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Biotech Stocks Are Blazing Hot — Here Are The Top 5 Today

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 largely declined for 16 months.

After hitting a six-year low in mid-June, biotech stocks seemed to gain their footing this fall. Now, shares are trending mostly sideways. That comes amid struggles for the broader market, however. The group is ranked No. 19 out of 197 industry groups tracked by Investor’s Business Daily. Meanwhile, the pharma group ranks No. 123.

But it’s key to watch specific measures when examining stocks. In terms of fundamental and technical measures as well as 12-month performance, the best biotech stocks today are:

  • Catalyst Pharmaceuticals (CPRX)
  • Genmab (GMAB)
  • Harmony Biosciences (HRMY)
  • Vertex Pharmaceuticals (VRTX)
  • Dynavax Technologies (DVAX)

The No. 1 Biotech Stock

Catalyst is the No. 1 biotech stock, leading an industry group of more than 800 companies.

Its only product is 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.

Though sales are growing, the company is looking to acquire a second or third product — either through an outright buyout or licensing deal.

The biotech stock just broke out of a cup-with-handle base, topping a buy point at 16.76, according to MarketSmith.com.

Catalyst shares are also on the Tech Leaders list. Shares rank first on the IBD 50 list of elite growth stocks.

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 1% of all stocks.

Cancer Treatments Are Key

Genmab sells a small handful of treatments for cancer. The company partners with big biopharma names, including AbbVie (ABBV), Johnson & Johnson (JNJ), Horizon Therapeutics (HZNP) and Seagen (SGEN).

In the September quarter, earnings and sales increased bullishly to 53 cents per share and $551 million, respectively. Both measures also easily topped forecasts.

Now, Genmab on expanding its suite of medicines to new solid tumors and blood cancers.

Shares have a tip-top Composite Rating of 99, and a strong Relative Strength Rating of 96. Also, its RS line is at a new high. Plus, Genmab is a Tech Leader and ranks No. 13 on the IBD 50. Genmab stock is forming a lengthy cup base with a buy point at 49.17.

Harmony’s Pipeline In A Product

Harmony Biosciences is making a name for itself with a single product: pitolisant. The company sees the drug “as a portfolio in a product opportunity.”

Today, pitolisant is approved as a narcolepsy treatment named Wakix. But Harmony is also investigating pitolisant in other conditions, including a sleeping disorder called idiopathic hypersomnia, a genetic disorder known as Prader-Willi syndrome and a myotonic dystrophy, a muscle weakness disease.

Harmony is also testing an earlier-stage product in Prader-Willi syndrome. Prader-Willi causes a number of behavioral and intellectual problems. It can also lead to short stature.

The biotech stock is also a Tech Leader and ranks seventh on the IBD 50.

Harmony stock broke out of a cup-with-handle base with a buy point at 52.62, and is above its 50-day line. Shares have a perfect Composite Rating of 99 and a strong RS Rating of 97.

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. Third-quarter sales — dominated by its triple regimen Trikafta — jumped 18% to $2.33 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 recently 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 perfect Composite Rating and a Relative Strength Rating of 96. Shares are well above their 50-day moving average and recently broke out of a flat base with a buy point at 306.05, according to MarketSmith.com.

The company is also a Tech Leader.

Leveraging Vaccine Technology

Dynavax is one of the smaller biotech stocks on the list, but its shares are gaining steam.

The company sells a hepatitis B vaccine called Heplisav-B and has emergency authorization in India for its Covid vaccine partnered with India-based Biological E. Limited. Dynavax also is testing out its vaccine adjuvant in pertussis, shingles and plague. Adjuvants boost the typical immune response to vaccines.

During the September quarter, Dynavax reported $167.7 million in sales. Sales soared 55% and beat expectations for $159.4 million, according to FactSet. Adjusted earnings were 43 cents per share, which reversed from a year-earlier loss and topped forecasts by 13 cents.

The biotech stock has steadily climbed since hitting a recent bottom in late September. Shares have a Relative Strength Rating of 83 and a bullish Composite Rating of 97. Dynavax stock also recently surged above its key moving averages.

Dynavax stock has landed on the Tech Leaders list.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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