Author: ALLISON GATLIN
Source
Biotech stocks have been on a roller-coaster ride, but continue to outperform the broader market.
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In 2020, the industry was thrust into the pandemic limelight as Pfizer (PFE) and its partner BioNTech (BNTX), along with Moderna (MRNA) and Johnson & Johnson (JNJ), launched a trio of Covid vaccines. But as society learned to live with Covid — and other concerns around the economy, inflation and politics took center stage — interest in biotech fell by the wayside.
Shares of Investor’s Business Daily’s biotech industry group hit a downward slope from February 2021 to June 2022. Though things began to look up, initially, biotech stocks have mostly traded sideways since last fall. Today, the entire group has a Relative Strength Rating of 86, which puts them in the top 14% of all stocks in terms of 12-month performance, according to IBD Digital.
The group is ranked No. 39 out of 197 industry groups. Meanwhile, the pharma group ranks No. 99.
But it’s key to watch specific measures when examining stocks. In terms of fundamental and technical measures, the best biotech stocks trading above 10 today are:
- Catalyst Pharmaceuticals (CPRX)
- Biomarin Pharmaceutical (BMRN)
- Amphastar Pharmaceuticals (AMPH)
- Horizon Therapeutics (HZNP)
- Vertex Pharmaceuticals (VRTX)
The No. 1 Biotech Stock
Catalyst is the No. 1 biotech stock, leading an industry group of more than 800 companies.
Catalyst recently added a second product to its lineup. Through a deal with Eisai (ESALY), Catalyst can now sell anti-seizure medicine Fycompa in the U.S. Catalyst also sells Firdapse, a treatment for Lambert-Eaton myasthenic syndrome, or LEMS. LEMS is a rare autoimmune condition that saps muscle strength and often occurs in lung cancer patients.
Sales are growing, but Teva Pharmaceutical (TEVA) recently said it plans to launch a generic version of Firdapse. Teva says the patents covering Firdapse are invalid and not enforceable. Catalyst now has almost two months to respond to Teva’s filing.
Shares of Catalyst tumbled below their 50-day moving average on the Teva news, MarketSmith.com shows.
Catalyst stock remains on the Tech Leaders list.
Bullishly, CPRX shares have a best-possible Composite Rating of 99, according to IBD Digital. This puts the biotech stock in the top 1% of all stocks in terms of fundamental and technical measures. Its 12-month performance, measured by the Relative Strength Rating, is also in the top 4% of all stocks.
Biomarin Nearing FDA Review In Hemophilia
Biomarin is focusing on hereditary conditions.
The company recently said 134 patients treated with its gene therapy for hemophilia A had stable and durable results over three years. On average, patients had an 80% reduction in annualized bleed rates. On average, patients reduced their use of traditional hemophilia treatment by 94%.
The Food and Drug Administration has said it doesn’t plan to hold an advisory committee meeting to discuss the treatment. The drug is known as Roctavian in Europe where it’s already approved. Approval in the U.S. could be a boon for the biotech stock. The FDA is set to review the drug March 31.
Investors are closely watching the space after Uniqure (QURE) and Australia’s CSL gained FDA approval for a hemophilia B gene therapy.
Bullishly Biomarin stock has a strong Composite Rating of 96 and an RS Rating of 88. It also lands on the Tech Leaders list. On a bearish note, shares have sliced through their 50-day line.
Injectable And Inhaled Drugs
Amphastar develops, manufactures and sells a variety of injectable drugs. It also works on drugs that can be inhaled or delivered in the nose.
In its fourth quarter, Amphastar’s sales jumped 12% and adjusted surged 74%. Sales of its biggest product, Primatene Mist, edged 4% higher to $22.3 million. Primatene Mist is an asthma inhaler.
The company also sells prefilled syringes of epinephrine, a substance used to treat emergency allergy reactions. In the December quarter, sales climbed 14% to $21.4 million. Other big products include local anesthetic lidocaine and blood sugar hormone called glucagon. Sales of those products grew a respective 19% and 10%. But revenue from an injection for bleeding disorders, phytonadione, fell 16%.
Shares have a Composite Rating of 97 and a Relative Strength Rating of 91.
Horizon: A Looming Amgen Takeover
Amgen is in the process of buying Horizon for close to $28 billion.
Horizon is well known for its drug, Tepezza, a treatment for thyroid eye disease. The company also makes a treatment for gout known as Krystexxa. In the fourth quarter, those drugs generated a respective $493.5 million and $216.1 million in sales. Tepezza sales toppled 16% on continued supply disruptions while Krystexxa sales jumped 27%.
The biotech company is also working on treatments for immune diseases called neuromyelitis optica spectrum disorder and Sjogren’s syndrome.
Horizon stock is forming a flat base with a buy point at 113.93. Shares have a strong Relative Strength Rating of 93 and a Composite Rating of 91.
The biotech stock is also a Tech Leader.
Moving Beyond Cystic Fibrosis
Vertex is one of the biggest biotech stocks in terms of market cap. It ranks fourth behind Amgen (AMGN), Gilead Sciences (GILD) and Regeneron Pharmaceuticals (REGN).
The company is the de facto leader of the cystic fibrosis drug market. Fourth-quarter sales, dominated by its triple regimen Trikafta, grew 11% to $2.3 billion.
But it’s now expanding into other efforts. Vertex is partnered with Crispr Therapeutics (CRSP) on a gene-editing approach to a pair of blood diseases. Further, Vertex also announced its $320 million plan to buy its partner in diabetes treatment, privately held ViaCyte. The companies are testing a cell replacement drug in type 1 diabetes.
Beyond that, Vertex is testing treatments for liver and kidney diseases, Duchenne muscular dystrophy and pain.
The biotech stock has a Composite Rating of 93 and a Relative Strength Rating of 74. Shares recently tried and failed to break out of a cup base with an entry at 324.85.
The stock is a Tech Leader.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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