In this article, we discuss the 10 biotech stocks with the biggest upside.
The biotechnology sector has been one of the most profitable growth spaces in the stock market over the past few years. Investors are thus always looking for potential bargains in the industry that might pay off handsomely in the coming years. Amid a macro slowdown and recession fears, these bargains are readily available at much discounted rates, but identifying winners, like Pfizer Inc. (NYSE:PFE), Eli Lilly and Company (NYSE:LLY), and AbbVie Inc. (NYSE:ABBV), from amongst them is a somewhat difficult task.
Biotechnology is a branch of science that develops products by utilizing biological systems, living creatures, or elements out of them. It encompasses a wide range of fields such as biochemistry, genetics, and molecular biology. Countries like China, Japan, and India have taken favorable initiatives in the field of biotechnology in the past few years. Globally, the government activities are aimed at streamlining the medication regulatory pathway, standardizing clinical studies, and expediting the product approval processes.
In light of these favorable trends, the industry has explosive growth potential. According to a recent report, the global biotechnology market size is expected to reach $4 trillion by 2030. The analysts are predicting a compound annual growth rate of close to 14% over the forecast period. Biotechnology startups are acquiring robust funding support and venture capital investments, which, in 2021, amounted to $41 billion, an increase of over 11% as compared to the $36.7 billion raised in the previous year.
Organic factors are driving this growth as well. For example, the British Journal of Cancer predicts that the number of people suffering from cancer in the UK is expected to increase from 2.5 million in 2015 to 4 million by 2030. Per the journal, this would increase the demand for robust and advanced treatment methods for dealing with cancer. The money flowing towards research and development of vaccines has also increased in the past few years, largely as a result of the global panic during the COVID-19 crisis.
Some exciting trends that investors should keep in mind when considering the biotech sector are the advancements being made in relation to the treatment for Alzheimer’s disease. For example, aducanumab, developed by Biogen, is one such candidate. Personalized medicine is also likely to be a strong focus of biotech firms throughout 2022. Furthermore, with the improvements in biotech, the nanobiotechnology segment is expanding at an annual rate of 15% from 2022 to 2030.
Even as investments in the biotech space witness a gradual slowdown due to the shift in focus away from medtech towards other sectors in light of a waning pandemic, the fundamentals of the sector remain robust and the biotechnology sphere remains a key driver of innovation and growth in the economy. A recent Endpoint survey revealed that 66% of investors think that biotech will outperform the broader market in 2022. Nearly 58% plan to increase their exposure to the sector this year in anticipation of this growth.
Our Methodology
The companies that operate in the biotechnology sector and have upcoming products or services with explosive growth potential were selected for the list. The business fundamentals and analyst ratings for the stocks are also discussed to provide readers with some additional insight for their investment decisions. Data from around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
Photo by National Cancer Institute on Unsplash
Biotech Stocks With The Biggest Upside
10. Alzamend Neuro, Inc. (NASDAQ:ALZN)
Number of Hedge Fund Holders: N/A
Alzamend Neuro, Inc. (NASDAQ:ALZN) is an early clinical-stage biopharmaceutical company that focuses on developing various products for the treatment of neurodegenerative and psychiatric disorders. On October 5, Alzamend Neuro, Inc revealed that it has dosed its first healthy adult subject in its Phase IIA multiple ascending dose (“MAD”) study of AL001 in subjects with dementia related to Alzheimer’s.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Alzamend Neuro, Inc. (NASDAQ:ALZN) with 28,800 shares worth more than $34,000.
Just like Pfizer Inc. (NYSE:PFE), Eli Lilly and Company (NYSE:LLY), and AbbVie Inc. (NYSE:ABBV), Alzamend Neuro, Inc. (NASDAQ:ALZN) is one of the biotech stocks with the biggest upside heading into 2023.
9. Virax Biolabs Group Limited (NASDAQ:VRAX)
Number of Hedge Fund Holders: 1
Virax Biolabs Group Limited (NASDAQ:VRAX) is a biotechnology company that sells, distributes, and markets diagnostics test kits, and med-tech and PPE products for the prevention, detection, diagnosis, and risk management of viral diseases in the field of immunology. On December 6, Virax Biolabs Group declared that their supplier has received an Emergency Use Authorization from the US FDA for their Over-the-Counter COVID-19 Rapid Antigen Test. The tests are ready for sale in the US by the company.
At the end of the third quarter of 2022, 1 hedge fund in the database of Insider Monkey held stakes worth $115,000 in Virax Biolabs Group Limited (NASDAQ:VRAX).
8. Ampio Pharmaceuticals, Inc. (NYSE:AMPE)
Number of Hedge Fund Holders: 4
Ampio Pharmaceuticals, Inc. (NYSE:AMPE) is a biopharmaceutical company that focuses on the development of immunomodulatory therapies for the treatment of pain from osteoarthritis in the United States. On March 2, Ampio Pharmaceuticals announced positive data from the modified Intent-to-Treat population in the Company’s AP-013 study, a Phase 3 clinical trial of the company’s lead candidate, Ampion, in patients suffering from severe osteoarthritis of the knee.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Millennium Management is a leading shareholder in Ampio Pharmaceuticals, Inc. (NYSE:AMPE) with 2.7 million shares worth more than $163,000.
