The biotechnology industry has lagged the S&P 500 so far this year, but most of the industry participants haven’t disappointed investors. The above-average performance of the industry has primarily been driven by mergers and acquisitions, initial public offerings, collaborative operations, introduction of biosimilars and new job vacancies.
The Zacks Medical - Biomedical and Genetics industry, which majorly consists of biotechnology stocks, has moved up just 2.2% year to date versus the Zacks S&P 500 composite’s gain of 22.6%. However, the major biotech ETFs and indexes have put up an impressive performance year to date. Among others, the SPDR S&P Biotech ETF (XBI) and ProShares Ultra Nasdaq Biotechnology (BIB) have surged 17% and 23.7%, respectively, so far this year.
In fact, biotechnology stocks are a good investment irrespective of how the markets are performing. Investors can thus take a look at a few that have performed remarkably well so far in 2019.
M&As, IPOs and Collaborations Keep Sector in Focus
The sector has been in the limelight since the beginning of this year. In January, Bristol-Myers Squibb Company (BMY - Free Report) announced that it will acquire Celgene Corporation . This was followed by Takeda Pharmaceutical Company Limited’s (TAK - Free Report) acquisition of Shire in the same month.
In February, Eli Lilly and Company’s (LLY - Free Report) acquisition of Loxo Oncology made headlines. There were many other M&As announced during the period.
The number of initial public offerings has also been overwhelming this year. In fact, biotech IPOs have been rising steadily over the last few years.
Biotech firms require extensive financing, especially as they advance in their research. Going public is a great way to take care of the financing they need. It not only gives a company solid ground, but also makes it more visible for acquisitions and collaborations. Adaptive Biotechnologies Corporation (ADPT - Free Report) , NGM Biopharmaceuticals, Inc. (NGM - Free Report) and Alector, Inc. (ALEC - Free Report) are some biotech companies that went public this year.
The industry was also in focus due to rampant collaboration this year. Last month, Amgen announced that it has entered into a strategic collaboration with BeiGene to expand its oncology presence in China.
Biogen Inc. (BIIB - Free Report) and C4 Therapeutics announced in January that they have entered into a strategic collaboration to examine the use of the latter’s novel protein degradation platform to discover and develop potential new treatments for neurological conditions.
The Future of Biotechnology Looks Promising
The size of the biotechnology market was valued at $399.4 billion in 2017 and is expectedto witness a compound annual growth rate of 9.9% during the forecast period 2018-2024, according to Global Market Insights.
Apart from the aforementioned factors, rise in chronic ailments such as diabetes and cancer, increasing access to healthcare in remote areas, and evolving R&D are also pushing the space ahead.
4 Stocks to Buy
We have, therefore, selected four stocks from the biotechnology sector that have outperformed the Zacks S&P 500 composite year to date and carry a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Coherus BioSciences, Inc. (CHRS - Free Report) is a commercial-stage biotherapeutics company. The company recently acquired exclusive rights from Bioeq IP AG, a Swiss biopharmaceutical joint venture, to commercialize Bioeq’s biosimilar candidate to Lucentis in the United States. Bioeq is set to file a Biologics License Application with the FDA in Q4 2019 and Coherus BioSciences plans to launch the product in 2021.
The company carries a Zacks Rank #1. The Zacks Consensus Estimate for Coherus BioSciences’ current-year earnings has risen 29.2% over the past 60 days.The stock has gained 110.6% year to date. You can see the complete list of today’s Zacks #1 Rank stocks here.
Incyte Corporation (INCY - Free Report) is a biopharmaceutical company. The company is mostly engaged in developing and commercializing several therapeutics in the country. It offers JAKAFI, a drug used to treat myelofibrosis and polycythemia vera cancers. In the January-September period this year, the drug generated $1.22 billion in product revenues and another $161 million in royalty revenues. In fact, JAKAFIbrought in 92% of total revenues during the said period.
The company carries a Zacks Rank #1. The Zacks Consensus Estimate for Incyte’s current-year earnings has risen 6.6% over the past 60 days.The stock has gained 33.8% year to date.
ACADIA Pharmaceuticals Inc. (ACAD - Free Report) is a biopharmaceutical company that primarily focuses on developing and commercializing small molecule drugs that deal with unmet medical needs in central nervous system disorders. The company’s Phase III HARMONY trial, conducted recently to evaluate pimavanserin data in the treatment of dementia-related psychosis (DRP) patients, delivered robust results.
The company carries a Zacks Rank #2. The Zacks Consensus Estimate for ACADIA Pharmaceuticals’ current-year earnings has risen 13.4% over the past 60 days.The stock has gained 163.5% year to date.
Celgene is a biopharmaceutical company that is primarily engaged in the discovery, development and commercialization of therapies for the treatment of cancer and inflammatory diseases globally. Earlier this month, the drugmaker’s rare disease drug Reblozyl was approved by the FDA. Reblozyl treats anemia in patients with beta thalassemia, a rare blood disorder. The drug was developed jointly by Celgene and Acceleron Pharma Inc. (XLRN).
The company carries a Zacks Rank #2. The Zacks Consensus Estimate for Celgene’s current-year earnings has risen 0.7% over the past 60 days.The stock has gained 70.9% year to date.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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