In this article, we will look at the 12 Biotech Stocks with the Biggest Upside Potential.
Improving Trends for Biotech Stocks
While 2024 was a “challenging” year for biotech stocks, JPMorgan is of the view that some names in the industry may be poised for considerable upside in the coming months. On November 28, Johan Hueffer, senior partner and principal of investments at Novo Holdings, appeared on CNBC to discuss his macro perspective on investments in life sciences. He said that biotechs faced difficulty raising capital in the last couple of years. However, that trend has started to improve in the last quarter or two.
Still, there have been impacts on companies that particularly service the pharmaceutical industry, such as contract research organizations (CROs), contract manufacturing organizations (CMOs), and companies that provide tools for research and development. Similar trends have been observed for companies that manufacture tools for production in the pharmaceutical and biotech industries. While these sectors have had ups and downs in the past two years, the trends are starting to normalize now. Hueffer was of the view that the industry is now showing considerable opportunity.
The Fed’s Rate Cuts and Biotech Stocks: Could There Be a Connection?
Similarly, Goldman Sachs shed light on biotech as an often overlooked sector in the investing space. In a note to clients, John Flood, Goldman’s Head of Americas Equities Sales Trading, said that biotech stocks posed an under-the-radar opportunity for investors looking to capitalize on the Fed’s recent rate cuts. Changes in interest rates uniquely affect biotech stocks as they are sensitive to them and often rely on projected future profits. These stocks are also heavily impacted by the cost of capital. Although there is little to no current profitability, these stocks have significant upside potential and pose an “option-like structure” if clinical trials succeed. This makes them especially responsive to changes and movements in interest rates.
Since September, the Fed cut a full point off the funds rate. According to CNBC, the current market pricing is showing just one or two more moves lower in 2025. On January 8, CNBC reported that the Federal Open Market Committee (FOMC) members voted to reduce the central bank’s benchmark borrowing rate to the 4.25%-4.5% target range. However, they also slashed their outlook for expected rate cuts for 2025, bringing it down to two from four and assuming quarter-point increments. These changes are expected to affect biotech stocks.
Flood’s note also highlighted that the biotech industry has recently shown improved fundamentals, attributed to a more favorable regulatory environment and positive clinical outcomes. Despite these tailwinds, Goldman’s data reflects that biotechnology remains under-owned by hedge funds. The sector ranked in the 13th percentile in hedge fund long/short positioning over the past year. Furthermore, it ranked in the 4th percentile over the past five years.
With these trends in view, let’s look at the 12 biotech stocks with the biggest upside potential.
A biotechnologist in a lab setting, examining a sample of liquid for research and development.
Our Methodology
We used the Finviz stock screener to compile a list of 40 biotech stocks. We then selected the top 12 stocks with the highest analyst upside potential as of January 15, 2025. We have also included the market capitalization of the stocks as of the same date. The list is sorted in ascending order of analysts’ average upside potential. These stocks are also popular among elite hedge funds, as of fiscal Q3 2024.
Why do we care about what hedge funds do? 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).
12 Biotech Stocks with the Biggest Upside Potential
12. Revolution Medicines, Inc. (NASDAQ:RVMD)
Analyst Upside: 80.72%
Number of Hedge Fund Holders: 44
Revolution Medicines, Inc. (NASDAQ:RVMD) is a clinical-stage precision oncology company that develops novel targeted therapies. It discovers and develops cancer treatments through novel combination and monotherapy treatment regimens that enhance clinical benefits.
The company ended fiscal Q3 2024 with $1.55 billion in investments and cash, which can support its planned operations into 2027 based on its current operating plan. Revolution Medicines, Inc. (NASDAQ:RVMD) developed a roadmap of strategic development priorities for its operations at the beginning of 2024 for its three pioneering RAS(ON) inhibitors in clinical development. These included RMC-6236, RMC-6291 and RMC-9805. It has successfully executed and made significant progress across its key 2024 priorities, setting it up for long-term and sustainable progress across its goal of revolutionizing treatment for patients with RAS-addictive cancers.
