In this article, we will take a look at the 10 biotech stocks with huge potential.
Recent developments, technological as well as optimism related to interest rate reductions, have led to a significant rally for the biotech industry. S&P Biotechnology Select Industry Index, an index that tracks stocks belonging to the biotechnology industry, is up 13.54% year to date.
The latest trend in the biotechnology industry, in addition to the long-standing affinity for rare and debilitating diseases, is the resurgence of therapies targeting obesity. In August 2023, Novo Nordisk released SELECT trial results which showed that its GLP-1 weight loss medicine Wegovy reduced the risk of major adverse cardiovascular events in adults who are overweight or obese and have established cardiovascular disease with no prior history of diabetes. This has brought the possibility of GLP-1 drug class being broadly adopted in the U.S. On December 5, Eli Lilly and Company (NYSE:LLY) announced the availability of Zepbound™ (tirzepatide) injection in U.S. pharmacies, indicated for adults with obesity. The drug was approved by the U.S. FDA on November 8 and is available through a prescription that can be filled at retail and mail-order pharmacies. You can read more about this in our recently published article: 11 Most Promising Biotech Stocks to Buy According to Analysts
The M&A activity in the biotech industry is picking up pace once again after a dismal performance last year. It has been a relatively strong year for the pharmaceutical and life sciences sectors with both deal value and volume of M&A close to pre-pandemic levels, according to PwC’s latest analysis. These sectors combined registered $238 billion worth of M&A deals during 2023. Some of the biggest transactions announced or closed during the period including Pfizer Inc. (NYSE:PFE) agreement to acquire Seagen Inc. (NASDAQ:SGEN) in a $43 billion transaction, acquisition of Prometheus Biosciences, Inc. (NASDAQ:RXDX) by Merck & Co., Inc. (NYSE:MRK) for $10.8 billion, and AbbVie Inc. (NYSE:ABBV) agreement to acquire Cerevel Therapeutics (NASDAQ:CERE) for nearly $8.7 billion, among others.
Several other factors point to a potential recovery of the biotechnology sector in 2024. The IPO market is expected to improve, which would provide the companies operating at the earlier stage of product development with an important source of financing. In addition, the FDA approvals, which slowed down in 2022 picked up pace once again in 2023. The trend, expected to continue strongly in 2024, is going to generate optimism for the investors as well as existing shareholders. Several novel therapies have already been rewarded Priority Review status by the FDA, including Dupixent® (dupilumab), by Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) in a sixth potential indication.
Many of the companies on our list of 10 biotech stocks with huge potential are late stage clinical-stage biotechnology companies working on the development of novel therapeutics for rare diseases. The list includes Moderna, Inc. (NASDAQ:MRNA), Exelixis, Inc. (NASDAQ:EXEL), and Jazz Pharmaceuticals Plc (NASDAQ:JAZZ), among others.
A close up photograph of a vial of a new biotechnological drug candidate in development.
Methodology
For our list of 10 biotech stocks with huge potential we conducted a survey of mainstream financial media and checked multiple credible financial websites to see which biotechnology stocks have potential to grow in the coming weeks and months according to these websites. We picked 10 stocks which frequently appeared in our survey. These stocks have upside potential according to notable financial websites. We have also mentioned the number of hedge fund investors having stakes in each of these companies.
Data from around 900 elite hedge funds tracked by Insider Monkey in the fourth quarter of 2023 was used to identify the number of hedge funds that hold stakes in each firm. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
10 Biotech Stocks with Huge Potential
10. Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH)
Number of Hedge Fund Holders: 18
Rancho Cucamonga, California-based Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) is a bio-pharmaceutical company that focuses primarily on developing, manufacturing, marketing, and selling technically challenging generic and proprietary injectable, inhalation, and intranasal products.
As of Q4 2023, Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) shares were owned by 18 of the 933 hedge funds tracked by Insider Monkey, with a total value of $112 million. Jim Simons’ Renaissance Technologies was the lead hedge fund shareholder with ownership of 0.64 million shares valued at $40 million.
9. Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY)
Number of Hedge Fund Holders: 29
Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY) is a commercial-stage pharmaceutical company dedicated to developing and commercializing innovative therapies for people living with rare neurological disorders who have unmet medical needs.
Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY) received FDA approval for its first commercial product, WAKIX® (pitolisant), for the treatment of excessive daytime sleepiness or cataplexy in adult patients with narcolepsy in 2019. The drug has been commercially available in the U.S. since Q4 2019.
On February 22, Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY) released its financial results for Q4 2023. Its revenue increased by 31% y-o-y to $168 million while its net income shrunk 45% y-o-y to $27 million.
Following the earnings release, Needham lowered the price target for H shares to $50 from $53 and maintained a ‘Buy’ rating for the shares. The price target represents a potential upside of 48.94% based on the latest share price.
8. Exelixis, Inc. (NASDAQ:EXEL)
Number of Hedge Fund Holders: 33
Alameda, California-based Exelixis, Inc. (NASDAQ:EXEL) is a biotechnology company focused on oncology. The company is evolving its product portfolio to target an expanding range of tumor types and indications with its clinically differentiated pipeline.
The product portfolio of Exelixis, Inc. (NASDAQ:EXEL) is led by CABOMETYX, a prescription medicine used to treat people with kidney cancer, people with liver cancer, and adults and children above 12 years of age with differentiated thyroid cancer.
On February 6, Exelixis, Inc. (NASDAQ:EXEL) released its financial results for Q4 2023. Its revenue increased by 13% y-o-y to $480 million while it generated a net income of $86 million, compared to a net loss of $30 million.
7. Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE)
Number of Hedge Fund Holders: 34
Novato, California-based Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) is a is a biopharmaceutical company focused on the development of novel products for the treatment of serious rare and ultra-rare genetic diseases.
The portfolio of Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) includes four commercial products: DOJOLVI® for patients with molecularly confirmed long-chain fatty acid oxidation disorders, MEPSEVII® for Mucopolysaccharidosis VII, CRYSVITA® for hypophosphatemic disorders, and EVKEEZA® for Homozygous Familial Hypercholesterolemia.
On February 27, JP Morgan raised the price target for Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) shares from $84 to $88 and maintained an ‘Overweight’ rating for its shares. The target price represents a potential upside of 65.88%, the second highest on our list of 10 biotech stocks with huge potential.
6. Amylyx Pharmaceuticals, Inc. (NASDAQ:AMLX)
Number of Hedge Fund Holders: 36
Cambridge, Massachusetts-based Amylyx Pharmaceuticals, Inc. (NASDAQ:AMLX) is a global company committed to the mission of discovery and development of treatments for relentless and progressing neurodegenerative diseases.
On January 3, Baird initiated coverage of Amylyx Pharmaceuticals, Inc. (NASDAQ:AMLX) shares with a price target of $37 and an ‘Outperform’ rating. The target price represents a potential upside of 90.92%, the highest on our list of 10 biotech stocks with huge potential.
As of Q4 2023, Amylyx Pharmaceuticals, Inc. (NASDAQ:AMLX) shares were held by 36 hedge funds with total value of $330 million. Andreas Halvorsen’s Viking Global held the most shares among hedge funds with ownership of 3.0 million shares valued at $44 million.
5. Incyte Corporation (NASDAQ:INCY)
Number of Hedge Fund Holders: 37
Wilmington, Delaware-based Incyte Corporation (NASDAQ:INCY) is global biopharmaceutical company focused on the discovery, development, and commercialization of novel medicines across Oncology and Inflammation & Autoimmunity.
On February 27, Incyte Corporation (NASDAQ:INCY) announced that the FDA has granted priority review for axatilimab, an anti-CSF-1R antibody, for the treatment of chronic graft-versus-host disease (GVHD) after failure of at least two prior lines of systemic therapy.
Axatilimab is being developed by Incyte Corporation (NASDAQ:INCY) and Syndax Pharmaceuticals (NASDAQ:SNDX) as part of an exclusive worldwide co-development and co-commercialization license agreement.
As of Q4 2023, Incyte Corporation (NASDAQ:INCY) shares were held by 37 hedge funds with the total shares held by these hedge funds valued at $3.4 billion. Baker Bros. Advisors was the lead hedge fund shareholder with ownership of 36.2 million shares valued at $2.3 billion.
