In this article, we will take a look at the 11 most promising biotech stocks to buy according to analysts. To skip our analysis of the recent trends, and market activity, you can go directly to see the 5 Most Promising Biotech Stocks to Buy According to Analysts.
The biotech industry is making a resurgence after more than a year of dismal performance which has seen S&P Biotechnology Select Industry Index, an index that tracks stocks belonging to the biotechnology industry, lose more than 50% of its value from its peak in early 2021. Rising interest rates and cool-down of pandemic-era triumphs led to bearish sentiment from investors. Recent developments, technological as well as optimism related to interest rate reductions, have led to a significant rally for the industry with the index up 29% since the end of October.
The M&A activity in the biotech industry is picking up pace once again after a dismal performance last year. It has been a relatively strong year for the pharmaceutical and life sciences sectors with both deal value and volume of M&A close to pre-pandemic levels, according to PwC’s latest analysis. These sectors combined registered $222 billion worth of M&A deals during the twelve months ended November 16, 2023.
Some of the biggest transactions announced or closed during the period include Pfizer Inc. (NYSE:PFE) agreement to acquire Seagen Inc. (NASDAQ:SGEN) in a $43 billion transaction, acquisition of Prometheus Biosciences, Inc. (NASDAQ:RXDX) by Merck & Co., Inc. (NYSE:MRK) for $10.8 billion, and AbbVie Inc. (NYSE:ABBV) agreement to acquire Cerevel Therapeutics (NASDAQ:CERE) for nearly $8.7 billion, among others.
The latest trend in the biotechnology industry, in addition to the long-standing affinity for rare and debilitating diseases, is the resurgence of therapies targeting obesity. In August this year, Novo Nordisk released SELECT trial results which showed that its GLP-1 weight loss medicine Wegovy reduced the risk of major adverse cardiovascular events in adults who are overweight or obese and have established cardiovascular disease with no prior history of diabetes. This has brought the possibility of GLP-1 drug class being broadly adopted in the U.S. On December 5, Eli Lilly and Company (NYSE:LLY) announced the availability of Zepbound™ (tirzepatide) injection in U.S. pharmacies, indicated for adults with obesity. The drug was approved by the U.S. FDA on November 8 and is available through a prescription that can be filled at retail and mail-order pharmacies. You can read more about this in our recently published article: 12 Healthcare Stocks Billionaires Like the Most
Majority of the companies on our list of 11 most promising biotech stocks to buy according to analysts are late stage clinical-stage biotechnology companies working on the development of novel therapeutics for rare diseases. The list includes Moderna, Inc. (NASDAQ:MRNA), Cytokinetics, Inc. (NASDAQ:CYTK), and Denali Therapeutics Inc. (NASDAQ:DNLI), among others.
A scientist in a lab coat laboring over petri dishes and microscope in a biotechnology laboratory.
Methodology
We used a stock screener to identify biotechnology stocks whose average analyst price estimate is 50% more than their current price targets and have positive analyst ratings. We skipped highly volatile and risky stocks in the current environment and preferred high-growth companies with actual long-term growth catalysts. We picked 11 stocks with the highest upside potential from their current levels based on these price targets.
We have also included the hedge fund sentiment for each stock, which was sourced from Insider Monkey’s proprietary database of roughly 900 elite hedge funds. We have ranked these stocks in ascending order of their upside potential based on average analyst price estimates, as of December 13. Note that we haven’t included companies with market capitalizations of less than $2.0 billion in our list as their stock prices are generally more volatile and they aren’t widely covered by Wall Street analysts.
11. Moderna, Inc. (NASDAQ:MRNA)
Upside Potential as of December 13: 67.53%
Number of Hedge Fund Holders: 37
Cambridge, Massachusetts-based Moderna, Inc. (NASDAQ:MRNA) is a leading biotechnology company pioneering messenger RNA (mRNA) therapeutics and vaccines. In addition to the commercial stage covid19 vaccine, the clinical pipeline of the company includes therapeutics and vaccines for infectious diseases, immuno-oncology, rare diseases, cardiovascular diseases, and auto-immune diseases.
