Biotech stocks are far from a sure thing. However, towards the end of 2019 several stocks in the sector got a nice lift based on promising new drugs in their pipelines. One of the key ways to measure any biotech stocks is the depth of its pipeline. When a biotech company issues a drug, its stock typically gets a lift because, for a brief period of time, the company has exclusive rights to that stock.
But those rights only last for a period of time. And at that point, generic equivalents can enter the market. Since generic labels typically bring prices down, it can be harmful to the stock unless they have a continuous stream of drugs coming to the market.
And in 2020, the story of biotech companies has been the coronavirus. Several of the leading biotech firms are working either individually or in tandem with other firms to develop vaccines or antiviral therapies to help treat and eventually blunt the spread of the virus which remains foreign to our bodies.
So while a volatile market is typically a clue to stay away from biotech stocks, now may be an ideal time to jump into this sector. And we’ve identified 8 stocks that you can buy today and hold until the end of the year.
Quick Links
- Regeneron Pharmaceuticals
- Inovio
- Gilead Science
- Exelixis
- Vertex Pharmaceuticals
- Crispr Therapeutics
- Co-Diagnostics
- Amgen
#1 - Regeneron Pharmaceuticals (NASDAQ:REGN)
Regeneron (NASDAQ:REGN) is one of the most actively traded biotech stocks in 2020. Investors initially traded the stock up when it was named as one of several firms that was developing a vaccine for the coronavirus. However, reality set in when investors realized that a vaccine is months from being approved and ready to deliver at scale.
REGN stock continues to show strength on news that it may have a vaccine ready by August. But that is not certain at all. And the thing with vaccines is that being first is critical.
Investors seem to be digesting that as the stock continues to fight against a level of resistance. Still shares of the stock are up nearly 20% in 2020. And that has a lot to do with the company’s pipeline that includes its headlining drug Dupixent which is used to treat moderate-to-severe eczema. Regeneron may be looking to expand its label for Dupixent in 2020.
Regeneron also continues to show strong sales for Eylea despite the introduction of generic competition and continues to have other drugs in its pipeline.
REGN stock has a P/E of over 23. Analysts have given Regeneron stock a consensus price target of just over $460. However, the two most recent analyst ratings from Oppenheimer and Argus have given the stock price targets of $525 and $540 respectively.
About Regeneron Pharmaceuticals
Regeneron Pharmaceuticals, Inc discovers, invents, develops, manufactures, and commercializes medicines for treating various diseases worldwide. The company's products include EYLEA injection to treat wet age-related macular degeneration and diabetic macular edema; myopic choroidal neovascularization; diabetic retinopathy; neovascular glaucoma; and retinopathy of prematurity.
Read More - Current Price
- $701.85
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 16 Buy Ratings, 6 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $1,052.90 (50.0% Upside)
#2 - Inovio (NASDAQ:INO)
Like Regeneron, Inovio (NASDAQ:INO) is working on a vaccine for the coronavirus. And like REGN, the fortunes of INO are largely tied to its success in getting its virus approved first. But also like Regeneron, the company gives investors reasons to be excited beyond its potential to vaccinate against the coronavirus.
In the case of INO, they are working in the field of immunotherapy. They call their process Immuno-Ingenuity. In the company’s own words this is (in part) “the drive to develop novel immunotherapies to fight cancer and infectious diseases.”
Inovio is on the leading edge of the drug market for pediatric brain tumors. This is a market that could be worth $1.65 by 2023. Inovio recently announced that the FDA approved its application to evaluate its drug, labeled INO-3107, which is in development for Recurrent Respiratory Papllomatosis (RPP). This is a rare disease caused by the human papillomavirus (HPV). The disease causes noncancerous tumor growths that lead to life-threatening obstruction of airways. The growths can occasionally progress to cancer.
About Inovio Pharmaceuticals
Inovio Pharmaceuticals, Inc, a biotechnology company, focuses on the discovery, development, and commercialization of DNA medicines to treat and protect people from diseases associated with human papillomavirus (HPV), cancer, and infectious diseases. Its DNA medicines platform uses precisely designed SynCon that identify and optimize the DNA sequence of the target antigen, as well as CELLECTRA smart devices technology that facilitates delivery of the DNA plasmids.
Read More - Current Price
- $1.84
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 3 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $38.00 (1,965.2% Upside)
#3 - Gilead Science (NASDAQ:GILD)
Gilead Science (NASDAQ:GILD) is also on the forefront of potential coronavirus treatments. The company is developing an experimental antiviral drug, remdesivir that looks to be a promising treatment. Remdesivir is now in late-stage studies and the company says it could report initial results as early as April.
However, Gilead faces a similar risk/reward dynamic as vaccine candidates. If remdesivir performs well, the stock will also perform well. If, however, the trials do not produce the hoped for results, GILD stock could plummet.
Fortunately, that’s not the only reason to like GILD stock. The company’s pipeline includes two of the premier HIV drugs: Biktarvy and Descovy. Gilead is also part of a duopoply in the treatment of hepatitis C.
