We recently compiled a list of the 10 Best Performing Biotech Stocks in 2024. In this article, we are going to take a look at where Insmed Incorporated (NASDAQ:INSM) stands against the other biotech stocks.
The Booming Biotechnology Sector
The biotechnology sector is expanding quickly due to rising demand for novel therapies, advancement in technology, and government assistance. New techniques are being made possible by advancements in fields like gene editing, sequencing, personalized medicine, and artificial intelligence, while the aging population and growing healthcare demands are driving a robust market for new treatments. Venture capital firms made approximately $52 billion in global investments in therapeutic-focused biotech companies between 2019 and 2021. Two-thirds of this sum was given to platform-tech start-up companies.
The worldwide biotechnology market was estimated to be valued at $1.38 trillion in 2023 and is projected to reach a valuation of approximately $4.25 trillion by 2033, growing at a compound annual growth rate (CAGR) of 11.8% from 2024 to 2024.
The U.S. biotechnology sector, in particular, was estimated to be worth $246.18 billion last year and is projected to reach about $830.31 billion at a compound annual growth rate (CAGR) of 11.6% from 2024 to 2034, according to previous research. The revenue proportion for Asia Pacific was 23.99%, whilst the revenue share for North America was 37.79%. The bioindustry application segment accounted for 24.33% of total revenue in 2023, while the biopharmacy segment held a 41.73% revenue share by application. For 2023, the tissue engineering and regeneration market is expected to account for 19.26% of total revenue.
Despite its potential, there are many risks associated with investing in biotech companies. With 90% of initiatives failing and drug development lasting more than ten years, the industry has a high failure rate. Businesses frequently face bankruptcy if they miss clinical trial endpoints or don’t have enough money before launching a product. As a result of its significant risks and growth potential, biotech is commonly considered a “high-risk, high-reward” investment.
Challenges and Opportunities Shaping the Future of Biotechnology
Biotech businesses have been further challenged by volatile market conditions, which have led several of them to reduce programs and lay off huge numbers of employees to save money. Although recent rate cuts may assist in resurrecting scientific initiatives, analysts like Jared Holz point out that it is still challenging to forecast their consequences. Holz also points out that the performance of biotech companies is increasingly matching that of small-cap stocks, indicating a change in market dynamics. Biotech may increase if small-cap stocks trade well, but stagnation could result from momentum loss. Interest rates and biotech success have a relatively recent relationship that emerged after the pandemic when enterprises with a therapeutic focus received a lot of investment.
Biotech companies are addressing significant unmet medical needs by developing novel therapies that are transforming healthcare. A major advancement is the creation of the National Bioeconomy Board as part of Biden’s Investing in America plan. It aims to optimize the economic potential of biotechnology in the US.
Additionally, the National Security Commission on Emerging Biotechnology is developing policy recommendations to speed up the approval process for biotechnology products. Reducing barriers to entrance will enable more scholars to apply biotechnology to agriculture, which will help American farmers and improve food security. These projects are expected to create new markets.
Our Methodology
We selected biotech companies with the best year-to-date (YTD) performance and a market cap of at least $10 billion. This ensured our focus on larger, established firms. The companies were then ranked by their YTD performance as of December 21st to highlight the top performers.
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).
A biopharmaceutical research team taking notes in front of a laboratory’s microscope.
Insmed Incorporated (NASDAQ:INSM)
Total YTD Return: 135.27%
Insmed Incorporated (NASDAQ:INSM) is a biopharmaceutical company focused on innovative therapies for serious and rare diseases, particularly pulmonary and inflammatory conditions. Its key product, ARIKAYCE, treats NTM lung infections caused by Mycobacterium avium complex in adults. The company is also developing pipeline products like brensocatib for non-cystic fibrosis bronchiectasis and treprostinil prodrug for pulmonary arterial hypertension and interstitial lung diseases.
In the third quarter, Insmed Incorporated (NASDAQ:INSM) announced total revenues of $93.4 million, which is an 18% year-over-year growth. Arikayce, its marketed medication, showed a surge in demand in every region, which was the main driver of this expansion. The business reported a net loss of $220.5 million, or $1.27 per share, which was more than the $158.9 million ($1.11 per share) loss from the prior year. Compared to the same time the previous year, selling, general, and administrative (SG&A) expenses climbed by 31% to $118.9 million, while research and development (R&D) spending jumped by 38% to $150.8 million.
Insmed Incorporated (NASDAQ:INSM) intends to file a New Drug Application (NDA) with the FDA in Q4 2024 in anticipation of the possible mid-2025 launch of Brensocatib. According to the Insider Monkey database, 67 hedge fund investors owned shares in the firm as of Q3 2024. Darwin Global Management was the stock’s biggest shareholder.
Street analysts hold a consensus Strong Buy rating on Insmed Incorporated (NASDAQ:INSM), which makes it one of the best performing biotech stocks in 2024.
Overall INSM ranks 2nd on our list of the best performing biotech stocks in 2024. While we acknowledge the potential of INSM as an investment, 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 INSM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