On December 11, Moderna, Inc. (NASDAQ:MRNA) and Merck (NYSE: MRK) announced the initiation of INTerpath-002, a pivotal Phase 3 randomized clinical trial evaluating V940 (mRNA-4157), an investigational individualized neoantigen therapy, in combination with Merck’s KEYTRUDA, as adjuvant treatment in patients with certain types of resected non-small cell lung cancer.
Moderna, Inc. (NASDAQ:MRNA) ranks #1 on our list of 11 most promising biotech stocks to buy according to analysts based on the number of hedge funds that held its shares at the end of Q3 2023. Its shares were owned by 37 leading hedge funds with the total shares held by them valued at nearly $1.5 billion.
10. Royalty Pharma Plc (NASDAQ:RPRX)
Upside Potential as of December 13: 68.85%
Number of Hedge Fund Holders: 31
Founded in 1996, New York-based Royalty Pharma Plc (NASDAQ:RPRX) is the largest buyer of biopharmaceutical royalties. It acquires these royalties both directly and indirectly: directly through co-funding late-stage clinical trials and new product launches in exchange for future royalties, and indirectly through the acquisition of existing royalties from original innovators.
Current portfolio of Royalty Pharma Plc (NASDAQ:RPRX) includes more than 35 commercial products, including Biogen’s Tysabri, AbbVie and Johnson & Johnson’s Imbruvica, Astellas and Pfizer’s Xtandi, and Pfizer’s Nurtec ODT, among others, and 12 development-stage product candidates.
On October 19, Royalty Pharma Plc (NASDAQ:RPRX) announced an agreement with PTC Therapeutics, Inc. (NASDAQ:PTCT) to acquire additional royalties on Roche’s Evrysdi for $1.0 billion upfront. The company previously acquired 43% of royalties for $650 million in July 2020. The current transaction brings total ownership of the company to 81% for Evrysdi royalties, and brings total transactions announced by the company in 2023 to $3.8 billion.
As of Q3 2023, Royalty Pharma Plc (NASDAQ:RPRX) shares were owned by 31 of the 910 hedge funds tracked by Insider Monkey, with a total value of $929 million.
9. TG Therapeutics, Inc. (NASDAQ:TGTX)
Upside Potential as of December 13: 70.46%
Number of Hedge Fund Holders: 28
TG Therapeutics, Inc. (NASDAQ:TGTX) is a biopharmaceutical company focused on the acquisition, development, and commercialization of novel treatments for B-cell diseases. Its research pipeline includes several investigational medicines targeting B-cell diseases.
The portfolio of TG Therapeutics, Inc. (NASDAQ:TGTX) includes one commercial product, BRIUMVI® (ublituximab-xiiy), approved by the FDA for treatment of adult patients with relapsing forms of multiple sclerosis. The drug has also been approved by the European Commission to treat adult patients with RMS.
On August 1, TG Therapeutics, Inc. (NASDAQ:TGTX) announced an ex-US commercialization agreement with Permira backed European specialty pharmaceutical company, Neuraxpharm Group, of BRIUMVI® (ublituximab). The total deal is valued at $645 million in upfront and milestone payments including $140 million upfront payment.
As of Q3 2023, TG Therapeutics, Inc. (NASDAQ:TGTX) shares were owned by 28 of the 910 hedge funds tracked by Insider Monkey, with a total value of $125 million.
Like other stocks such as Moderna, Inc. (NASDAQ:MRNA), Royalty Pharma Plc (NASDAQ:RPRX), and Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT), TG Therapeutics, Inc. (NASDAQ:TGTX) is among the 11 most promising biotech stocks according to analysts.
