S&P 500   4,594.62
DOW   34,899.34
QQQ   391.20
S&P 500   4,594.62
DOW   34,899.34
QQQ   391.20
S&P 500   4,594.62
DOW   34,899.34
QQQ   391.20
S&P 500   4,594.62
DOW   34,899.34
QQQ   391.20

Biotechnology Stocks

Biotech companies leverage cutting-edge science to create medicines and treatments for a multitude of diseases, making them high-risk, high-reward opportunities for investors looking to profit from healthcare innovation. What is a biotech stock?

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Analyst consensus is the average investment recommendation among Wall Street research analysts.
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CompanyCurrent PricePE RatioMarket CapVolumeAverage VolumeIndicator(s)
AMGN
Amgen
$201.09
-1.4%
20.71$113.27 billion3.20 million2.62 million
BNTX
BioNTech
$348.00
+14.2%
10.03$84.40 billion11.03 million3.15 millionShort Interest ↑
Gap Up
High Trading Volume
REGN
Regeneron Pharmaceuticals
$643.35
-0.7%
10.27$69.19 billion575,586848,898Insider Selling
VRTX
Vertex Pharmaceuticals
$183.59
-1.4%
22.04$46.68 billion1.13 million1.95 millionShort Interest ↓
GLW
Corning
$37.96
-2.8%
39.54$32.40 billion2.40 million4.42 millionGap Down
SGEN
Seagen
$169.50
-2.1%
N/A$30.99 billion735,621886,807
GMAB
Genmab A/S
$39.18
+0.4%
55.97$25.74 billion262,301483,709Gap Up
RPRX
Royalty Pharma
$41.89
-0.5%
32.47$25.43 billion1.39 million2.44 million
BIO.B
Bio-Rad Laboratories
$769.89
3.49$23.04 billion20152
CRL
Charles River Laboratories International
$375.28
-0.6%
48.49$18.94 billion192,276416,277Short Interest ↑
TECH
Bio-Techne
$473.47
-0.7%
109.35$18.61 billion114,941250,527Insider Selling
PEAK
Healthpeak Properties
$33.90
-2.3%
29.48$18.27 billion1.45 million3.17 millionAnalyst Revision
PPD
PPD
$47.35
+0.1%
47.35$16.64 billion999,2061.90 millionAnalyst Downgrade
TXG
10x Genomics
$148.85
-1.4%
N/A$16.63 billion384,040720,963Insider Selling
ICLR
ICON Public
$272.00
-0.7%
69.21$14.38 billion194,721640,357
ARGX
argenx
$276.10
-0.3%
N/A$14.22 billion186,721176,252Short Interest ↑
Gap Up
IBB
iShares Nasdaq Biotechnology ETF
$154.90
+1.0%
N/A$9.94 billion2.97 million2.90 million
UTHR
United Therapeutics
$193.64
-3.3%
19.62$8.72 billion227,942362,566Insider Selling
Short Interest ↓
LEGN
Legend Biotech
$54.14
-1.6%
N/A$7.83 billion604,240429,594Analyst Downgrade
Short Interest ↑
MEDP
Medpace
$210.01
-1.9%
43.39$7.55 billion140,188183,188
STVN
Stevanato Group
$22.39
+1.9%
N/A$6.60 billion466,334592,801
LITE
Lumentum
$86.82
-2.7%
16.47$6.28 billion350,6841.16 million
BEAM
Beam Therapeutics
$78.69
-3.9%
N/A$5.36 billion461,283840,646News Coverage
Gap Down
HALO
Halozyme Therapeutics
$33.85
-4.0%
12.13$4.77 billion905,1531.00 millionAnalyst Report
VIR
Vir Biotechnology
$36.00
+12.4%
N/A$4.71 billion3.50 million1.16 millionGap Up
High Trading Volume
ADPT
Adaptive Biotechnologies
$28.12
-0.3%
N/A$3.97 billion415,562786,118
SANA
Sana Biotechnology
$18.37
-3.2%
N/A$3.47 billion252,433643,585News Coverage
SWTX
SpringWorks Therapeutics
$68.48
-2.6%
N/A$3.37 billion307,308296,072Gap Down
RCUS
Arcus Biosciences
$46.36