Revolution Medicines, Inc. (NASDAQ:RVMD) is also initiating its first Phase 3 clinical study in second-line pancreatic cancer, reflecting a significant milestone in its evolution. It also has several disclosure milestones for the coming quarters and is well capitalized to continue advancing its pipelines in high-unmet-need cancers. The company ranks 12th on our list of the 12 biotech stocks with the biggest upside potential.
11. Ionis Pharmaceuticals, Inc. (NASDAQ:IONS)
Analyst Upside: 83.89%
Number of Hedge Fund Holders: 44
Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) develops and commercializes human therapeutic drugs using antisense technology. It functions through the Ionis Core segment, which generates a pipeline of drugs through a novel drug discovery platform.
The company recently attained the approval of TRYNGOLZA™ (olezarsen) as the first-ever therapy for familial chylomicronemia syndrome and launched the drug. In addition, the potential approval of donidalorsen drug for hereditary angioedema is expected to further evolve the company into a fully integrated commercial-stage biotechnology company that independently brings its medicines to patients.
The launch of TRYNGOLZA™ is expected to be the first of four independent Ionis product launches anticipated over the next three years. Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) also expects four key launches from its partnered programs within this period, reflecting optimism for its operations. The launch of these medicines is expected to create value for its stakeholders and increase its product and royalty revenue in the long term. Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) ranks 11th on our list.
10. Amicus Therapeutics, Inc. (NASDAQ:FOLD)
Analyst Upside: 88.17%
Number of Hedge Fund Holders: 38
Amicus Therapeutics, Inc. (NASDAQ:FOLD) is a biotech company that discovers, develops, and delivers medicines to treat metabolic diseases. Its product portfolio includes the first and only approved oral precision medicine to treat Fabry disease, a clinical-stage treatment paradigm for Pompe disease, and a rare disease gene therapy portfolio.
The company’s total revenue for fiscal 2024 was $528 million, reflecting 32% year-over-year growth. This growth was attributed to the strong and growing demand for its products Galafold®, Pombiliti® and + Opfolda®. The company also secured reimbursement and regulatory milestones that would allow it to attain sustainable double-digital growth in 2025 and beyond.
Investors are bullish on the stock due to the increasing demand for its medicines in growing markets, accelerating profitability, strong intellectual property position, and leverageable global rare disease organization. Amicus Therapeutics, Inc. (NASDAQ:FOLD) has the capability to expand its operations over time to become one of the leading rare disease companies. It expects continued revenue growth of around 17% to 24% in fiscal 2025, supported by the launch of Pombiliti® and Opfolda® and significant milestones in regulatory and reimbursement processes. Amicus Therapeutics, Inc. (NASDAQ:FOLD) plans to continue its growth momentum through ongoing studies and expansion of its therapeutic portfolio for rare diseases. It ranks tenth on our list.
9. Denali Therapeutics, Inc. (NASDAQ:DNLI)
Analyst Upside: 89.71%
Number of Hedge Fund Holders: 23
Denali Therapeutics, Inc. (NASDAQ:DNLI) develops and commercializes product candidates for neurodegenerative diseases. Its product portfolio includes LRRK2, RIPK1, TREM2, and Tau.
The company expects to submit its first biologics license agreement (BLA) for tividenofusp alfa for Hunter syndrome and prepare for commercial launch. It is also seeking alignment with the FDA to attain an accelerated approval path for its second program, DNL126, for Sanfilippo syndrome. These two programs are anticipated to develop into a profitable franchise of TransportVehicleTM (TV) enabled enzyme replacement therapies for the company.
Denali Therapeutics, Inc. (NASDAQ:DNLI) is expanding its TV-enabled portfolio of therapeutic enzymes, oligonucleotides, and antibodies. It plans to advance 1-2 additional TV programs into the clinic each year for the next three years. This TV platform holds considerable potential to deliver a new class of barrier-crossing therapeutics, which is why analysts are optimistic about its operations. Denali Therapeutics, Inc. (NASDAQ:DNLI) takes the ninth spot on our list of the 12 biotech stocks with the biggest upside potential.
