Top Biotech Stocks for Q1 2022

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 Biotechnology ETF (IBB), have posted a total return of -12.8%, significantly below the Russell 1000’s total return of 21.0% as of Jan. 13, 2022. Data from the “value” section below are as of Jan. 14, while all other data below are as of Jan. 13, 2022.

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-sales (P/S) ratio. For companies in early stages of development or industries suffering from major shocks, this can be substituted as a rough measure of a business’s value. A business with higher sales could eventually produce more profit when it achieves, or returns to, profitability. The price-to-sales ratio shows how much you’re paying for the stock for each dollar of sales generated.

Source: YCharts

• Intercept Pharmaceuticals Inc.: Intercept Pharmaceuticals is a biopharmaceutical company focused on developing and selling therapeutics to treat chronic liver diseases. On Dec. 9, 2021, the company announced that it had formally notified the European Medicines Agency (EMA) of its decision to withdraw its Marketing Authorization Application (MAA) for obeticholic acid (OCA) for the treatment of certain types of liver fibrosis. The company said it would assess the possibility of submitting a new application pending new analyses.
• Akebia Therapeutics Inc.: Akebia Therapeutics is a biopharmaceutical company. It produces medicines for people living with kidney disease. Its leading product candidate is vadadustat, an oral therapy in development aimed at treating of anemia stemming from kidney disease.
• uniQure NV: uniQure NV is a Netherlands-based gene therapy company. The company develops one-time administered treatments for patients with variety of genetic diseases including hemophilia B and Huntington’s disease.

These are the biotech stocks with the highest year-over-year (YOY) sales growth for the most recent quarter. Rising sales can help investors identify companies that are able to grow revenue organically or through other means, and find growing companies that have not yet reached profitability. In addition, earnings per share can be significantly influenced by accounting factors that may not reflect the overall strength of the business. However, sales growth can also be potentially misleading about the strength of a business, because growing sales on money-losing businesses can be harmful if the company has no plan to reach profitability. Due to the nature of biotech business models, especially early on, revenue can undergo large growth spurts when a deal is made or a drug is approved, so our typical ceiling for removing outliers has been raised from 2,500% growth to 10,000%.

Source: YCharts

• BioNTech SE: BioNTech SE is a Germany-based clinical-stage biotechnology company that develops treatments, including for tumors in cancer patients. It also offers diagnostic products and drug discovery services for a variety of therapeutic areas. On Jan. 3, the company announced with Pfizer Inc. (PFE) that the U.S. Food and Drug Administration (FDA) had expanded the Emergency Use Authorization (EUA) of a booster dose of the two companies’ COVID-19 vaccine to include individuals 12 to 15 years in age.
• Seres Therapeutics Inc.: Seres Therapeutics is a microbiome therapeutics company. It develops a class of biological drugs designed to restore health by repairing the function of a dysbiotic microbiome. On Nov. 10, 2021, the company reported Q3 2021 results for the period ended Sept. 30. For that period, Seres reported net income of $68.2 million as compared with net loss for the prior-year quarter, as well as revenue that skyrocketed more than 88-fold year-over-year (YOY) to $126.7 million. Results were driven by collaboration revenue recognized from a co-commercialization license agreement with Nestlé Health Science.
• Marinus Pharmaceuticals Inc.: Marinus Pharmaceuticals develops and commercializes medical drugs for the treatment of neurological and psychiatric disorders including post traumatic stress, among others. For Q3 2021, ended Sept. 30, Marinus reported widening net losses on explosive revenue growth YOY.

Biotech Stocks with the Most Momentum

These are the biotech stocks with the highest total return over the last 12 months.

Source: YCharts

• Aadi Bioscience Inc.: Aadi Bioscience is a clinical-stage biopharmaceutical company. It develops therapies for genetically-defined cancers. The company serves patients in the U.S.
• Cassava Sciences Inc.: Cassava Sciences is a clinical-stage biotechnology company that develops drug treatments for neurodegenerative diseases such as Alzheimer’s. On Dec. 21, 2021, the company announced that it had been informed by the academic journal Neuroscience that there is no evidence to support claims of data manipulation in a 2005 paper authored by the company and scientific collaborators. In Aug. 2021, a law firm submitted a Citizen Petition to the FDA alleging data manipulation in scientific articles authored by Cassava scientists.
• Prothena Corp. PLC: Prothena Corp. is an Ireland-based late-stage clinical company. It develops a pipeline of therapeutics for neurodegenerative and rare peripheral amyloid diseases, including Parkinson’s disease and amyotrophic lateral sclerosis (ALS).

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