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The biotechnology industry includes companies that develop drugs and diagnostic technologies for the treatment of diseases and medical conditions. These products must go through a 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 selection 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 37.8% compared to the Russell 1000’s total return of 46.9% as of March, 2021. All data below are as of March 9, 2021.
Here are the top nine biotech stocks with the best value, the fastest earnings growth, and the most momentum.
Best Value Biotech Stocks
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
- XBiotech Inc.: XBiotech is a biopharmaceutical company that specializes in developing antibody therapies for a cancer treatment, inflammatory diseases, and infectious diseases. It is working on a wider range of therapies harnessing antibodies to treat viruses like COVID-19 and influenza. One of the products they are testing is a therapy that uses antibodies from patients that have recovered from COVID-19 to help treat current COVID-19 patients.
- Catalyst Pharmaceuticals Inc.: Catalyst Pharmaceuticals is a biopharmaceutical company that specializes in therapies for rare neurological and neuromuscular diseases. It announced its fourth-quarter and 2020 financial results on March 15, 2021, reporting a 16% increase in revenue for fiscal 2020 and a 30% increase in operating income.
- Innoviva Inc.: Innoviva is a healthcare-focused asset management company that holds a portfolio of royalties from a variety of pharmaceuticals. The company’s revenue increased 20% year-over-year from 2019 to 2020, and it’s operating income increased by 30.4%.
Fastest-Growing Biotech Stocks
These are the biotech stocks with the highest YOY earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and generating more money that it can reinvest or return to shareholders.
Source: YCharts
- BioDelivery Sciences Inc.: BioDelivery Sciences is a pharmaceutical company producing prescription medication for patients with serious chronic conditions. Its full-year net revenue in 2020 jumped 40% compared to a year before, with fourth-quarter revenue growing 33% from the same period in 2019. BELBUCA, an opioid-containing drug, was the main driver behind this growth posting $35.6 million in net sales.
- Neurocrine Biosciences Inc.: Neurocrine Biosciences focuses on developing treatments for challenging neurological or psychiatric disorders that tend to be overlooked or under-diagnosed. Pharmaceutical products include treatments for Schizophrenia, Parkinson’s disease, tardive dyskinesia, uterine fibroids and endometriosis. In 2020, the company reported total annual revenue of over $1 billion, a 33% increase over the previous year.
- Seagen Inc.: Seagen produces monoclonal antibody-based therapies focusing on the treatment of cancer. The company’s total revenue for 2020 jumped to $2.2 billion, compared to $916.7 million the year before, a 140% increase.
Biotech Stocks with the Most Momentum
These are the biotech stocks with the highest total return over the last 12 months.
Source: YCharts
- Aclaris Therapeutics Inc.: Aclaris Therapeutics is a biopharmaceutical company specializing in the development of new drugs to treat immune-inflammatory diseases like severe rheumatoid arthritis. The company posted a net loss of $51.0 million for the full year of 2020 compared to a loss of $161.4 million the year before.
- Ocugen Inc.: Ocugen is a biopharmaceutical company focusing on therapies for blindness and other retinal diseases. It is working with Indian biotech firm Bharat Biotech to develop a new COVID-19 vaccine called COVAXIN. The company’s Indian partner Bharat Biotech was allowed by the government to drop “clinical trial” mode, boosting Ocugen’s plans to develop the COVID-19 vaccine Covaxin for the U.S. market.
- Novavax Inc.: Novavax is a clinical stage biotechnology company that creates vaccines to address a wide range of infectious diseases. It is currently conducting clinical trials on a vaccine for COVID-19.
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