The biotech sector has had a roller coaster ride in the first half of 2021, as leading biotech companies are striving hard to come up with effective treatments and vaccines to combat and prevent the coronavirus contagion. The Nasdaq Biotechnology Index is up 9.6% in the year so far.
The development of coronavirus vaccines and treatments continues to be the underlying story for the sector, as new emerging deadly variants continue to wreak havoc across the world. Consequently, companies like
Moderna ( MRNA Quick Quote MRNA - Free Report) and Novavax, which have been developing vaccines, continue to be in the spotlight. In particular, shares of Moderna have surged significantly of late, with data readouts indicating its COVID-19 vaccine, mRNA-1273, being effective against all variants tested, including the rapidly spreading delta variant.
While the bigwigs of the sector face challenges as sales of established drugs take a hit due to the reduced number of patient visits, new drug approvals are likely to maintain momentum, going ahead. Last month, the FDA approval of
Biogen’s ( BIIB Quick Quote BIIB - Free Report) Alzheimer's disease (AD) drug, Aduhelm, propelled the entire sector. Notably, the approval has also put the spotlight on other companies that are developing drugs for AD and investors are optimistic about the prospects of these pipeline candidates.
Meanwhile, the pace of mergers & acquisitions had slowed down in 2021 compared to previous years. In April 2021,
Amgen ( AMGN Quick Quote AMGN - Free Report) acquired Five Prime Therapeutics for approximately $1.9 billion. Nevertheless, mergers and buyouts should pick up as pharma/biotech bigwigs eye lucrative acquisitions to bolster their portfolio/pipeline and combat rivalry woes. While oncology and immuno-oncology are the key areas of focus, treatments for rare diseases and gene-editing companies like Intellia Therapeutics, Inc. ( NTLA Quick Quote NTLA - Free Report) also promise potential, making them lucrative areas of investment.
However, given the uncertain economic environment, the inherent peril of the sector gets intensified. In such a scenario, choosing a biotech stock for investment can be tricky. Particularly, smaller biotechs are more hazardous as their product pipelines are several years away from commercialization.
Here we zero in on three biotech companies, which have outperformed the sector in the year so far and still hold enough room for an upside, backed by strong fundamentals.
3 Biotech Stocks to Bet on in 2H21 BioNTech SE ( BNTX Quick Quote BNTX - Free Report) has had a stupendous year so far on the success of its COVID-19 vaccine, which has been developed in partnership with Pfizer. Demand is expected to be strong in the upcoming quarters as large populations of the world still need to be vaccinated. This, in turn, should propel the stock further. Meanwhile, BioNTech is also developing multiple mRNA vaccine candidates for a range of infectious diseases alongside its diverse oncology pipeline in collaboration with other big companies.
Shares have skyrocketed 174.8% in the year so far compared with the
industry’s growth of 0.4%. The company currently sports a Zacks Rank #1 (Strong Buy). You can see . the complete list of today’s Zacks #1 Rank stocks here
Image Source: Zacks Investment Research
Regeneron Pharmaceuticals ( REGN Quick Quote REGN - Free Report) has had a good run in 2021 so far, on the back of a solid product portfolio. The company’s efforts to expand the label of its approved drugs and concurrently develop the pipeline are impressive. Demand for ophthalmology drug, Eylea, revived after a slowdown last year. Asthma drug, Dupixent, developed in partnership with Sanofi posted a strong performance in the last few quarters and maintains momentum. Immunotherapy drug, Libtayo, is off to a good start and sales are expected to get a boost from the recent approvals in lung and skin cancer. Moreover, an incremental contribution from REGEN-COV, its antibody cocktail for COVID-19, has boosted the top line in the last couple of quarters and should propel sales as the pandemic continues.
Regeneron currently carries a Zacks Rank #2 (Buy). Shares of the company have gained 20.8% in the year so far.
Image Source: Zacks Investment Research Repligen Corporation ( RGEN Quick Quote RGEN - Free Report) , which too holds a Zacks Rank #2, is a global life sciences company that develops and commercializes highly innovative bioprocessing technologies and systems that increase efficiencies in the process of manufacturing biological drugs. The company has experienced a surge in demand, driven by strong COVID-induced tailwinds. The recent acquisitions too should boost performance.
Shares of the company have increased 5.4% in the year so far.
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