8. CRISPR Therapeutics AG (NASDAQ:CRSP)
Analyst Upside: 90.66%
Number of Hedge Fund Holders: 27
Headquartered in Zug, Switzerland, CRISPR Therapeutics AG (NASDAQ:CRSP) develops transformative gene-based medicines for serious diseases through its proprietary CRISPR/Cas9 platform. The CRISPR/Cas9 platform allows precise changes to genomic DNA by employing gene editing technology. The company’s product portfolio spans therapeutic programs across various disease areas, including oncology, rare diseases, regenerative medicine, etc.
The FDA approval and launch of CASGEVY, a gene therapy for the treatment of sickle cell disease (SCD) and transfusion-dependent beta-thalassemia (TDT) in patients 12 years and older, have created considerable momentum for the company. CRISPR Therapeutics AG (NASDAQ:CRSP) has also received regulatory approval for the drug in various countries across the globe, including Canada, Switzerland, Great Britain, the European Union, and others, with product launches underway.
CRISPR Therapeutics AG (NASDAQ:CRSP) is focusing on strategically advancing its portfolio of clinical trials across autoimmune, diabetes, oncology, and cardiovascular indications. As of September 30, 2024, it has a strong balance sheet with around $1.9 billion in cash, cash equivalents, and marketable securities. Thus, supported by an approved commercial product, a strong balance sheet, and a rich pipeline, it is in a suitable position to expand its pipeline in 2025. It ranks eighth on our list of the biotech stocks with the biggest upside potential.
7. Ultragenyx Pharmaceutical, Inc. (NASDAQ:RARE)
Analyst Upside: 97.57%
Number of Hedge Fund Holders: 41
Ultragenyx Pharmaceutical, Inc. (NASDAQ:RARE) develops, acquires, and commercializes novel products to treat genetic diseases. Its product portfolio includes Crysvita, Mepsevii, Dojolvi, and Evkeeza. In 2024, the company expanded its business through four products in five indications worldwide, exceeding analyst expectations in terms of revenue. It estimates its total revenue for fiscal 2024 to be $555 million to $560 million, surpassing its guidance range and reflecting a 29% growth compared to 2023.
The company has plans to expand its commercial business base in 2025 and prepare for the potential launch of its first gene therapy for Sanfilippo syndrome. It is also planning to file a Biologics License Application (BLA) for its second gene therapy, in Glycogen Storage Disease Type Ia.
Ultragenyx Pharmaceutical, Inc., (NASDAQ:RARE) is executing a valuable late-stage pipeline in rare diseases. It anticipates pivotal Phase 3 results in osteogenesis imperfecta and is also completing the enrollment in its Phase 3 trial for Angelman syndrome. Progress across these avenues gives the company a competitive advantage and positions it to launch three to four new therapies over the next few years. This would translate to the company accumulating 8-9 approved products over a 10-year period, reflecting its solid operations.
Baron Health Care Fund stated the following regarding Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) in its Q3 2024 investor letter:
“We purchased Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE), a biopharmaceutical company focused on developing treatments for rare genetic diseases. Impressively, the company has gotten 4 drugs approved across 5 indications in 10 years, and it has a large clinical pipeline with several potential blockbuster opportunities in late stage development. While the company’s approved products continue to grow 20%-plus, we are most excited about the company’s new product pipeline. Setrusumab is in Phase 3 studies for Osteogenesis Imperfecta, a rare genetic disorder that causes bones to break easily. The drug helps patients increase bone mineral density and reduces the number of fractures patients experience. We think this could be transformative for patients and could be a $1 billion-plus peak sales drug. We are also excited about Ultragenyx’s GTX-102, an antisense oligonucleotide that treats Angelman Syndrome, a rare genetic disorder that affects the nervous system and causes severe development delay and intellectual disability. Early data showed dramatic improvement for patients across several behavioral and cognitive endpoints, and Ultragenyx just started a registrational study. The company is also working on a drug for Wilson disease, a rare genetic disorder that causes copper to build up in the body, where we will get proof-of-concept data soon. We think each of these programs has potential for significant value creation, transforming the company to one with significantly higher revenue and profits.”
