Tech stocks are tumbling around like they’re in a washing machine. Between the trade wars and varying economic numbers, chip stocks have been all over the place. While the Nasdaq Biotech Index (INDEXNASDAQ:NBI) is up 7% year to date, it was a bumpy ride through the latter part of 2018.
This year, the broad biotech sector has been buffeted along with other broad market indicators, considering that the weaker-than-expected U.S. economy and the continued trade war with China have slapped a question mark over that growth market.
And the administrations crackdown on funding and researchers at the National Institutes of Health are also challenging since most major drug discoveries start at NIH and are then pulled into R&D efforts at biotech and pharma companies.
But following are seven healthy biotech stocks to buy now.
They get top scores in my Portfolio Grader for their fundamentals, earnings and momentum.
These seven biotechs are both big and small, the one thing they have in common is growth now and in their future.
Biotech Stocks to Buy: Repligen (RGEN)
Repligen Corp (NASDAQ:RGEN) has had quite a good year, up 65% in the past 12 months, and 42% year to date. If a biotech or a Big Pharma are the bakeries that sell the finished goods, RGEN is the company that sells the ingredients and tools to the bakeries.
It has three divisions: Chromotography (the separation of a mixture by passing it through a suspension), Filtration and OEM Products (usually proteins used for purification and cell growth products).
These “ingredients” are certainly more complex than they are for a bakery, but they’re just as fundamental to building drugs and manufacturing them with quality and consistency on a large scale.
With a $3.6 billion market cap, RGEN is a good sized player with exposure across the industry, so it’s a leveraged played on the fundamental growth in the biotech and pharmaceutical sector. And that’s a solid investment moving forward.
Vertex Pharma (VRTX)
Vertex Pharmaceuticals Inc (NASDAQ:VRTX) is a big-cap pharmaceutical firm based out Boston, MA. It currently has three approved drugs to treat cystic fibrosis (CF) and has a number of drugs in the pipeline to treat other auto-immune diseases.
Earlier this month it moved into the genetic therapy side of the business, expanding its relationship with CRISPR Therapeutics (CSPR) and buying gene therapy company Exonics Therapeutics.
Exonics is involved in developing a gene therapy for Duchenne’s muscular dystrophy (DMD). DMD is the most common form of the disease. It afflicts about 1 in 3,500 males and is usually recognized between the ages of 3 and 6 years of age. By age 10, most patients are wheelchair bound.
Creating a gene therapy to resolve this rare disease would be massive. And given VRTX’s history with CF, it has a very good shot.
It’s a relative outperformer in the big cap biotech space — it sports a $43 billion market cap — and is still a good value.
Recro Pharma (REPH)
Recro Pharma Inc (NASDAQ:REPH) is a small cap — $206 million market cap — that was launched in 2007. Its focus is on non-opioid, non-addictive pain and analgesics.
It focuses its efforts on products for hospitals and ambulatory care facilities and works with generics to develop more effective delivery systems and more targeted markets.
For example, its top-performing drug is meloxicam, an analgesic for post-operative pain that is administered intravenously. It also has an intranasal formulation of dexmedetomidine (Dex) for post-operative pain. Its third pipeline drug is fadolmidine and is similar to Dex but doesn’t cross the blood-brain barrier.
The stock is up 31% year to date and up 75% for the past 12 months. There’s a good chance that its drugs could be fast-tracked considering the opioid crisis, which would get them to market even faster.
Arrowhead Pharmaceuticals Corp (ARWR)
Arrowhead Pharmaceuticals Corp (NASDAQ:ARWR) is a gene therapy biotech with a twist. Instead of using modified genes to eradicate a disease, it silences genes that are causing problems.
Either way, this is a very hot sector and ARWR is one of the shining stars in the biotech heaven. It has a $2 billion market cap and has been around since 1989, which is means it has been through two or three waves of biotech booms and busts.
The stock is on fire right now, up 108% year to date and 134% in the past year. Part of that is the news last October is signed a deal to license one of its drugs that targets hepatitis B to Janssen Pharmaceuticals.
It’s pricey, but it has a lot of big new ahead of it.
Veracyte Inc (NASDAQ:VCYT) is also on the genetic side of the biotech sector. But it doesn’t develop novel drugs, it produces genetic testing for various types of diseases.
This is another new sector that is growing quickly because of the processing power now available to sequence genes and see how they tick.
Right now, VCYT has genetic tests for thyroid cancer, lung cancer and a lung disease called idiopathic pulmonary fibrosis. The latter has been very hard to test for in the past, so VCYT testing is a big step forward.
With a $1 billion market cap, VCYT is establishing a name for itself and already has products in the market, which is a very attractive business model compared to drug companies that will spend years and billions of dollars hoping a drug will get to the marketplace.
Up and staggering 214% in the past year and 121% year to date, VCYT is just getting started. And could be a serious takeover candidate.
Affimed NV (NASDAQ:AFMD) is a Germany-based biotech that is focused on immunotherapy work. This line of work is built on the premise that you can find a way for each individual to help combat disease using their own immune system.
This is highly complex and is in earlier stages than gene therapy but it has enormous potential, especially in treating various cancers.
AFMD has a proprietary ROCK(R) platform for recognizing and attacking certain types of cancers. It cancelled phase 1 studies in October of AFM11 to focus on its innate cell engager AFM24.
Immuno-oncology is more than just working with a patient’s immune system. It also means individualized treatment solutions for each patient. That would be a massive shift in the way disease care is viewed. And it’s getting very close.
Also, being a German company, it would have access to the European markets as well as the U.S. markets due to its partnership with Genentech. But it’s a small cap with some work to do, so be patient.
Incyte Corp (INCY)
Incyte Corp (NASDAQ:INCY) is a Delaware-based biotech that is another good-sized player with a market cap of $16 billion.
It has one drug that has been in the marketplace for years now. JAKAFI is a treatment for a rare form of bone marrow cancer and it also has a use as a treatment for host-done issues with bone marrow transplants.
When you have drugs for rare diseases you have less competition and you can also charge more since there is few to no competitors but the market is also very small. But this does help start generating revenue for a company that can then use that cash to develop more drugs without burning through cash waiting for a big breakthrough.
INCY has cooperative agreements with Merck (MRK) and Bristol Myers Squibb (BMY) using a new drug to work with their immuno-oncology drugs that are already on the market. This could be a big opportunity since these two Big Pharma firms could help get this combination through regulatory hurdles.
The stock is up 21% year to date but only 4% in the past year. Its partnerships with leading Big Pharma firms is a strategic play on broader industry exposure.
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Source: Investor Place