-4.3%
N/A$3.26 billion647,514577,390Analyst Upgrade
Analyst Revision
GLPG
Galapagos
$48.84
-1.6%
N/A$3.20 billion188,694280,621Short Interest ↑
Gap Down
RXRX
Recursion Pharmaceuticals
$18.91
+0.6%
N/A$3.20 billion1.04 million643,132News Coverage
FOLD
Amicus Therapeutics
$10.80
-4.8%
N/A$3.01 billion1.27 million2.88 millionGap Down
OLK
Olink Holding AB (publ)
$22.35
+0.3%
N/A$2.66 billion67,232264,653Short Interest ↑
DNA
Ginkgo Bioworks
$12.06
+0.5%
N/A$2.60 billion3.45 million5.15 millionNews Coverage
Gap Down
BCRX
BioCryst Pharmaceuticals
$12.48
-0.2%
N/A$2.23 billion2.70 million4.26 millionInsider Buying
Gap Up
MYGN
Myriad Genetics
$26.61
-3.1%
N/A$2.12 billion390,908599,496
CDMO
Avid Bioservices
$31.46
-0.3%
393.30$1.93 billion451,210722,033Upcoming Earnings
Positive News
ENTA
Enanta Pharmaceuticals
$91.89
+5.8%
N/A$1.86 billion356,724153,333Earnings Report
Analyst Report
Short Interest ↓
Analyst Revision
High Trading Volume
LIAN
LianBio
$16.00
+2.8%
N/A$1.68 billion645,261353,903Analyst Report
News Coverage
IGMS
IGM Biosciences
$49.64
-11.7%
N/A$1.61 billion114,314172,100Gap Down
IMCR
Immunocore
$36.38
-2.0%
N/A$1.57 billion16,91374,247
ADCT
ADC Therapeutics
$22.20
-1.9%
N/A$1.53 billion35,519272,505
RCKT
Rocket Pharmaceuticals
$23.67
-5.8%
N/A$1.53 billion269,235431,095
INBX
Inhibrx
$38.33
-7.9%
N/A$1.45 billion107,020174,194Short Interest ↓
BNR
Burning Rock Biotech
$13.80
-3.2%
N/A$1.44 billion445,822336,004Analyst Downgrade
Short Interest ↓
SEER
Seer
$22.87
-2.9%
N/A$1.41 billion238,192494,405
REPL
Replimune Group
$29.00
-6.4%
N/A$1.36 billion181,313309,515Insider Selling
Gap Down
SXI
Standex International
$108.83
-3.8%
31.27$1.33 billion28,92254,704Short Interest ↓
Gap Down
RGNX
REGENXBIO
$30.96
-6.8%
N/A$1.32 billion263,459406,773
SGMO
Sangamo Therapeutics
$8.45
-5.5%
N/A$1.23 billion999,7841.17 millionGap Down
HQH
Tekla Healthcare Investors
$24.08
+0.8%
N/A$1.08 billion109,948132,051Ex-Dividend
Short Interest ↓
PCVX
Vaxcyte
$19.86
-6.1%
N/A$1.05 billion178,019256,602Insider Selling
Gap Down
HRTX
Heron Therapeutics
$9.41
-3.7%
N/A$959.21 million1.98 million1.39 million
IPSC
Century Therapeutics
$17.20
-4.2%
N/A$939.83 million48,163178,425Gap Down
VXRT
Vaxart
$7.48
+5.1%
N/A$938.71 million6.24 million11.67 millionGap Up
ZEAL
Zealand Pharma A/S
$21.36
+0.3%
N/A$930.91 million2,11516,884Gap Up
STOK
Stoke Therapeutics
$25.11
-9.2%
N/A$923.82 million100,034157,448Short Interest ↑
Gap Down
RVNC
Revance Therapeutics
$12.83
-6.0%
N/A$921.13 million623,321645,561Gap Down
TNGX
Tango Therapeutics
$10.35
-0.6%
N/A$906.10 million49,25695,764Analyst Upgrade
Short Interest ↑
KRYS
Krystal Biotech
$39.81
-6.2%
N/A$885.30 million251,221137,638Gap Down
ANAB
AnaptysBio
$31.12
-2.1%
111.14$856.05 million119,709302,749
OMGA
Omega Therapeutics
$16.91
-0.5%
N/A$807.88 million35,295100,617
PGEN
Precigen
$3.86
-4.7%
N/A$798.01 million1.06 million1.33 millionInsider Buying
Gap Down
TNYA
Tenaya Therapeutics
$19.12
-4.0%
N/A$789.29 million44,169179,738Gap Down
ACRS
Aclaris Therapeutics
$12.62
-5.8%
N/A$772.69 million216,1501.22 millionGap Down
DYN