Heading into 2020 Gilead was sitting on $25 billion in cash and investments. This means it will easily be able to continue spending on the research and development it needs to expand its pipeline. And that pipeline includes potentially entering the immunology market with filgotinig, a rheumatoid arthritis drug.
Plus, Gilead pays out an attractive dividend. While they don’t have a long history of increasing the dividend, the company has increased the dividend by over 9% on average the last three years. And with plenty of cash on hand, the dividend looks extremely safe.
About Gilead Sciences
Gilead Sciences, Inc, a biopharmaceutical company, discovers, develops, and commercializes medicines in the areas of unmet medical need in the United States, Europe, and internationally. The company provides Biktarvy, Genvoya, Descovy, Odefsey, Truvada, Complera/ Eviplera, Stribild, Sunlencs, and Atripla products for the treatment of HIV/AIDS; Veklury, an injection for intravenous use, for the treatment of COVID-19; and Epclusa, Harvoni, Vemlidy, and Viread for the treatment of viral hepatitis.
Read More - Current Price
- $92.57
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 15 Buy Ratings, 12 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $96.43 (4.2% Upside)
#4 - Exelixis (NASDAQ:EXEL)
Most of the stocks in this presentation have benefited from the coronavirus. Exelixis (NASDAQ:EXEL) has actually been on a roller coaster ride. After riding the market melt-up to a 25% gain, the stock plunged sharply and dropped more than 30% from that high. The stock currently sits about flat for the year.
But if the company isn’t competing in the coronavirus arena, they are one of the leaders in cancer treatment. While the world’s attention is rightly focused on containing the spread of the coronavirus, cancer is a disease that will be long after a vaccine for this novel virus is found.
The company’s top-selling drug, Cabometyx, is used to treat both kidney cancer and liver cancer. And, it’s becoming likely that the company will be receiving additional approved indications for Cabometyx by the end of the year. More indications mean more prospective patients and more revenue.
And, Exelixis currently has a huge cash position of $1.4 billion. This means the company has plenty of ammunition to develop new drugs or pursue a strategic acquisition.
About Exelixis
Exelixis, Inc, an oncology company, focuses on the discovery, development, and commercialization of new medicines for difficult-to-treat cancers in the United States. The company offers CABOMETYX tablets for the treatment of patients with advanced renal cell carcinoma who received prior anti-angiogenic therapy; and COMETRIQ capsules for the treatment of progressive and metastatic medullary thyroid cancer.
Read More - Current Price
- $33.29
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 10 Buy Ratings, 7 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $32.44 (2.6% Downside)
#5 - Vertex Pharmaceuticals (NASDAQ:VRTX)
Vertex Pharmaceuticals (NASDAQ:VRTX) is another biotech company that is not a play on the coronavirus. What sets Vertex apart is its leadership position in the area of cystic fibrosis treatment. The company currently has four drugs that are approved in the United States. Of those four, three of them are also approved in Europe. And the one that has not received approval, Trikafta, is likely to be approved as well and stands to be the biggest seller in the Vertex portfolio.
However, the company is not resting on its laurels. Biotech stocks are not known for issuing dividends because of their commitment to growth. This usually takes the form of acquisition or in developing future drugs. In the case of Vertex, it’s a little of both.
The company spent $950 million to buy Semma Therapeutics last year. This will give the company access to an experimental drug for Type 1 diabetes. The company is also partnering with CRSPR Therapeutics (CRSP) to develop a gene-editing therapy that targets rare blood diseases.
About Vertex Pharmaceuticals
Vertex Pharmaceuticals Incorporated, a biotechnology company, engages in developing and commercializing therapies for treating cystic fibrosis (CF). It markets TRIKAFTA/KAFTRIO for people with CF with at least one F508del mutation for 2 years of age or older; SYMDEKO/SYMKEVI for people with CF for 6 years of age or older; ORKAMBI for CF patients 1 year or older; and KALYDECO for the treatment of patients with 1 year or older who have CF with ivacaftor.
Read More - Current Price
- $397.27
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 18 Buy Ratings, 10 Hold Ratings, 3 Sell Ratings.
- Consensus Price Target
- $499.77 (25.8% Upside)
#6 - Crispr Therapeutics (NASDAQ:CRSP)
Speaking of Crispr Therapeutics (NASDAQ:CRSP), they make the list on their own merits. To say CRSP stock had a good year in 2019 would be an understatement. The stock more than doubled at one point. And although it has come down from those lofty heights, it’s still sitting at about a 30% gain since the beginning of 2019.
Crispr specializes in the field of regenerative medicine and gene editing. This has been a field of intense interest for over 20 years. The possibilities that exist could potentially lead to cures in various diseases.
One reason for investor optimism is the encouraging results for the company’s immune-evasive cell replacement therapy for diabetes. In fact, investors were so optimistic that they essentially turned a blind eye to CRSP launching a $4.3 million stock offering when the stock reached $64.50.
That’s because Crispr is likely to use their $274.1 million windfalls to fund ongoing clinical studies that they are partnering with Vertex Pharmaceuticals (VRTX) to complete.
