two years, trends are beginning to stabilize. Hueffer believes that the sector is now on the verge of considerable opportunity, with conditions starting to normalize and potential for growth emerging once again.
Growth Potential and Investment Opportunities:
Goldman Sachs clarified biotech as a frequently disregarded area of the investment world. John Flood, Head of Americas Equities Sales Trading at Goldman, wrote in a letter to clients that biotech equities offered an unnoticed opportunity for investors hoping to profit from the Fed’s recent rate decreases. Because biotech equities are sensitive to interest rate changes and frequently depend on anticipated future revenues, they are particularly impacted. The cost of capital has a significant effect on these equities as well. These equities have substantial upside potential and, should clinical studies be successful, offer an “option-like structure,” even though they are now quite unprofitable. Because of this, they are particularly sensitive to shifts in interest rates.
The Fed has lowered the funds rate by one full point since September. The present market pricing indicates that there will only be one or two additional declines in 2025, according to CNBC. The Federal Open Market Committee (FOMC) members voted to lower the central bank’s benchmark borrowing rate to the 4.25%–4.5% target range, according to a January 8 CNBC report. But they also trimmed their projections for anticipated rate cuts in 2025, assuming quarter-point increases, from four to two. Biotech stocks are anticipated to be impacted by these changes.
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%. This growth is expected to be fueled by favorable government laws, more investment, the need for synthetic biology, and an increase in chronic diseases such as high blood pressure, heart disease, and cancer. Government initiatives to modernize laws and enhance reimbursement practices are driving market growth.
IQVIA projects that global pharma spending will reach $2.30 trillion by 2028, growing at a compound annual growth rate (CAGR) of 5% to 8%. While immunology spending may decrease as biosimilars become accessible, obesity and cancer treatments are expected to be the primary drivers of this expansion. It is anticipated that biotech will reach $892 billion by 2028, or 39% of total spending, with the highest growth occurring in cell and gene therapies.
The biotechnology sector in the United States, in particular, was estimated to be worth $246.18 billion in 2023 and is projected to rise at a compound annual growth rate (CAGR) of 11.6% between 2024 and 2034, reaching over $830.31 billion. Asia Pacific had a revenue proportion of 23.99%, whereas North America had a revenue share of 37.79%. While the bioindustry application category generated 24.33% of total revenue in 2023, the biopharmacy segment held a 41.73% revenue share by application. With this, we will take a look at some oversold stocks in the biotech sector.
Scientist in a lab working on a research project, focusing on biotechnology and healthcare advancements.
Our Methodology
For our methodology, we selected stocks with a market cap over 2 billion and Relative Strength Index (RSI) of 40, and strong hedge fund sentiment and then ranked these stocks based on their RSI values.
At Insider Monkey we are obsessed with 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).
Here is our list of the 10 oversold biotech stocks to buy now.
10. Blueprint Medicines Corporation (NASDAQ:BPMC)
Relative Strength Index (RSI): 32.30
Blueprint Medicines Corporation (NASDAQ:BPMC) is a biopharmaceutical company focused on developing targeted therapies for cancers and blood disorders. It specializes in allergy/inflammation and oncology/hematology, with its main revenue coming from AYVAKIT (avapritinib), a treatment for systemic mastocytosis (SM) available in the U.S. and Europe.
Blueprint Medicines Corporation (NASDAQ:BPMC) reported strong financial results for Q4 and full-year 2024, with $479 million in global revenue from AYVAKIT, including $144.1 million in Q4 alone. The company expects significant growth in 2025, forecasting $680–$710 million in revenue, a 45% increase year-over-year. Looking ahead, it sees a $4 billion peak revenue opportunity for its systemic mastocytosis (SM) franchise, with AYVAKIT projected to reach $2 billion by 2030.
Despite reporting a net loss of $50 million in Q4 and $67.1 million for the year, these figures mark a major improvement from 2023, when losses were much higher. This suggests better financial management and a path toward profitability for Blueprint Medicines Corporation (NASDAQ:BPMC). Strong demand for AYVAKIT continues to drive revenue which shows successful commercialization.
Investors are drawn to Blueprint Medicines Corporation (NASDAQ:BPMC) for its impressive growth, promising drug pipeline—including BLU-808, a potential treatment for allergic and inflammatory diseases—and financial discipline. The company’s focus on reducing cash burn and moving toward self-sustainability makes it an appealing long-term investment, particularly for those seeking opportunities in oversold stocks with strong growth potential.