6. Crinetics Pharmaceuticals, Inc. (NASDAQ:CRNX)
Analyst Upside: 100.30%
Number of Hedge Fund Holders: 37
Crinetics Pharmaceuticals, Inc. (NASDAQ:CRNX) is a clinical-stage pharmaceutical company that develops and commercializes novel therapeutics for rare endocrine diseases and endocrine-related tumors. The company’s product candidate, CRN00808, is an oral treatment for acromegaly. It is also developing other oral treatments for neuroendocrine tumors, hyperinsulinism, and Cushing’s disease.
On December 9, the company announced that the FDA accepted its New Drug Application (NDA) for investigational candidate paltusotine for the treatment and long-term maintenance therapy of acromegaly in adults. If approved, paltusotine would become the first and only once-daily oral treatment available for acromegaly in adults. Crinetics Pharmaceuticals, Inc. (NASDAQ:CRNX) is thus preparing for the potential US launch of paltusotine. In addition, it is also building capabilities to commercialize paltusotine and support global clinical development of its other potential future drugs in the pipeline. The company plans to eventually bring paltusotine and its future drugs to European patients and expand its scope to the rest of the world. These expansion programs position the company for long-term success and profitability.
Crinetics Pharmaceuticals, Inc. (NASDAQ:CRNX) is also introducing a new technology, non-peptide drug conjugates (NDCs), developed in-house through its drug discovery capabilities in G protein-coupled receptors (GPCRs). This novel platform selectively targets anti-tumor agents by leveraging endocrine receptors to treat the underlying tumors. If successful, the company’s NDC platform might be applicable to a range of different cancers, which reflects its long-term potential.
5. Immunovant, Inc. (NASDAQ:IMVT)
Analyst Upside: 106.02%
Number of Hedge Fund Holders: 36
Immunovant, Inc. (NASDAQ:IMVT) develops treatments for autoimmune diseases. Its product pipeline includes batoclimab and IMVT-1402. Both are novel antibodies targeting the neonatal fragment crystallizable receptor (FcRn).
The company’s primary focus is boosting the potential of its lead asset, IMVT-1402. With five Investigational New Drug (IND) applications cleared, it is set to initiate four to five potentially registrational clinical development programs by March 31, 2025. These INDs are anticipated to support IMVT-1402’s evaluation in various indications and therapeutic areas.
Immunovant, Inc. (NASDAQ:IMVT) is also expanding its IMVT-1402 development program into rheumatology. In addition, its development plans for Graves’ disease paint an optimistic picture for the company, as it currently does not have competition in the domain. As of September 30, 2024, the company has cash and cash equivalents of around $472.9 million, putting it in a position to continue investing in its processes.
It recently announced a $450 million private placement after selling 22,500,000 shares of common stock to three institutional accredited investors as part of a private investment in public equity (PIPE). The company plans to use PIPE’s proceeds to advance its working capital, development pipeline, and other corporate purposes. It ranks fifth on our list of the 12 biotech stocks with the biggest upside potential.
Baron Health Care Fund stated the following regarding Immunovant, Inc. (NASDAQ:IMVT) in its first quarter 2024 investor letter:
“Somewhat offsetting the above was adverse stock selection in biotechnology and health care supplies coupled with cash exposure amid favorable market conditions. Weakness in biotechnology was mainly due to disappointing performance from Rocket Pharmaceuticals, Inc. and Immunovant, Inc. (NASDAQ:IMVT), whose shares fell double digits in the period. Immunovant is focused on autoimmune disorders targeting the FcRn mechanism of action. A host of concerns weighed on Immunovant’s stock price, the most critical of which was competitor argenx SE’s failure in pemphigus vulgaris, which has raised questions about the addressable opportunity for the FcRn class. Overall, we continue to believe FcRn will command billions in revenue and that Immunovant has one of the two competitive offerings in the space. We are most optimistic about Immunovant’s development plans in Graves’ disease, a large commercial unmet need in which they currently have no competition.”