Dyne Therapeutics
$14.71
-7.3%
N/A$757.98 million130,805292,930
GRTS
Gritstone bio
$11.12
+2.6%
N/A$756.03 million565,8831.49 million
BLUE
bluebird bio
$10.50
-2.4%
N/A$736.12 million2.19 million1.64 million
TPC
Tutor Perini
$13.64
-2.9%
7.14$696.62 million257,087313,964Gap Down
ALGS
Aligos Therapeutics
$16.27
-0.2%
N/A$693.25 million96,268160,457Positive News
Gap Down
DHC
Diversified Healthcare Trust
$2.85
-10.1%
N/A$681.14 million2.65 million1.21 millionShort Interest ↑
News Coverage
Positive News
Gap Down
High Trading Volume
SLN
Silence Therapeutics
$22.00
+0.5%
N/A$658.42 million7,4253,183Analyst Report
Short Interest ↑
News Coverage
High Trading Volume
INKT
MiNK Therapeutics
$20.01
+6.7%
N/A$652.07 million31,32588,742Quiet Period Expiration
MASS
908 Devices
$23.35
-0.2%
N/A$651.47 million167,920280,605Short Interest ↓
Gap Down
VERA
Vera Therapeutics
$30.00
+13.2%
N/A$629.04 million45,10054,263Short Interest ↓
Gap Up
EGRX
Eagle Pharmaceuticals
$48.10
-4.2%
117.32$621.16 million62,521108,861Analyst Upgrade
NAUT
Nautilus Biotechnology
$4.86
+0.6%
N/A$603.45 million224,760467,771
PROG
Progenity
$3.64
-2.9%
N/A$596.05 million21.28 million23.42 millionShort Interest ↓
Gap Down
LGVN
Longeveron
$30.67
-27.5%
N/A$586.44 million20.80 million3.67 millionGap Down
High Trading Volume
BBH
VanEck Vectors Biotech ETF
$196.64
+2.2%
N/A$579.50 million16,61314,672Short Interest ↑
News Coverage
ENOB
Enochian Biosciences
$10.98
N/A$573.38 million102,927788,044Gap Down
DTIL
Precision BioSciences
$8.89
-6.7%
N/A$540.22 million459,244660,357
XLO
Xilio Therapeutics
$19.91
-2.2%
N/A$530.92 million94,530131,160Quiet Period Expiration
Gap Down
ATHA
Athira Pharma
$13.94
-3.6%
N/A$520.67 million419,587631,210Short Interest ↑
Gap Down
HQL
Tekla Life Sciences Investors
$19.93
+1.1%
N/A$483.88 million65,37175,486Ex-Dividend
GRCL
Gracell Biotechnologies
$7.07
-0.3%
N/A$475.42 million278,483221,618Gap Down
PSCH
Invesco S&P SmallCap Health Care ETF
$177.26
-2.9%
N/A$475.06 million6,2789,139Short Interest ↓
Positive News
Gap Down
RIGL
Rigel Pharmaceuticals
$2.77
-5.1%
N/A$473.69 million1.82 million2.39 millionGap Down
GERN
Geron
$1.47
-4.5%
N/A$473.27 million1.71 million4.24 millionGap Down
EVLO
Evelo Biosciences
$8.51
-3.5%
N/A$454.95 million92,262262,884Gap Down
ALDX
Aldeyra Therapeutics
$7.68
-3.0%
N/A$446.15 million693,2811.26 millionGap Up
RLYB
Rallybio
$13.15
-2.2%
N/A$422.51 million12,881112,744Analyst Downgrade
Gap Down
ALT
Altimmune
$10.42
-0.1%
N/A$414.08 million414,5171.51 million
STTK
Shattuck Labs
$9.29
-7.2%
N/A$392.48 million127,623202,301News Coverage
Gap Down
XBIT
XBiotech
$12.80
-0.5%
N/A$389.11 million72,98382,387Gap Down
IPHA
Innate Pharma
$4.80
+1.5%
N/A$380.78 million27,279695,434Short Interest ↑
Gap Up
ELYM
Eliem Therapeutics
$13.76
-11.1%
N/A$365.30 million37,362150,436Gap Down
FLDM
Fluidigm
$4.69
+4.0%
N/A$358.72 million739,0991.39 million
MGTA
Magenta Therapeutics
$6.06
-7.8%
N/A$356.19 million103,470237,689Gap Down
SQZ
SQZ Biotechnologies
$12.28
-7.4%
N/A$344.66 million34,068144,357
The How and Why of Investing in Biotech Stocks

