Biotech Stocks: The Top 5 to Watch When Stocks Fall

Biotech stocks have had a roller coaster ride but continue to outperform the broader market.




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In 2020, the industry moved into the spotlight of the pandemic Pfizer (PFE) and its partner BioNTech (BNTX), along with Moderna (MRNA) and Johnson&Johnson (JNJ) has 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 biotechnology fell by the wayside.

Investor's Business Daily's Biotech industry group recorded a downtrend from February 2021 to June 2022. Now, biotech stocks are recovering after trending lower through late March on the back of the banking crisis and the Centers for Medicare and Medicaid Services set to begin price negotiations soon for one of the most expensive drugs. Today, the entire group has a Relative Strength Rating of 89, which puts it in the top 11% of all stocks for 12-month performance, according to IBD Digital.

The biotech group ranks 29th out of 197 industry groups tracked by IBD. The pharmaceutical company is now in 98th place.

However, when looking at stocks, it's important to keep certain metrics in mind. In terms of fundamental and technical metrics, the top 10 biotech stocks trading today are:

  • Amphastar Pharmaceuticals (AMPH)
  • Arcturus Therapeutics (ARCT)
  • Vertex Pharmaceuticals (VRTX)
  • Enliven Therapeutics (ELVN)
  • catalyst pharmaceuticals (CPRX)

The #1 biotech stock: Amphastar

Amphastar Pharmaceuticals develops, manufactures and markets a wide variety of injectable drugs. It also works for medications that can be inhaled or given through the nose.

In the first quarter, Amphastar's revenue rose 16% to $140.02 million and adjusted earnings rose 32% to 62 cents a share. According to FactSet, both measures significantly exceeded expectations.

The strongest growth came from glucagon, a drug used to treat low blood sugar. Revenue rose 134% to $25.7 million. Glucagon is also Amphastar's biggest moneymaker. Meanwhile, sales of asthma drug Primatene Mist fell 5% to $23.48 million.

Amphastar also announced acquisition plans Eli Lilly‘s (LLY) Baqsimi, a nasal glucagon drug for people with diabetes and low blood sugar. Baqsimi had global sales of $139.3 million last year.

As MarketSmith.com shows, Amphastar stock recently broke out of a cup-and-handle buy point at 44.15. The shares are now above a profit-taking zone.

Biotech stock Amphastar is a technology leader.

Stocks have a perfect composite rating of 99 and a relative strength rating of 97.

Arcturus is close to the first approval

Arcturus Therapeutics is a pre-commercial biotech company working on messenger RNA treatments.

In the first quarter, Arcturus submitted its application for a next-generation Covid vaccine in Japan. This means that a possible approval in 2023 is possible. The company is also working on an early-stage treatment for patients with cystic fibrosis.

According to FactSet, analysts expect Arcturus to report product sales for the first time in the September quarter.

The biotech stock is trading below its 50-day moving average but above its 200-day moving average.

Stocks also have a Strong Composite Rating of 95 and a Relative Strength Rating of 96.

In addition, Arcturus is a technology leader.

Vertex: Going Beyond Cystic Fibrosis

Vertex Pharmaceuticals is one of the largest biotech stocks by market cap. It is behind in fourth place amgen (AMGN), Gilead Sciences (GOLD) and Regeneron Pharmaceuticals (REGN).

The company is the de facto market leader for drugs against cystic fibrosis. First-quarter revenue, mostly dominated by triple-cure Trikafta, rose 13% to $2.37 billion. Vertex also recently received approval for another drug, Kalydeco, to treat infants under the age of one with cystic fibrosis.

But it's now expanding to other endeavors. Vertex is a partner of Crisper Therapeutics (CRSP) on a gene-editing approach for two blood disorders. In addition, Vertex also announced its $320 million plan to acquire its partner in diabetes care, privately held ViaCyte. The companies are testing a cell replacement drug for type 1 diabetes.

In addition, Vertex is testing treatments for liver and kidney disease, Duchenne muscular dystrophy and pain.

The biotech stock has a Composite Rating of 95 and a Relative Strength Rating of 82. The shares form a cup basis with a buy point at 354.46.

The stock is also a technology leader.

Cancer treatments drive Enliven

Enliven Therapeutics is working on treatments for numerous types of cancer. The latest tests include chronic myeloid leukemia, lung cancer and other solid tumors.

The company is also working on several early-stage cancer drugs for solid tumors. According to Enliven, there are no approved therapies for these cancers. It is important to note that Enliven is not yet selling any product and therefore has no sales. In addition, the company is expected to report several more years of losses.

Enliven is a newer biotech stock that went public in 2020. After crashing by mid-2022, stocks rebounded optimistically. Now, the biotech stock has a best possible Relative Strength Rating of 98 and a Composite Rating of 91.

The biotech stock recently reclaimed its 50-day moving average and the stock is consolidating with a buy point at 25.34.

Enliven stock is also a technology leader.

Catalyst faces new challenges

Catalyst recently added a second product to its range. Through a deal with Eisai (ESAIY), Catalyst now distributes the anti-epileptic drug Fycompa in the US. Catalyst also markets Firdapse, a treatment for Lambert-Eaton Myasthenic Syndrome (LEMS). LEMS is a rare autoimmune disease that affects muscle strength and is common in lung cancer patients.

Sales are growing, however Teva Pharmaceutical (TEVA) said it plans to launch a generic version of Firdapse. According to Teva, the patents for Firdapse are invalid and unenforceable.

Catalyst shares fell below its 50-day moving average after the company reported weak first-quarter earnings. However, sales exceeded expectations.

On an upbeat note, CPRX stocks have a Strong Composite rating of 90. Their Relative Strength rating is much lower at 63.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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