Biotech Stocks: The Top 5 To Watch Amid A Blazing Hot Run

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Biotech stocks have been on a roller-coaster ride, but continue to outperform the broader market.

In 2020, the industry was thrust into the pandemic limelight as Pfizer (PFE) and its partner BioNTech (BNTX), along with Moderna (MRNA) and Johnson & Johnson (JNJ), launched a trio of Covid vaccines. But as society learned to live with Covid — and other concerns around the economy, inflation and politics took center stage — interest in biotech fell by the wayside. Shares of Investor’s Business Daily’s biotech industry group largely declined for 16 months.

After hitting a six-year low in mid-June, biotech stocks seemed to gain their footing this fall. Now, shares are trending mostly sideways. That comes amid struggles for the broader market, however. The group is ranked No. 17 out of 197 industry groups tracked by Investor’s Business Daily. Meanwhile, the pharma group ranks No. 149.

But it’s key to watch specific measures when examining stocks. In terms of fundamental and technical measures as well as 12-month performance, the best biotech stocks today are:

Catalyst Pharmaceuticals (CPRX)
Genmab (GMAB)
Vertex Pharmaceuticals (VRTX)
Biomarin Pharmaceutical (BMRN)
Harmony Biosciences (HRMY)

The No. 1 Biotech Stock

Catalyst is the No. 1 biotech stock, leading an industry group of more than 800 companies.

Its only product is Firdapse, a treatment for Lambert-Eaton myasthenic syndrome, or LEMS. LEMS is a rare autoimmune condition that saps muscle strength and often occurs in lung cancer patients.

Though sales are growing, the company is looking to acquire a second or third product — either through an outright buyout or licensing deal.

The biotech stock just broke out of a cup-with-handle base, topping a buy point at 16.76, according to MarketSmith.com. Shares are now trading above a profit-taking zone.

Catalyst shares are also on the Tech Leaders list. Shares rank first on the IBD 50 list of elite growth stocks.

Bullishly, CPRX shares have a best-possible Composite Rating of 99, according to IBD Digital. This puts the biotech stock in the top 1% of all stocks in terms of fundamental and technical measures. Its 12-month performance, measured by the Relative Strength Rating, is also in the top 1% of all stocks.

Cancer Treatments Are Key

Genmab sells a small handful of treatments for cancer. The company partners with big biopharma names, including AbbVie (ABBV), Johnson & Johnson (JNJ), Horizon Therapeutics (HZNP) and Seagen (SGEN).

In the September quarter, earnings and sales increased bullishly to 53 cents per share and $551 million, respectively. Both measures also easily topped forecasts.

Now, Genmab on expanding its suite of medicines to new solid tumors and blood cancers.

The biotech stock has a tip-top Composite Rating of 99 with a lower RS Rating of 83. Genmab is also a Tech Leader.

Moving Beyond Cystic Fibrosis

Vertex is one of the biggest biotech stocks in terms of market cap. It ranks fourth behind Amgen (AMGN), Gilead Sciences (GILD) and Regeneron Pharmaceuticals (REGN).

The company is the de facto leader of the cystic fibrosis drug market. Third-quarter sales — dominated by its triple regimen Trikafta — jumped 18% to $2.33 billion.

But it’s now expanding into other efforts. Vertex is partnered with Crispr Therapeutics (CRSP) on a gene-editing approach to a pair of blood diseases. Further, Vertex recently announced its $320 million plan to buy its partner in diabetes treatment, privately held ViaCyte. The companies are testing a cell replacement drug in type 1 diabetes.

Beyond that, Vertex is testing treatments for liver and kidney diseases, Duchenne muscular dystrophy and pain.

The biotech stock has a nearly perfect Composite Rating of 98 and a Relative Strength Rating of 75.

The company is also a Tech Leader.

Biomarin Nearing FDA Review In Hemophilia

Biomarin is focusing on hereditary conditions and recently said the Food and Drug Administration will not hold an advisory committee meeting to discuss its hemophilia A gene therapy. The drug is known as Roctavian in Europe where it’s already approved. Approval in the U.S. could be a boon for the biotech stock.

Investors are closely watching the space after Uniqure (QURE) and Australia’s CSL gained FDA approval for a hemophilia B gene therapy.

Today, Biomarin shares are trading in a prof-taking zone above a double-bottom base with an entry at 92.86.

Bullishly Biomarin stock has a strong Composite Rating of 97 and an RS Rating of 94. It also lands on the Tech Leaders list.

Harmony’s Pipeline In A Product

Biotech stock Harmony Biosciences is making a name for itself with a single product: pitolisant. The company sees the drug “as a portfolio in a product opportunity.”

Today, pitolisant is approved as a narcolepsy treatment named Wakix. But Harmony is also investigating pitolisant in other conditions, including a sleeping disorder called idiopathic hypersomnia, a genetic disorder known as Prader-Willi syndrome and a myotonic dystrophy, a muscle weakness disease.

Harmony is also testing an earlier-stage product in Prader-Willi syndrome. Prader-Willi causes a number of behavioral and intellectual problems. It can also lead to short stature.

But the biotech stock is now below its 50-day line. The biotech stock has a strong Composite Rating of 95 and a strong RS Rating of 64 after its chief executive announced his plan to head over to Novavax (NVAX).

Harmony also ranks in the Tech Leaders list.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.