9. Scholar Rock Holding Corporation (NASDAQ:SRRK)
Relative Strength Index (RSI): 36.75
Scholar Rock Holding Corporation (NASDAQ:SRRK) is a biopharmaceutical company focused on developing innovative therapies for serious diseases and stands ninth among 10 oversold biotech stocks to buy now. Fundamentally, the company focuses on finding and creating medications that target growth factors, which are proteins essential to many cellular functions.
Apitegromab is the company’s primary candidate and is showing great promise in treating SMA. Scholar Rock Holding Corporation (NASDAQ:SRRK) intends to file regulatory applications in the US and the EU in Q1 2025, opening the door for a possible commercial launch after the Phase 3 SAPPHIRE experiment revealed significant improvements in motor function. Furthermore, the Phase 2 EMBRAZE trial for obesity by apitegromab may expand market prospects; topline results are anticipated in Q2 2025.
After a public offering in October 2024, Scholar Rock Holding Corporation (NASDAQ:SRRK) reported $463.5 million in cash, extending its runway until late 2026. In Q3 2024, R&D expenditures rose to $48.7 million, demonstrating its dedication to pipeline advancement. The company’s novel myostatin inhibition strategy, robust clinical evidence, varied programs in SMA, obesity, and oncology, and sound financial base all attract investors.
As of Q4 2024, 48 hedge funds held stakes in Scholar Rock Holding Corporation (NASDAQ:SRRK) with Fmr Llc being the largest stakeholder in the company with stakes worth $589 million. Street analysts have given the stock a Strong Buy rating.
8. CG Oncology, Inc. (NASDAQ:CGON)
Relative Strength Index (RSI): 36.76
CG Oncology, Inc. (NASDAQ:CGON) is a clinical biopharmaceutical company that develops and commercializes bladder-sparing therapeutics for bladder cancer. Cretostimogene, one of its products, is presently being developed clinically to treat non-muscle invasive bladder cancer (NMIBC). Significant progress is being made by the business in its pipeline to create a possible bladder-sparing treatment for NMIBC that spares the backbone. Cretostimogene has the potential to cause a long-lasting, full response in patients with bladder cancer because of its excellent safety and tolerability profile. Because cretostimogene’s distinct product profile sets it apart from the current and investigational NMIBC therapies, investors are optimistic about the stock.
As of September 30, 2024, CG Oncology, Inc. (NASDAQ:CGON) has $540.7 million in marketable securities and cash and cash equivalents. Management anticipates that its present cash, cash equivalents, and marketable securities will be adequate to support operations through 2027 based on its current operational plans.
As of fiscal Q3 2024, CG Oncology, Inc. (NASDAQ:CGON) is owned by 26 hedge funds. A 158.01% increase from current levels is implied by its median price goal of $27.32. Bank of America Securities analyst Charlie CY Yang kept his Buy rating on the stock at $65.00 on February 13.
7. Janux Therapeutics, Inc. (NASDAQ:JANX)
Relative Strength Index (RSI): 37.02
Janux Therapeutics, Inc. (NASDAQ:JANX) is a clinical-stage biopharmaceutical company working on cancer treatments that activate the immune system to fight tumors. Tumor Activated T-cell Engagers (TRACTr) and Tumor Activated Immunomodulators (TRACIr) are two unique platforms that the company has created.
Janux Therapeutics, Inc. (NASDAQ:JANX) develops safe, efficient treatments that minimize adverse effects while assisting the immune system in eliminating malignancies. For solid tumors, the company is creating a range of TRACTr and TRACIr therapies.
It now has two TRACTr therapies in clinical trials: one targets the Epidermal Growth Factor Receptor (EGFR) for colorectal, lung, head and neck, and kidney malignancies, and the other targets the Prostate-Specific Membrane Antigen (PSMA) for prostate cancer.
The two main candidates of Janux Therapeutics (NASDAQ:JANX) are JANX007, which targets PSMA for prostate cancer, and JANX008, which targets EGFR for a variety of solid tumors. Both JANX008 and the lead candidate, JANX007, are undergoing Phase 1 trials for different solid tumors and metastatic castration-resistant prostate cancer, respectively.
Janux Therapeutics, Inc. (NASDAQ:JANX) reported strong financials for Q3 2024, with $658 million in cash and investments as of September 30, up from $344 million at the end of 2023. This solid cash position ensures the company can continue funding clinical trials and pipeline development.
