/GettyImages-1185509424-c266dcf1b8da47a49db6e29b8546c63e.jpg)
The biotechnology industry includes companies that develop drugs and diagnostic technologies for the treatment of diseases and medical conditions. These products must go through rigorous, costly, and time-consuming trials before potentially obtaining approval from the U.S. Food and Drug Administration (FDA). This means that investors may wait for years before knowing whether a drug under development will pay off. The industry includes smaller start-up companies with recent traction as well as large, well-established corporations that aim to develop a range of drugs and technologies. Many biotech companies have shifted their focus entirely or added COVID-19 vaccine and treatments to their product pipeline. During the past year, biotech stocks, as represented by the iShares Nasdaq Biotechnology ETF (IBB), have posted a total return of 14.1% compared to the Russell 1000’s total return of 38.3% as of June 3, 2021. All data below are as of June 3, 2021.
Here are the top biotech stocks with the best value, the fastest earnings growth, and the most momentum.
These are the biotech stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
Source: YCharts
- Agios Pharmaceuticals Inc.: Agios is a pharmaceutical company developing drug treatments for genetically defined diseases such as hemolytic anemias and sickle cell disease. The company reported net income of $1.9 billion for Q1 2021 versus a loss in Q1 2020. This figure was impacted by the sale of Agios’ oncology portfolio to Servier Pharmaceuticals LLC in Q1 2021.
- Sage Therapeutics Inc.: Sage Therapeutics creates treatments for central nervous system disorders including schizophrenia and major depressive disorder. In Q1 2021, the company reported positive trial developments in its SAGE-718, a drug with the potential to be used in the treatment of Huntington disease.
- Innoviva Inc.: Innoviva is a healthcare-focused asset management company that holds a portfolio of royalties from a variety of pharmaceuticals.
These are the top biotech stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general.
| Fastest Growing Biotech Stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) | |
| Vanda Pharmaceuticals Inc. ( VNDA) |
18.00 | 1.0 | 1,400 | 8.1 |
| Deciphera Pharmaceuticals Inc. ( DCPH) |
33.05 | 1.9 | N/A (see company description) | 40,470 |
| Moderna Inc. ( MRNA) |
195.22 | 78.4 | N/A (see company description) | 24,110 |
Source: YCharts
- Vanda Pharmaceuticals Inc.: Vanda Pharmaceuticals is a global biotech company that develops therapies to address illnesses such as schizophrenia and non-24-hour sleep-wake-disorder. The company’s net income for Q1 2021 was more than 17 times that of Q1 2020, while revenue climbed by 8.1% YOY. Performance benefited from rising sales for the company’s HETLIOZ therapeutic product.
- Deciphera Pharmaceuticals Inc.: Deciphera Pharmaceuticals develops and commercializes new medicines for the treatment of cancer, led by its FDA-approved flagship product QINLOCK. Deciphera does not have a listing under EPS growth in the table above because it had negative EPS in Q1 2021.
- Moderna Inc.: Moderna is a clinical-stage biotech company that discovers and develops messenger RNA therapeutics and vaccines. It develops mRNA medicines for infectious, immuno-oncology, and cardiovascular diseases. The company, a major vaccine supplier to the U.S., has recently announced an agreement to supply the Republic of Botswana with its COVID-19 vaccine, the latest in a series of similar agreements Moderna has signed with other nations and global organizations. Moderna does not have a listing under EPS growth in the table above because its YOY change was from negative to positive EPS, and so can’t be registered as a percent change.
Biotech Stocks with the Most Momentum
These are the biotech stocks with the highest total return over the last 12 months.
Source: YCharts
- Ocugen Inc.: Ocugen is a biopharmaceutical company focusing on therapies for blindness and other retinal diseases.
- Cassava Sciences Inc.: Cassava Sciences is a clinical-stage biotechnology company focused on Alzheimer’s disease. On May 12, the company announced that it was awarded a new $2.7 million research grant by the National Institutes of Health (NIH). The grant will fund clinical readiness activities related to the company’s Phase 3 trial for Simufilam, its drug candidate for Alzheimer’s.
- Curis Inc.: Curis is a biotech company that develops therapeutics for the regeneration and restoration of human tissues and organs, including for cancer patients.
The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.
