With the outbreak of the pandemic, most economies came to a halt and businesses suffered immensely. However, biotech stocks were thrust into the limelight as biotechnology companies partook in a race to find a cure for the newfound disease. But nothing lasts forever and living with Covid normalized, while several other concerns took center stage. Hence, biotech stocks also joined in on the downfall in stock markets. After hitting a six-year low in June 2022, biotech companies’ stocks now seem to be regaining their footing. The biotech sector seemingly is on the verge of a rebound while scientists believe the world to be in the “golden age” of biotechnology — with huge leaps of scientific advances paving new and previously unimaginable ways for treating and preventing diseases.
Thus, these are high times to upgrade one’s portfolio and add some great value biotech stocks to it. But fret not, you need not worry about doing extensive research and going through the difficult work of finding out which biotech stocks exactly are the best bets right now. We present you with the list of the top five most promising biotech stocks to buy right now.
Amgen Inc. (AMGN)
First in line is an American multinational biopharmaceutical company Amgen Inc. (AMGN). As a pioneer in biologics and one of the biggest biotech companies in the world, Amgen has a strong presence in several key markets.
A key reason for Amgen’s success so far has been its merger-and-acquisitions strategy. Its 20.5% stake in BeiGene allowed its entry into the Chinese oncology market while a deal with Celgene added Otezla to its drugs portfolio in 2019. Acquiring Immunex Corporation gave Amgen access to another multi-blockbuster drug, Enbrel. And last year, Amgen bought Five Prime Therapeutics, leading to the addition of the understudy drug bemarituzumab. This strategy will prove extremely fruitful to Amgen as it nears losing patent protection for several products in the next decade. So far, this has brought plenty of future growth drivers to Amgen’s lineup.
The company’s latest acquisition target is ChemoCentryx and its newly approved drug Tavneos. Amgen plans to acquire the company in a $3.7 billion deal, which is expected to close in the fourth quarter of 2022.
Moreover, while the company’s Lumakras combination drug needs further study, its Tarlatamab showed promising results in a recent data readout — both of which are part of its oncology lineup. Another good news, its RAIBNI was just recently approved by the FDA for rheumatoid arthritis.
A further reason for us to add Amgen to our list is its exceptionally strong financial profile. As per the latest report, the company’s sales grew steadily to $6.59 billion, while earnings galloped 163% higher to $4.65 a share. What’s more, the company boasts a nice dividend yield of 3.1%. Thus, combining all its strong features and a price that has been relatively stagnant over the past three months, you get a great biotech stock to add to your portfolio.
Biogen Inc. (BIIB)
Next in line on our list of biotech stocks is Biogen Inc. (BIIB). This U.S.-based biotech develops therapies for treating neurological and neurodegenerative diseases. Now, some might disagree with Biogen being on our list due to its Aduhelm controversy and increasing generic competition but that’s not enough to ignore this stock.
Yes, the stock did suffer much this year owing to the controversial approval of Aduhelm, its Alzheimer’s drug. Due to questions about its efficacy, most insurers are not covering it while Japanese and European authorities have rejected it altogether. On the other hand, Tecfidera which accounted for 25% of Biogen’s last year’s revenue, is now facing generic competition.
But such issues are always going on in the pharmaceutical world, and to counter this, Biogen has been extremely aggressive on its pipeline front. The company has made over 20 acquisitions, licensing, and development deals in the past five years. Its latest Alzheimer’s candidate is currently undergoing Phase III trials with the hope of accelerated approval due to positive safety data. Moreover, Its ALS experimental treatment has been granted Priority Review by the FDA, which if approved will be the first treatment to target a genetic cause of ALS. Its New Drug Application was just accepted at the end of July.
On the financial front, the company is doing great despite the expiring Tecfidera patent and growing generic competition. Biogen’s earnings shot up by 135.9% year-over-year last quarter to reach $1.06 billion. The cash balance also surged a nice 87.9% year-over-year to $958.50 million. Sales were $2.48 billion, better than street expectations despite a 5% decline. Given the Aduhelm issue, shares are now trading near a historically cheap sales multiple of under three while the forward price-to-earnings ratio is less than 13.