4. Moderna, Inc. (NASDAQ:MRNA)
Number of Hedge Fund Holders: 39
Cambridge, Massachusetts-based Moderna, Inc. (NASDAQ:MRNA) is a leading biotechnology company pioneering messenger RNA (mRNA) therapeutics and vaccines. In addition to the commercial stage covid19 vaccine, the clinical pipeline of the company includes therapeutics and vaccines for infectious diseases, immuno-oncology, rare diseases, cardiovascular diseases, and auto-immune diseases.
On December 11, Moderna, Inc. (NASDAQ:MRNA) and Merck (NYSE: MRK) announced the initiation of INTerpath-002, a pivotal Phase 3 randomized clinical trial evaluating V940 (mRNA-4157), an investigational individualized neoantigen therapy, in combination with Merck’s KEYTRUDA, as adjuvant treatment in patients with certain types of resected non-small cell lung cancer.
Moderna, Inc. (NASDAQ:MRNA) shares were owned by 37 leading hedge funds with the total shares held by them valued at nearly $1.4 billion, as of Q4 2023. Patrick Degorce’s Theleme Partners was the lead hedge fund shareholder with ownership of 7.3 million shares valued at $731 million.
3. Jazz Pharmaceuticals Plc (NASDAQ:JAZZ)
Number of Hedge Fund Holders: 42
Founded in 2003, Dublin, Ireland-based Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) is a global biopharmaceutical company with a diverse portfolio of marketed medicines, including therapies for sleep disorders and epilepsy, and a growing portfolio of cancer treatments.
On January 29, Barclays lowered the price target for Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) shares to $235 from $240 and maintained an ‘Overweight’ rating for its shares. The target price represents a potential upside of 77.92%, one of the highest on our list of 10 biotech stocks with huge potential.
As of Q4 2023, Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) shares were owned by 42 hedge funds with the total shares held by them valued at $1.2 billion. Its largest hedge fund shareholder was Bernard Horn’s Polaris Capital Management with ownership of 1.3 million shares valued at $156 million.
2. Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN)
Number of Hedge Fund Holders: 59
Based in Tarrytown, New York, Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) is a leading biotechnology company that focus on developing therapies for eye diseases, allergic and inflammatory diseases, cancer, cardiovascular and metabolic diseases, pain, hematologic conditions, infectious diseases, and rare diseases.
On February 23, Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) announced that it the FDA has accepted for Priority Review the application for Dupixent® (dupilumab) in a sixth potential indication as an add-on maintenance treatment in certain adult patients with uncontrolled chronic obstructive pulmonary disease (COPD). If approved, Dupixent would be the only biologic therapy for COPD. The Priority Review has been granted based on positive results from two Phase 3 trials.
Following the announcement, RBC Capital raised the price target on Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) shares to $1184 from $1096 and maintained an ‘Outperform’ rating on the shares.
1. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)
Number of Hedge Fund Holders: 62
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is a pharmaceutical company focused on creation of transformative medicines for people with serious and life-threatening diseases. It discovered and developed the first medicines to treat the underlying cause of cystic fibrosis, a rare, life-threatening genetic disease.
On February 13, Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) announced that the European Commission has granted conditional marketing authorization to CASGEVY for the treatment of Sickle Cell Disease and Transfusion-Dependent Beta Thalassemia (TDT). Previously, the company received FDA approval for CASGEVY for the treatment of TDT in patients 12 years and older.
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) ranks #1 on our list of 10 biotech stocks with huge potential. Its shares were widely owned by hedge funds, as of Q4 2023, with 62 prominent hedge funds tracked by Insider Monkey holding its shares valued at $2.5 billion.
Harding Loevner, an asset management company, made the following comments about Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) in its “Global Equity Strategy” Q4 2023 investor letter:
“Unlike most drug developers, which focus on mitigating symptoms of an illness, Vertex seeks to understand and address the causal biology of a disease more fully. This approach has helped the company establish a wide lead in treating cystic fibrosis (CF), a rare disease that causes mucus buildup in organs such as the lungs. Vertex’s research and treatments have targeted the root cause of CF, which is that a particular protein becomes misfolded and unable to move chloride out of a cell, resulting in an imbalance between salt and water. Its scientists have been able to do this by working with the lung cells of real CF patients, an advantage over using engineered animal cells to simulate the disease-causing mechanism to determine which drug candidate is most promising for humans.”
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Disclosure: None. 10 Biotech Stocks with Huge Potential is originally published on Insider Monkey.