About CRISPR Therapeutics
CRISPR Therapeutics is a gene-editing company focused on developing transformative gene-based medicines for serious diseases using its proprietary CRISPR/Cas9 platform. CRISPR/Cas9 is a revolutionary gene-editing technology that allows for precise, directed changes to genomic DNA. CRISPR Therapeutics has established a portfolio of therapeutic programs across a broad range of disease areas including hemoglobinopathies, oncology, regenerative medicine and rare diseases.
Read More - Current Price
- $40.72
- Consensus Rating
- Hold
- Ratings Breakdown
- 9 Buy Ratings, 8 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $77.93 (91.4% Upside)
#7 - Co-Diagnostics (NASDAQ:CODX)
If there’s one thing that the coronavirus crisis is teaching us, it’s the importance of testing. And that’s why Co-Diagnostics (NASDAQ:CODX) is having its moment. At one point, CODX stock was trading at over 300% above its pre-correction level. And it all was based on strong demand for the company’s CE-IVD Logix Smart COVID-19 test kits.
CODX was one of the first companies to have test kits available. They initially shipped the kits to four continents, but could not ship kits inside the United States due to Food and Drug Administration (FDA) regulations. However on February 29, 2020 the FDA relaxed its regulations and the company was free to ship the test kits in the United States.
At that time the company could only produce about 50,000 test kits per day. But they expect to get that number up to 150,000 per day when a production facility in India goes online. “Our facility in that country stands to more than triple our manufacturing capacity for this test, especially important to meet potential demand in the eastern hemisphere,” said CODX CEO Dwight Egan.
The stock has not managed to maintain that lofty share price of over $21 per share. But the stock is still above $9 per share. Which is still impressive considering that CODX was trading below $1 per share when the year started.
About Co-Diagnostics
Co-Diagnostics, Inc, a molecular diagnostics company, develops, manufactures, and sells reagents used for diagnostic tests that function through the detection and/or analysis of nucleic acid molecules in the United States and internationally. The company offers Co-Dx PCR platform, a polymerase chain reaction (PCR) testing to patients in point-of-care and at-home setting.
Read More - Current Price
- $0.73
- Consensus Rating
- Hold
- Ratings Breakdown
- 0 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $1.50 (105.5% Upside)
#8 - Amgen (NASDAQ:AMGN)
There are few slam dunks in the biotech sector, but Amgen (NASDAQ:AMGN) has been pretty close. The stock is down significantly in 2020, but Amgen is simply one of the largest companies in the biotech arena. It has a large, and historically profitable, portfolio, and pays a dividend.
The question for some investors what will Amgen do to combat declining revenue for its signature drugs. To that end, the company is expecting to receive data from various studies in 2020. This data will include results for its promising drug omecamtiv mecarbil, which is a candidate for the treatment of heart failure. According to GlobalData, this could be a $16.1 billion market by 2026.
Another strategy that is working for Amgen is its effort to form collaborations. In the last 10 years, Amgen has expanded its footprint to 100 countries including China and some emerging markets. Its most recent collaboration is with BeiGene (BGNE). The acquisition is a strategic investment in China. BeiGene has strong experience in oncology with both commercial and clinical capabilities.
About Amgen
Amgen Inc discovers, develops, manufactures, and delivers human therapeutics worldwide. The company's principal products include Enbrel to treat plaque psoriasis, rheumatoid arthritis, and psoriatic arthritis; Otezla for the treatment of adult patients with plaque psoriasis, psoriatic arthritis, and oral ulcers associated with Behçet's disease; Prolia to treat postmenopausal women with osteoporosis; XGEVA for skeletal-related events prevention; Repatha, which reduces the risks of myocardial infarction, stroke, and coronary revascularization; Nplate for the treatment of patients with immune thrombocytopenia; KYPROLIS to treat patients with relapsed or refractory multiple myeloma; Aranesp to treat a lower-than-normal number of red blood cells and anemia; EVENITY for the treatment of osteoporosis in postmenopausal for men and women; Vectibix to treat patients with wild-type RAS metastatic colorectal cancer; BLINCYTO for the treatment of patients with acute lymphoblastic leukemia; TEPEZZA to treat thyroid eye disease; and KRYSTEXXA for the treatment of chronic refractory gout.
Read More - Current Price
- $263.38
- Consensus Rating
- Hold
- Ratings Breakdown
- 11 Buy Ratings, 12 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $319.67 (21.4% Upside)
Every market sell-off creates winners and losers. And this one is no different. Markets are enjoying the stimulus plans that are coming from the United States and other nations. But even this stimulus will only go so far if the coronavirus lives up to the worst-case scenarios of medical experts.
And that’s why now is a great time to look at biotech stocks. Whether you’re looking at stocks of companies that are working on vaccines or anti-virals, or whether you’re just looking to snatch up stocks of quality companies that are selling at bargain prices, you have many options in this sector.
The stimulus package coming from the U.S. government will be sending money directly to companies that are involved in the research and development for vaccines and other treatments that can help the world combat the coronavirus.
But investors have to look beyond this current crisis. Some of the companies that are racing for a coronavirus treatment don’t have anything else in their portfolio. And when it comes to biotech companies, the pipeline is very important. That’s how you get the repeatable and sustainable revenue that drives up stock prices and helps reward shareholders.
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