These metrics combined with a share price that is still down over 36% since last year, Biogen is indeed a stock to add to your portfolio and hold on to.
Moving on, the next stock on our list, which is Bio-Techne (TECH). This U.S.-based biotech sells life science reagents, instruments, and services to research, diagnostics, and Bioprocessing markets throughout the world. Thus, it is different from the rest of the Biotechs on our list and provides investors with exposure to the genomics industry — which is anticipated to grow at a rate of approximately 14% over the next ten years. Moreover, being a supplier in the industry, Bio-Techne has less risk as compared to those who use genomics to develop and bring drugs to the market. This is another big plus for this biotech stock.
While Bio-Techne is a giant in itself, that does not stop the company from continuing its expansion. It recently acquired California-based Namocell, Inc., which is a leading provider of single-cell sorting and dispensing platforms. This acquisition will result in significant commercial synergies for the company along with new market opportunities.
Furthermore, the company has a very attractive financial profile and pays a dividend of 0.3%. For its recently ended the fiscal year 2022, the company’s organic revenue was $1.1 billion, a nice 17% year-over-year growth. The yearly earnings also grew by the same number to record earnings per share of $7.89.
Hence, a huge potential upside, lower risk, and strong financial profile, all make Bio-Techne stock a great buy. But that’s not all, the wider market instability has the stock trading at a price that is still down nearly 30% year to date.
Next on our list is oncology-focused biotech based in the U.S. called Exelixis (EXEL). Exelixis has largely outperformed the bear market this year, however, its share price dropped by nearly 10% last month as a Phase 3 trial in kidney cancer didn’t achieve the expected results.
While the approved indications alone offer over $1 billion in annual sales potential, the company has dozens of new clinical studies ongoing in numerous other cancer types for the drug as a monotherapy and combination — including combinations with drug giants Bristol Myers Squibb and Roche. In addition to the star drug, the company is expecting positive results from an array of clinical compounds later this year — this also includes a next-Gen version of Cabometyx.
Furthermore, the company has a fast-growing stockpile of cash for funding, licensing agreements and expanding drug offerings. Exelixis had a cash balance of $2 billion at the end of the last quarter, which is more than enough to support its pipeline progress. Moreover, the company’s earnings were 22 cents a share in the quarter on sales of $419.4 million. The company expects its full-year revenue to be between $1.5 billion and $1.6 billion in 2022.
Thus, with the recent decline in share price, it is a nice entry point for investors to expand their portfolio and add this growth biotech stock.
Corcept Therapeutics (CORT)
And last but not least we have Corcept Therapeutics (CORT). This biotech is focused on developing drugs that help manages unstable cortisol levels — the body’s stress hormone —and resulting disorders.
Corcept’s primary product is Korlym which helped it amass over $300 million in revenue last year alone. Currently, it is an approved treatment for Cushing’s syndrome in patients with type 2 diabetes. For Cushing’s the drug has orphan status and exclusivity until 2037, while the company is working on approval for additional indications. With the numerous indications in line for Korlym, there’s huge upside potential in its total addressable market. Other than Korlym, the company also has four different drug candidates in different stages of clinical trials. These include Relacorilant with much promise and positive effects against several cancers and Exicorlant for castration-resistant prostate cancers.
From a financial point of view, the company is doing exceptionally well with a nearly 13% increase in revenues to $103.4 million in the second quarter. Corcept had a net income of 24 cents a share while its cash balance was $382 million at the end of the quarter. Over the last five years, the company has seen net income growth of 9.2% against the industry average of 6.1%. Not only this, but its return on equity is also well above the industry average at a nice 27%.
Given the pipeline progress and financial profile of the company and its one-month price decline of 3%, Corcept presents a good buying opportunity before it skyrockets once again.