R&D expenses rose to $18.6 million from $11.9 million in the same period last year, reflecting ongoing work on its clinical programs, JANX007 and JANX008. G&A expenses also jumped to $17.7 million from $6.4 million, mainly due to $9.5 million in stock-based compensation.
Janux Therapeutics, Inc. (NASDAQ:JANX) reported a net loss of $28.1 million for Q3 2024, compared to $11.6 million in 2023. This increase is due to higher spending on research, development, and administrative costs, which are essential for advancing its biotech initiatives. Despite this, Janux remains a compelling option for investors looking at oversold stocks in the biotech industry with strong cash reserves and innovative treatments in development.
6. NewAmsterdam Pharma Company N.V. (NASDAQ:NAMS)
Relative Strength Index (RSI): 37.46
NewAmsterdam Pharma Company N.V. (NASDAQ:NAMS) is a late-stage biopharmaceutical company that develops therapies to enhance patient care in populations with metabolic diseases. It is creating an oral low-dose inhibitor of cholesteryl ester transfer protein (CETP), anacetrapib. Due to a series of encouraging reports on the progress of its drug pipeline, analysts say the stock has been soaring and is still among the top 52-week high stocks to purchase.
NewAmsterdam Pharma Company N.V. (NASDAQ:NAMS) declared in 2024 that three Phase 3 trials of its main drugs had yielded positive topline outcomes. With a fixed-dose combination, TANDEM reduced LDL-C by 49%; BROOKLYN accomplished 36%; and BROADWAY demonstrated 33% LDL-C reduction and 21% MACE reduction. With $835 million on the balance sheet at the end of 2024, the corporation has enough cash on hand to expedite the development of the three programs.
By increasing production and expanding its inventory, NewAmsterdam Pharma Company N.V. (NASDAQ:NAMS) is preparing for high commercial demand. A commercialization agreement with Menarini in Europe strengthens revenue potential and validates its efforts even further. The company is confident in Obicetrapib’s long-term future because it has obtained patent protection through 2043. By building production capacity, it is currently concentrating on commercial preparedness, which enhances its portfolio of intellectual property and long-term revenue potential.
5. Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY)
Relative Strength Index (RSI): 38.51
Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) stands fifth on our list of oversold biotech stocks to buy now and is a biopharmaceutical company that develops RNA interference (RNAi) therapies to treat rare genetic diseases. Its medicines, including ONPATTRO, GIVLAARI, OXLUMO, and AMVUTTRA, target and silence specific genes that cause conditions like hereditary ATTR amyloidosis and acute hepatic porphyria.
Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) reported strong financial growth in its Q4 2024 results. The company’s total net product revenue for 2024 reached $1.646 billion, a 33% increase from 2023. Its TTR franchise generated $343 million in Q4, reflecting 35% year-over-year growth, while full-year TTR revenue in the U.S. rose to $705 million, a 39% increase. Notably, the company achieved a non-GAAP operating income of $95 million, marking its first profitable year.
The company’s success highlights its ability to commercialize RNAi therapeutics effectively. The recent positive results from the HELIOS-B Phase III study for vutrisiran in ATTR cardiomyopathy have led to global regulatory filings, potentially expanding its market. This could significantly grow Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY)’s presence in the ATTR amyloidosis space.
Looking ahead, Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) expects 2025 product sales between $2.05 billion and $2.25 billion, with TTR revenue projected at $1.6 billion to $1.725 billion, assuming AMVUTTRA is approved for ATTR cardiomyopathy. The company also anticipates growth in its rare disease franchise.
4. Arcellx, Inc. (NASDAQ:ACLX)
Relative Strength Index (RSI): 39.21
Arcellx, Inc. (NASDAQ:ACLX) is a clinical-stage biotech company focused on developing innovative cell therapies for cancer and incurable diseases. It aims to create safer, more effective, and accessible immunotherapies, with a primary focus on multiple myeloma and expanding into leukemia and solid tumors. The company’s leading candidate, anitocabtagene autoleucel (anito-cel), is in clinical trials for relapsed or refractory multiple myeloma. Since Arcellx, Inc. (NASDAQ:ACLX) has no approved products yet, it relies on partnerships, such as with Kite (a Gilead Company), and investor funding for financial support.