One of the most fascinating and potentially risky sectors to invest in is the biotech sector. This is the sector that includes companies involved in the research and development of therapeutics and vaccines to relieve a myriad of conditions and diseases.

The Covid-19 pandemic brought on by the novel coronavirus in 2020 put the sector squarely in focus. However, due to the unprecedented assistance from the U.S. government through Operation Warp Speed (OWS) it was also an anomaly.

Seasoned investors in the biotech industry understand that products go through a lengthy, rigorous, and expensive testing process. However even when (and if) a drug makes it through that process, the product(s) still have to be approved by the U.S. Food & Drug Administration (FDA) before it can go to market.

And the harsh reality of the biotech sector is that many products will never make it to market, which adds a level of risk to any biotech investment. The good news is there are ways to help minimize the risk by understanding what qualities to look for in biotech stocks.

Introduction

The biotech sector illustrates the risk-reward of investing in stocks more than almost any other sector. Biotech companies are involved in developing therapeutics and drugs for life-threatening conditions. Many of the companies in this sector are small-cap companies. Some are even penny stocks (meaning they have a stock price of under $5).

Biotech stocks are popular because, if these companies successfully bring a product to market, their stock price could double or more virtually overnight. On the other hand, perhaps no other sector comes with so much risk. The reality is that many of the products that these companies develop never make it out of clinical trials, or get approved by the FDA. And that means that investors can easily lose the majority of their investment.

In this article, we’ll describe what a biotech company is and how it is different from (and in some cases similar to) a pharmaceutical company. We’ll also share a few practical tips that can help you select a biotech stock.

How a Biotech Company Is Different From a Pharmaceutical Company?

The biotech and pharmaceutical sectors are related but more like cousins than siblings. One key point that distinguishes the two sectors is that investing in pharmaceutical companies are about what is and biotech stocks are about what could be. And that changes the risk profile for both.

A pharmaceutical company has revenue coming in from products that are commercially available and have other products in development. Because of this pharmaceutical companies are generally profitable and in some cases offer investors a dividend, which can be a significant part of an investor’s total return.

By contrast, a biotech company is primarily research-driven that are using science to develop a potential therapy or vaccine. Many of these companies are small-cap stocks that are not profitable. And even the small fraction of those that rarely pay a dividend.

Another distinction is that pharmaceutical companies spend a great deal of money in marketing and sales. On the other hand, biotech companies see their strength as being in research and development (R&D).

Where the two sectors overlap is that pharmaceutical companies are increasingly pulling back from research and are looking to partner with biotech firms for innovation. This helps create an opportunity for investors who know what to look for in a biotech stock.

How to Select a Biotech Stock

There’s no sure-fire way to take the risk out of biotech stocks. However, there are certain things you can look for to help manage your risk.

  1. Look for a “hot” area of biotech. This means looking for a company that is doing research for a disease or condition that affects a large segment of the population. However, as an investor, these are the companies that you should be looking for because there will be a high demand for the company’s products. The obvious reason is that the companies that were successful would be able to get a faster return on their significant R&D and licensing efforts.