At the end of the third quarter of 2022, 4 hedge funds in the database of Insider Monkey held stakes worth $204,000 in Ampio Pharmaceuticals, Inc. (NYSE:AMPE), compared to 7 in the preceding quarter worth $581,000.
7. Peak Bio, Inc. (NASDAQ:PKBO)
Number of Hedge Fund Holders: 5
Peak Bio, Inc. (NASDAQ:PKBO) is a clinical-stage biopharmaceutical company that focuses on developing therapeutics addressing unmet needs in the areas of oncology and inflammation. On November 4, Ladenburg Thalmann analyst Ahu Demir initiated coverage of PeakBio, Inc. (NASDAQ:PKBO) stock with a Buy rating and $15 price target, noting that the company’s lead asset is PHP-303, a 5th-generation neutrophil elastase inhibitor that is Phase 2-ready and will be evaluated in a Phase 2 study for alpha-1 antitrypsin deficient illness.
Among the hedge funds being tracked by Insider Monkey, Washington-based firm Deerfield Management is a leading shareholder in Peak Bio, Inc. (NASDAQ:PKBO) with 725,000 shares worth more than $7.2 million.
6. Genmab A/S (NASDAQ:GMAB)
Number of Hedge Fund Holders: 12
Genmab A/S (NASDAQ:GMAB) develops antibody therapeutics for the treatment of cancer and other diseases primarily in Denmark. In late October, the company announced worldwide net trade sales of $2.05 billion for Darzalex (daratumumab), an anti-cancer monoclonal antibody medication, for the third quarter of 2022, compared with $1.99 billion generated in the previous quarter. The net trade sales were $1.09 billion in the US and $955 million in the rest of the world.
On November 14, JPMorgan analyst James Gordon maintained an Overweight rating on Genmab A/S (NASDAQ:GMAB) stock and raised the price target to DKK 3,450 from DKK 2,900.
At the end of the third quarter of 2022, 12 hedge funds in the database of Insider Monkey held stakes worth $125 million in Genmab A/S (NASDAQ:GMAB), compared to 6 in the preceding quarter worth $96.4 million.
Among the hedge funds being tracked by Insider Monkey, Boston-based firm Arrowstreet Capital is a leading shareholder in Genmab A/S (NASDAQ:GMAB) with 1.4 million shares worth more than $47 million.
In addition to Pfizer Inc. (NYSE:PFE), Eli Lilly and Company (NYSE:LLY), and AbbVie Inc. (NYSE:ABBV), Genmab A/S (NASDAQ:GMAB) is one of the biotech stocks with the biggest upside heading into 2023.
In its Q2 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Genmab A/S (NASDAQ:GMAB) was one of them. Here is what the fund said:
“Genmab A/S (NASDAQ:GMAB) is a creator and developer of human antibody products for the treatment of life-threatening and debilitating diseases. Shares have been volatile this year amid a binding arbitration with Johnson & Johnson to decide key aspects of royalty payments related to nextgeneration multiple myeloma drug, Darzalex FASPROTM. Last quarter, we indicated share weakness in February and early March seemed to overstate the potential negative outcome, especially relative to the additional growth opportunities within Genmab’s promising R&D pipeline. That potential was on display in Q2 when the company reported positive data for its bispecific antibody Epcoritamab, a new drug being developed with AbbVie to treat lymphoma. Bispecific antibodies are recombinant antibodies aimed at two biological targets simultaneously and are an important emerging technology area. The company expects to report further clinical trial updates later this year for another bispecific antibody it has developed with partner BioNTech. This new drug is expected to treat patients with metastatic or unresectable malignant solid tumors who are not candidates for standard therapy. We believe Genmab is establishing itself as one of the clear leaders in bispecifics, which increases our optimism about the long-term value of the company’s R&D platform.”
5. Veru Inc. (NASDAQ:VERU)
Number of Hedge Fund Holders: 13
Veru Inc. (NASDAQ:VERU) is a biopharmaceutical company that focuses on developing medicines for the management of COVID-19, and breast and prostate cancers. On November 9, Veru Inc declared the results of its meeting with the US Food and Drug Administration’s Pulmonary-Allergy Drugs Advisory Committee, which reviewed sabizabulin for Emergency Use Authorization in hospitalized moderate to severe COVID-19 patients who are at high risk for acute respiratory distress syndrome.
On November 10, H.C. Wainwright analyst Yi Chen maintained a Buy rating on Veru Inc. (NASDAQ:VERU) stock and lowered the price target on Veru to $21 from $24, noting that FDA might deny the company’s EUA application and requested additional clinical data.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Perceptive Advisors is a leading shareholder in Veru Inc. (NASDAQ:VERU) with 3.9 million shares worth more than $44.8 million.
4. Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX)
Number of Hedge Fund Holders: 18
Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX) is a commercial-stage biopharmaceutical company that focuses on developing and commercializing therapies for people with rare debilitating, chronic neuromuscular, and neurological diseases in the United States. On September 29, Catalyst Pharmaceuticals, Inc. revealed that the US Food and Drug Administration has approved the supplemental New Drug Application to expand the indicated age range for FIRDAPSE (amifampridine) Tablets 10 mg to include pediatric patients six years of age and older for the treatment of Lambert-Eaton myasthenic syndrome.
On November 10, Piper Sandler analyst Joseph Catanzaro maintained an Overweight rating on Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX) stock and raised the price target to $18 from $16, noting that the company reported third-quarter Firdapse revenues of $57.2 million, well ahead of consensus, and increased Firdapse revenue guidance to $205 million-$210 million.
At the end of the third quarter of 2022, 18 hedge funds in the database of Insider Monkey held stakes worth $189 million in Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX), compared to 16 in the preceding quarter worth $138.3 million.
3. Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY)
Number of Hedge Fund Holders: 27
Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY) is a commercial-stage pharmaceutical company that develops and commercializes therapies for patients with rare neurological disorders in the United States. In early November, the company posted positive topline results from phase 2 data related to Wakix (pitolisant), a drug approved for daytime sleepiness in those with narcolepsy. The results found that the daytime sleepiness drug may be effective for patients with Prader-Willi syndrome.
On November 8, Mizuho analyst Graig Suvannavejh maintained a Buy rating on Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY) stock and raised the price target to $70 from $60, highlighting that the company reported positive third-quarter results.
At the end of the third quarter of 2022, 27 hedge funds in the database of Insider Monkey held stakes worth $338.7 million in Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY), compared to 20 in the previous quarter worth $402.7 million.
2. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)
Number of Hedge Fund Holders: 27
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is a biotechnology company that engages in developing and commercializing therapies for treating cystic fibrosis. In early December, the company announced a four-year global research collaboration with Entrada Therapeutics targeting muscular disorder myotonic dystrophy type 1 (DM1). Per the deal, the former will take over the global development, manufacturing, and commercialization of the DM1 program ENTR-701, which is currently in late-stage pre-clinical studies, of the latter. Entrada will receive $224 million in return as an upfront payment and $26 million as an equity investment.
On November 17, Argus analyst Jasper Hellweg maintained a Buy rating on Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) stock and raised the price target to $340 from $320, highlighting that the company continues to benefit from high sales of Trikafta, its pipeline progress, and partnerships with other organizations.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) with 2.1 million shares worth more than $619 million.
In its Q3 2022 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) was one of them. Here is what the fund said:
“Biotechnology company Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) dominates the market for the treatment of cystic fibrosis (CF) with limited competition. In addition to solid growth in CF revenues that has driven better-than-expected results, positive progress in its development pipeline has lifted shares. At the time of our Q2 2021 purchase, the stock was under pressure due to regulatory hurdles and Vertex’s decision not to pursue late-stage development of VX-864 after an unexpectedly unfavorable outcome. VX-864 is designed to treat alpha-1 antitrypsin deficiency (AATD), which is an inherited disorder with a strong correlation to pediatric liver disease. Irrespective of Vertex’s AATD pipeline, the company has nearly two decades of patent protection remaining for its CF franchise. Management maintains a healthy reserve of cash and is focusing on research and development. We believe near-term growth is likely to be driven by Vertex’s expanding geographic presence and expansion of medicines to lower age groups, with long-term gains arising from the company’s diversifying pipeline.”
1. BioMarin Pharmaceutical Inc. (NYSE:BMRN)
Number of Hedge Fund Holders: 62
BioMarin Pharmaceuticals Inc. (NYSE:BMRN) develops and commercializes therapies for people with serious and life-threatening rare diseases and medical conditions. On November 23, BioMarin Pharmaceutical Inc. announced advancements in the US Food and Drug Administration (FDA) review of the Biologics License Application of ROCTAVIAN (valoctocogene roxaparvovec AAV gene therapy) for adults with severe hemophilia A.
On November 29, Jefferies analyst Akash Tewari maintained a Buy rating on BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) stock and raised the price target to $120 from $100, noting that 80 patients in Germany may begin taking Roctavian once it is available, which would indicate sales well above predicted by the Street for fourth quarter 2022 to second quarter 2023.
At the end of the third quarter of 2022, 62 hedge funds in the database of Insider Monkey held stakes worth $3.1 billion in BioMarin Pharmaceuticals Inc. (NYSE:BMRN), compared to 59 in the previous quarter worth $2.9 billion.
In its Q2 2021 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and BioMarin Pharmaceuticals Inc. (NYSE:BMRN) was one of them. Here is what the fund said:
“BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) rose as the company announced a new approval in Japan for its drug to treat achondroplasia (dwarfism), and investors may have become more optimistic regarding its therapy for hemophilia following a positive opinion from European drug regulators. The drug is pending approval and has been delayed by the U.S. Food and Drug Administration to collect more data.”
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Disclosure. None. 10 Biotech Stocks With The Biggest Upside is originally published on Insider Monkey.
