Biotech stocks hit a new two-year high in mid-July on a string of promising clinical news, but acquisition activity has slowed significantly from the first half of the year.
↑
X
CRSP stock on wild ride after historic FDA approval. These gene-editing treatments could be next.
In 2020, the industry was put in the spotlight by the pandemic, as Pfizer (PFE) and her partner BioNTech (BNTX), together with Modern (MRNA) and Johnson & Johnson (JNJ) launched a trio of Covid vaccines. But as society learned to live with Covid — and other concerns around economics and politics took center stage — interest in biotech faded into the background.
Investors returned to the biotech universe in late 2023 and early 2024 as Big Pharma began using its drug powder to make acquisitions. The acquisition momentum slowed, and biotech stocks traded sideways for months. On July 16, the biotech industry group of 730 companies reached its highest level since July 2022. After falling in early August, stocks are now rising again.
The industry group has a Relative Strength Rating of 72, according to IBD Digital. This means that the industry group is now in the top 28% of all industry groups in terms of 12-month performance.
The biotech group is ranked 57th out of 197 industry groups tracked by IBD, while the pharmaceutical group is ranked 85th.
But it’s important to keep an eye on specific measures when researching stocks. In terms of fundamental and technical metrics, the top biotech stocks currently trading above 10 are:
- Halozyme Therapies (HALO)
- United Therapeutics (UTHR translation)
- Ligand Pharmaceuticals (LGND)
- ADMA Biologics (ADMA number)
- Harmony Biosciences (HRMY system)
This biotech stock gets under your skin
Halozyme Therapeutics is an expert in drug delivery.
The company is known for its Enhanze technology, which helps inject drugs under the skin via subcutaneous injection. The technology is behind some of the biggest drugs on the market, including Johnson & Johnson’s Darzalex Faspro and rock‘s (RHHBY) Herceptin.
In the second quarter, Halozyme earned an adjusted 91 cents per share on $231.4 million in sales, up 23% and 5% year over year, respectively. Both metrics beat expectations.
The biotech stock rose more than 4% on Aug. 7, the day Halozyme reported its second-quarter earnings.
The company maintained its full-year guidance. In June, Halozyme forecast adjusted earnings of $3.65 to $4.05 per share and revenue of $935 million to $1.02 billion. That was based on a new European patent covering Enhanze technology. The patent has been validated in 37 European countries and expires in March 2029.
Halozyme stock has a strong Composite Rating of 97 and a strong Relative Strength Rating of 96.
Shares broke out of a cup-with-handle base with a buy point at 42.64 on May 8, according to MarketSurge. Shares shot up into the profit-taking zone on June 6. Savvy investors are encouraged to take some profits when a stock rises 20% to 25% above its entry.
Halozyme stock is also well above its 50- and 200-day moving averages, but is not forming a new base.
Halozyme is a technology leader.
Focus on treatments for PAH
United Therapeutics is another highly regarded biotech stock. The company makes a handful of drugs for chronic diseases.
The biggest drug is Tyvaso, a treatment for pulmonary arterial hypertension, or PAH. In the June quarter, Tyvaso sales rose 25 percent to $398.2 million. But that was below expectations of $403.3 million. The aerosolized formulation was to blame for the miss, bringing in $139.9 million in sales, compared with forecasts of $150.9 million.
Analysts are keeping a close eye on United Therapeutics’ pipeline. The company now expects to have results from a late-stage PAH trial in 2026, up from previous expectations of 2025, Leerink Partners analyst Roanna Ruiz said in a recent report.
The biotech stock hit an intraday high on July 25. But shares fell dramatically on July 31 after its second-quarter report. The biotech stock is now moving forward again. United Therapeutics stock has a strong Composite Rating of 98, with a lower Relative Strength Rating of 95.
United Therapeutics shares also made the Tech Leaders list.
Ligand reports strong second quarter
Ligand Pharmaceuticals continues to rank among the leading biotech companies.
The company invests in royalty deals and has more than 100 commercial and development programs with which it collaborates.
Recently, Ligand employee Merck (MRK) received FDA approval for its adult pneumococcal vaccine, Capvaxie. Ligand also agreed to acquire Apeiron Biologics for $100 million. The deal includes royalty rights to a cancer treatment called Qarziba. This is the sixth major asset added to Ligand’s commercial portfolio since early 2023.
Ligand partner Verona Pharmaceuticals (VRNA) also received FDA approval for its inhaled treatment for chronic obstructive pulmonary disease, or COPD. Ligand receives a low-single-digit royalty on global net sales of the drug, Ohtuvayre.
In the second quarter, Ligand easily beat expectations with adjusted earnings of $1.40 per share and $41.5 million in sales. Earnings fell two cents year over year, but sales rose 57.5%.
The biotech stock has a Composite Rating of 95 and a matching Relative Strength Rating. Shares broke out of a cup-with-handle base with an entry at 88.73 on July 8 and are approaching a profit-taking zone. Savvy investors are encouraged to take some profits when a stock rises 20% to 25% above an entry.
Ligand is also on the IBD Tech Leaders list.
ADMA shares continue to rise
Biotech stock ADMA Biologics is on the rise.
The company is known for its human immunoglobulin products. These drugs are intravenous infusions for people with immunodeficiencies.
Shares rose nearly 31% on Aug. 9 after the company reported adjusted earnings of 14 cents per share, beating expectations of 8 cents. The profit rebounded from a loss of 2 cents a year earlier. Revenue rose more than 78% year over year to $107.2 million, easily beating calls of $86.4 million.
The biotech stock is now well above its 50-day and 200-day lines. It has the best possible Relative Strength and Composite ratings of 99. ADMA stock is also trading near an all-time high.
The stock is also on the IBD Tech Leaders list.
ADMA shares are also currently at the top of the IBD 50.
Harmony’s pipeline in a product
Biotech stock Harmony Biosciences is making a name for itself with one product: pitolisant. The company sees the drug “as a portfolio in a product opportunity.”
Today, pitolisant is approved as a narcolepsy treatment called Wakix. But Harmony is also studying pitolisant in other conditions, including a sleep disorder called idiopathic hypersomnia and a genetic disorder known as Prader-Willi syndrome.
In the second quarter, Wakix brought in $172.8 million in revenue, up 29% year over year. That was roughly in line with expectations of $172.5 million.
The biotech stock is now well above its 50-day line. Shares broke out of a consolidation with a buy point at 35.40 on Aug. 14. After waffling on that entry, Harmony stock is now trading in the 5% chase zone, which runs from 35.40 to 37.17.
Harmony shares have a strong Composite Rating of 96 and an RS Rating of 80.
Harmony is also on the Tech Leaders list.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
YOU MAY ALSO LIKE:
Eli Lilly, Crispr and Biogen Lead Pharmaceutical and Biotech Stocks to Big Expectations in 2024
Eli Lilly has a big stake in weight-loss and Alzheimer’s drugs; but is the stock a bargain?
Get timely buy and sell alerts with IBD Leaderboard
Want more IBD insights? Subscribe to our investment podcast!
Options Trading: How to Start Using Options; How to Manage Risk