    For example, during the Covid-19 pandemic companies that were developing vaccine candidates soared. However, investors can also look for biotech firms that are researching treatments for areas such as cancer, AIDS, heart disease and neurological conditions.

    Another reason to look for a hot area of research is that it can lead to breakthrough “orphan” drugs and treatments that – if they are first to market - are typically protected from competition for many years.

  2. Look at the company they keep. Many biotech companies are small-cap companies. This can help them maintain a singular focus. However biotech development is expensive and when smaller companies form collaborations with other companies, it can help provide financial and logistical support. And if one collaborator is good, more is better.

  3. As with many investment opportunities, cash is king. The record pace at which multiple Covid-19 vaccines were developed underscores the length of time it takes to bring a product to market. And that means that you should be looking for companies that have an ample cash reserve. It’s not uncommon for small-cap biotech firms to raise money through secondary share offerings. This can work. However, it comes at the expense of share dilution. Companies that continually need to issue share offerings should raise a caution flag for investors.

  4. It stands to reason that in addition to finding companies that have an ample supply of cash, you also want to find companies that are not overly extended with debt. Companies that are heavily burdened with debt will often need to raise more capital which can lead to an unsustainable spiral.

  5. Look for companies with a deep pipeline of products that are in clinical trials. Many biotech companies have one product candidate. However, that’s a high-risk, high-reward proposition for investors. If that product fails, a company might have no other way to recoup their R&D costs. But companies that have several products in development give themselves multiple bites at the apple.

  6. Just as investors want to look for a deep pipeline, they also want to see market-ready products. A deep pipeline is one thing, but at some point, a company has to be able to bring a product to market. Completing clinical trials on human patients is a good first start. However, that’s only the first step. The product needs approval by the U.S. Food & Drug Administration (FDA). And that can take some time. Nevertheless, getting a drug successfully through clinical trials is a good indicator that a product will come to market sooner rather than later.

  7. Look for biotech stocks that have the potential to rebound quickly. These are typically companies whose stocks are being sold on temporary bad news. The process of getting a drug to market is notoriously complex. Along the line, many speculative investors will trade on the news. However investors can use a temporary drop in share price as a great opportunity to buy on the dip. Of course, you have to believe that the news is actually much ado about nothing. If so, investors can use these opportunities to accumulate additional shares.

  8. Have trust for who is in charge. It’s important that the management team consists of not only business-savvy entrepreneurs but also individuals who have the necessary scientific or medical credentials. This ensures that the company will not only be able to allocate resources towards the most promising products, they will also be able to properly interpret research data and make corrections as necessary.

How to invest in biotech stocks?

The easiest and more popular way to invest in biotech stocks is to buy stocks of individual companies. However, investing in an exchange-traded funds (ETFs) can be a smart way to manage the inherent risk of this sector. There are several biotech ETFs that track an index (a basket) of biotech stocks. Some of the most popular biotech ETFs are:

  • S&P Biotech Select Industry Index (INDEXSP:SPSIBI)
  • NYSE Arca Biotechnology Index (INDEXNYSEGIS:BTK)
  • NASDAQ Biotechnology Index (INDEXNASDAQ:NBI)
  • iShares NASDAQ Biotechnology ETF (NASDAQ:IBB)

The final word on investing in biotech stocks

Investing in biotech stocks can be one of the most profitable sectors for risk-tolerant investors. Biotech companies are engaged in research and development for life-threatening conditions. If these companies are able to successfully bring a product to market, its stock price (which in some cases is trading as a penny stock) can double, triple or move even higher.

However, there’s also a tremendous risk to biotech stocks. The process to get a product approved is lengthy and expensive. And just getting a product through clinical trials is not sufficient. There is still an approval process through the FDA. And, unlike the speed at which Covid-19 vaccines have been approved, this can also be a lengthy process.

To invest in biotech stocks requires knowledge of not only financial fundamentals but also the science and medicine behind the company. Individual investors who have a background in science and medicine may have the ability to separate the contenders from the pretenders.

                     



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