4. Merus N.V. (NASDAQ:MRUS)
Analyst Upside: 122.95%
Number of Hedge Fund Holders: 48
Merus N.V. (NASDAQ:MRUS) is a clinical-stage immuno-oncology company that discovers and develops bispecific antibody therapeutics. Its product pipeline includes Biclonics to treat solid and hematological tumors. On January 12, the company announced a research collaboration and license agreement with Biohaven Ltd. (NYSE:BHVN) to co-develop three novel bispecific antibody-drug conjugates (ADCs). The partnership is expected to expand the company’s portfolio.
The company attained FDA approval for its BIZENGRI® (zenocutuzumab-zbco) drug, the first and only treatment for adults with pancreatic adenocarcinoma or non–small cell lung cancer (NSCLC). This put the company on a positive trajectory.
Merus N.V. (NASDAQ:MRUS) strengthened its financial position in fiscal Q3 2024. It reported $433 million in cash and cash equivalents, up from $204 million at the end of 2023. This growth was attributed to successful public offerings and strategic partnerships. Merus N.V. (NASDAQ:MRUS) ranks fourth on our list of the 12 biotech stocks with the biggest upside potential.
TimesSquare Capital Management U.S. Small Cap Growth Strategy stated the following regarding Merus N.V. (NASDAQ:MRUS) in its Q2 2024 investor letter:
“Our preferences among Health Care stocks are those companies providing novel therapies for unmet needs that deserve premium pricing, or specialized service providers. A new addition this quarter is Merus N.V. (NASDAQ:MRUS), a clinical-stage immune-oncology biotechnology company. Their pipeline consists of several programs targeting solid tumors with various bispecific antibodies.”
3. Avidity Biosciences, Inc. (NASDAQ:RNA)
Analyst Upside: 133.69%
Number of Hedge Fund Holders: 38
Avidity Biosciences, Inc. (NASDAQ:RNA) develops a new class of oligonucleotide-based therapies called Antibody Oligonucleotide Conjugates (AOC). It leverages its AOC platform to engineer, design, and develop these therapeutics. Its advancing and expanding pipeline has three programs in clinical development designed to treat people with myotonic dystrophy type 1 (DM1), Duchenne muscular dystrophy, and facioscapulohumeral muscular dystrophy (FSHD).
The company has several transformational plans for 2025 and is preparing to become a commercial organization. It has plans to file its first Biologics License Application (BLA), broaden its pipeline, and accelerate commercial preparations for three potential product launches. The company is also expanding its AOC platform’s working to precision cardiology and next-generation technology innovations. Investors are thus bullish on the stock, as it is in a position to continue its growth trajectory by expanding its current RNA-based pipeline of rare muscle disorders to explore precision cardiology.
Avidity Biosciences, Inc.’s (NASDAQ:RNA) strong cash position of around $1.6 billion supports its focus on advancing its programs and building other capabilities, such as commercial functions. It is also expected to expand its operations to countries outside the United States. The company ranks third on our list of the top biotech stocks with the highest upside potential.
2. Legend Biotech Corp. (NASDAQ:LEGN)
Analyst Upside: 161.86%
Number of Hedge Fund Holders: 31
Legend Biotech Corp. (NASDAQ:LEGN) is a clinical-stage company that develops, discovers, manufactures, and commercializes novel therapies for oncology and other indications. It develops advanced cell therapies across an elaborate range of technology platforms. The company operates in the US, China, and other geographical segments.
It experienced solid sales growth for CARVYKTI® in fiscal Q3 2024. CARVYKTI treats multiple myeloma and is the first and only cell therapy that is clinically shown to significantly increase the overall survival in multiple myeloma patients. The company also increased its commercial capacity for the drug, delivering it to patients across the globe. It accounted for net trade sales of around $286 million in fiscal Q3 2024, reflecting operational growth of 87.6% year-over-year and 53.2% quarter-over-quarter.