8. Cytokinetics, Inc. (NASDAQ:CYTK)
Upside Potential as of December 13: 73.43%
Number of Hedge Fund Holders: 34
San Francisco, California-based Cytokinetics, Inc. (NASDAQ:CYTK) is a late-stage biopharmaceutical company focused on discovering, developing, and commercializing first-in-class muscle activators and next-in-class muscle inhibitors as potential treatments for people with debilitating diseases in which muscle performance is compromised and/or declining.
The development and clinical pipeline of Cytokinetics, Inc. (NASDAQ:CYTK) is led by Aficamten, a next-in-class cardiac myosin inhibitor, currently the subject of three Phase 3 clinical trials evaluating Aficamten in patients with obstructive hypertrophic cardiomyopathy (HCM), as monotherapy compared to metoprolol as monotherapy in patients with obstructive HCM and ACACIA-HCM, and in patients with non-obstructive HCM.
Cytokinetics, Inc. (NASDAQ:CYTK) expects topline results from SEQUOIA-HCM, a Pivotal Phase 3 Clinical Trial of Aficamten in Obstructive HCM, in late December. It had cash, cash equivalents, and investments totaled $554.7 million on September 30.
As of Q3 2023, 34 hedge funds held shares of Cytokinetics, Inc. (NASDAQ:CYTK) valued at $445 million. Polar Capital was the largest hedge fund shareholder of the company with ownership of 2.7 million shares valued at $78 million.
7. Beam Therapeutics Inc. (NASDAQ:BEAM)
Upside Potential as of December 13: 92.90%
Number of Hedge Fund Holders: 17
Based in Cambridge, Massachusetts, Beam Therapeutics Inc. (NASDAQ:BEAM) is a biotechnology company focused on creating a new class of precision genetic medicines based on its proprietary base editing technology, to provide life-long cures to patients suffering from serious diseases.
On October 31, Beam Therapeutics Inc. (NASDAQ:BEAM) announced that Eli Lilly and Company has agreed to acquire certain rights under Beam Therapeutics Inc. (NASDAQ:BEAM) collaboration and license agreement with Verve Therapeutics, Inc., including the company’s opt-in rights to Verve’s base editing programs for cardiovascular disease.
Under the terms of the agreement, Beam Therapeutics Inc. (NASDAQ:BEAM) will receive an upfront $200 million payment as well as $50 million equity investment. The company is also eligible to receive up to $350 million in potential future development-stage payments.
Past year hasn’t been good for Beam Therapeutics Inc. (NASDAQ:BEAM) as its shares have lost nearly 33% of their value during the period. The stock has recently been making a recovery with nearly 15% of positive movement posted in the last 30 days. In addition, analysts still remain bullish about the stock with an average analyst price target of $50.23, which represents a potential upside of 92.90% based on the share price on December 13.
6. Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT)
Upside Potential as of December 13: 103.66%
Number of Hedge Fund Holders: 27
Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT) is a leading late stage biotechnology company focused on the development of genetic therapies designed to correct the root cause of complex and rare childhood disorders.
Clinical programs of Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT) include multiple gene therapies targeting Fanconi Anemia, Leukocyte Adhesion Deficiency-I, Pyruvate Kinase Deficiency, Danon Disease, and Infantile Malignant Osteopetrosis.
On October 2, Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT) announced that the FDA had accepted the Biologics License Application (BLA) and granted Priority Review for RP-L201, an investigational gene therapy for severe Leukocyte Adhesion Deficiency-I.
Earlier in September, Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT) raised net proceeds of nearly $189 million through a public offering of its common shares. The company had cash, cash equivalents and investments of $437.2 million as of September 30.
Like other stocks such as Moderna, Inc. (NASDAQ:MRNA), Royalty Pharma Plc (NASDAQ:RPRX), and TG Therapeutics, Inc. (NASDAQ:TGTX), Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT) is among the 11 most promising biotech stocks according to analysts.
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Disclosure: None. 11 Most Promising Biotech Stocks to Buy According to Analysts is originally published on Insider Monkey.