In its recent trials, Arcellx, Inc. (NASDAQ:ACLX)’s lead therapy, anito-cel, showed promising results for multiple myeloma. The iMMagine-1 study reported a 95% response rate, with no cases of serious neurotoxic side effects across more than 140 patients. Additionally, the iMMagine-3 trial, conducted in partnership with Kite, has begun dosing patients, further advancing its clinical pipeline.
Financially, Arcellx, Inc. (NASDAQ:ACLX) is in a strong position, with $676.7 million in cash as of Q3 2024—enough to sustain operations into 2027. The company’s collaboration revenue grew to $26 million, driven by its expanded partnership with Kite. Meanwhile, research and development expenses decreased, and net losses improved from $39.3 million to $25.9 million.
3. Viking Therapeutics, Inc. (NASDAQ:VKTX)
Relative Strength Index (RSI): 39.45
Viking Therapeutics, Inc. (NASDAQ:VKTX) is a biotechnology company that is committed to the development of treatments for patients suffering from metabolic and endocrine disorders.
Viking Therapeutics, Inc. (NASDAQ:VKTX) is an oversold biotech stock with strong financials and promising clinical advancements which makes it an appealing investment opportunity.
Viking Therapeutics, Inc. (NASDAQ:VKTX) reported strong progress in its Q4 and full-year 2024 financial results, highlighting a solid financial position and advancements in its clinical pipeline. The company ended 2024 with $903 million in cash, a significant increase from $362 million in 2023. Despite higher expenses, including a net loss of $35.4 million in Q4 and a full-year loss of $110.0 million, the corporation is investing heavily in its clinical programs, particularly for VK2735, an obesity treatment.
Viking Therapeutics, Inc. (NASDAQ:VKTX)’s clinical pipeline has shown strong results: VK2735, a dual agonist for obesity, demonstrated up to 14.7% weight loss in Phase 2 trials, and the company plans to begin Phase 3 studies in 2025. Additionally, VK2809 for NASH and VK0214 for X-ALD showed positive Phase 2 results. Viking also completed a successful End-of-Phase 2 FDA meeting for VK2735, further advancing its programs.
2. MoonLake Immunotherapeutics (NASDAQ:MLTX)
Relative Strength Index (RSI): 39.80
MoonLake Immunotherapeutics (NASDAQ:MLTX), formerly Helix Acquisition Corp, is a clinical-stage biopharmaceutical business based in Switzerland that creates medications for immunologic conditions, such as inflammatory skin and joint disorders.
MoonLake Immunotherapeutics (NASDAQ:MLTX) develops the tri-specific nanobody Sonelokimab (SLK), a chemical that targets and penetrates difficult-to-reach inflammatory regions. It has improved enrichment in deep skin and joints.
The corporation had $493.9 million in cash, cash equivalents, and short-term marketable debt securities after the third fiscal quarter of 2024. Up until the end of 2026, management anticipates it to provide a financial runway and a roadmap full of possible catalysts. Sonelokimab, a pipeline-in-a-product that may be worth over $8 billion in sales by 2035 across the company’s targeted indications, is the reason analysts are optimistic about the company’s prospects.
As it gets ready for regulatory filings and other pre-commercial activities, MoonLake Immunotherapeutics (NASDAQ:MLTX) is investing in this growth prospect and extensive clinical development projects. An 84.36% increase from present levels is implied by its current price target of $42.83. On January 17, Goldman Sachs analyst Richard Law, CFA, raised the stock’s recommendation to a Buy and set a price target of $82.00.
1. Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY)
Relative Strength Index (RSI): 39.99
Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY) is a commercial-stage pharmaceutical company that develops and commercializes therapies to treat neurological disorders and tops the list for being an oversold stock. The chemical Wakix, which is its product, promotes histamine transmission in the brain by binding to H3 receptors. The company’s pipeline is among the best for people with rare neurological diseases.
Central nervous system diseases are now treated by three orphan rare franchises owned by Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY). Investors are hopeful about the company because each of its brands has potential peak revenues of $1 billion to $2 billion. The company’s pipeline, which includes 13 development programs, includes eight assets as well. Three of these programs are in critical Phase 3 trials, and a fourth is in the early stages of development.
Therefore, if successful, the current pipeline of Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY) might eventually produce over $3 billion in net revenue. The company continues to expand its pipeline and work on business development. With over $505 million in cash, cash equivalents, and investments as of September 30, 2024, the firm is well-positioned financially to take advantage of additional commercial development prospects.
Overall, Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY) ranks first among the 10 oversold 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 HRMY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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