Due to the drug’s transformational nature, Legend Biotech Corp. (NASDAQ:LEGN) recently initiated commercial production at its facility in Belgium to fulfill the demand for CARVYKTI worldwide. It plans to expand its capacity further while simultaneously advancing its R&D programs as part of its long-term strategy to be a leader in cell therapy innovation.
TimesSquare Capital U.S. Focus Growth Strategy stated the following regarding Legend Biotech Corporation (NASDAQ:LEGN) in its first quarter 2024 investor letter:
“We began buying shares in Legend Biotech Corporation (NASDAQ:LEGN), a biotechnology developer of cell therapies to treat blood cancers such as multiple myeloma and leukemia. The European Union approved the use of Legend’s Carvykti treatment of multiple myeloma and later the FDA followed suit. Some investors may have been concerned about possible delays as Legend ramps up production, and its price declined. Though with a long-standing agreement with Johnson & Johnson and a new partnership with Novartis, we see a long runway of growth ahead, so we initiated a position.”
1. Viking Therapeutics, Inc. (NASDAQ:VKTX)
Analyst Upside: 223.62%
Number of Hedge Fund Holders: 41
Viking Therapeutics, Inc. (NASDAQ:VKTX) is a clinical-stage company that develops therapies for metabolic and endocrine disorders. The first three quarters of fiscal 2024 proved productive for the company, with positive results across four of its clinical trials and promising initial results from its new preclinical program. These positive results came from its obesity programs, the treatment of NASH and fibrosis, and others.
The company’s lead program, VK2735, is a source of optimism for investors due to its long-term growth potential. VK2735 is a novel drug that targets glucagon-like peptide-1 (GLP-1) and glucose-dependent insulinotropic polypeptide (GIP) receptors. This combination improves metabolic benefits for conditions such as type 2 diabetes and obesity.
Viking Therapeutics, Inc. (NASDAQ:VKTX) has made considerable progress in VK2735 clinical trials, demonstrating significant weight loss results. This has increased investor confidence regarding its profitability. According to Research and Markets, the obesity treatment market is expected to grow at a compound annual growth rate of 10.24%, going from $18.88 billion in 2024 to around $33.93 billion in 2030. Since treatments like VK2735 deliver more significant weight loss and glycemic control, Viking Therapeutics, Inc. (NASDAQ:VKTX) is poised for long-term growth. Alger Mid Cap Focus Fund, in its fiscal Q2 2024 investor letter, stated that one-third of the US adults suffer from obesity, and they believe that Viking Therapeutics, Inc.’s (NASDAQ:VKTX) upcoming drug has the potential to address a large market.
Alger Mid Cap Focus Fund stated the following regarding Viking Therapeutics, Inc. (NASDAQ:VKTX) in its Q2 2024 investor letter:
“Viking Therapeutics, Inc. (NASDAQ:VKTX) is a clinical-stage biopharmaceutical company focused on developing novel therapies for patients suffering from metabolic and endocrine disorders. Their lead drug VK2809, a beta-selective thyroid hormone receptor agonist, is in development for nonalcoholic steatohepatitis and nonalcoholic fatty liver disease. Their VK2735 drug is a GLP-1 dual agonist being developed for patients with obesity. During the quarter, the company’s shares were negatively impacted by several factors: 1) a challenging environment for biotechnology stocks, exacerbated by Fed policy decisions to maintain elevated interest rates, 2) increased competition in the obesity treatment landscape, 3) manufacturability and scalability concerns regarding Viking’s obesity drug and 4) the absence of strategic partnerships from large pharmaceutical companies. Despite the challenging quarter, we continue to believe that the company’s GLP-1 drug has the potential to be a best-in-class obesity drug given its favorable efficacy and safety profile. Further, with approximately one-third of U.S. adults suffering from obesity, we believe the company’s GLP[1]1 drug has the potential to address a large market once approved.”
Overall, VKTX ranks first among the 12 biotech stocks with the biggest upside potential. While we acknowledge the potential of biotech stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than VKTX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and 30 Most Important AI Stocks According to BlackRock.
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