After hitting a two-year high in February, biotech stocks have pulled back markedly in April.
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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 and politics took center stage — interest in biotech fell by the wayside.
Interest appeared to return in early 2024 amid a slew of takeover deals. Though takeover momentum hasn't slowed, biotech stocks have. The industry group hit a two-year high at 3039.79 on Feb. 28. Since then, shares have fallen more than 13% as of the close on April 24.
The industry group has a Relative Strength Rating of 89, which has toppled from 98 just three months ago, according to IBD Digital. This means the industry group now ranks in the top 11% of all industry groups in terms of 12-month performance.
Notably, some companies are fighting back against plans for Medicare to begin negotiating the prices of the costliest drugs.
The biotech group ranks No. 21 out of 197 industry groups that IBD tracks. Meanwhile, the pharma group ranks No. 113.
But it's key to watch specific measures when examining stocks. In terms of fundamental and technical metrics, the best biotech stocks trading above 10 right now are:
- Neurocrine Biosciences (NBIX)
- CervoMed (CRVO)
- Gyre Therapeutics (GYRE)
- Alpine Immune Sciences (ALPN)
- GeneDx (WGS)
The No. 1 Biotech Stock: Neurocrine
Neurocrine Biosciences is continuing its reign as the top-rated biotech stock.
The company is a leader in the neuroscience space. It recently dosed the first patient in a study of a treatment for adults with major depressive disorder, and began a Phase 1 study of a treatment for neurological and neuropsychiatric conditions.
Neurocrine is well known for its approved drug, Ingrezza, which treats tardive dyskinesia. Tardive dyskinesia is a movement disorder associated with antipsychotic medications.
In the fourth-quarter, total sales came in below forecasts at $515.2 million. The Street projected $518.5 million. Adjusted profit topped forecasts, however, at $1.44 per share.
On a bearish note, Neurocrine said in November itstreatment for focal onset seizures didn't demonstrate a meaningful reduction in seizure frequency. Further, a depression treatment failed to meet the goal of a proof-of-concept study. Neurocrine tested it in people with anhedonia, the inability to feel pleasure.
In December,the Food and Drug Administration granted Neurocrine a breakthrough therapy designation for its treatment for congenital adrenal hyperplasia. CAH is a genetic disease that can affect a child's normal growth and development.
Neurocrine stock broke out of a flat base with a buy point at 143.35 on March 21, MarketSurge.com shows. But the biotech stock fell as much as 7% on March 27, triggering a sell rule. Savvy investors are encouraged to cut their losses when a stock falls 7% to 8% below its entry.
Shares are now trading above their 50-day and 200-day moving averages.
Shares have a perfect Composite Rating of 99, though a lower Relative Strength Rating of 84.
Neurocrine stock is also an IBD Tech Leader.
Clinical-Stage Neuro-Focused Biotech
CervoMed is a clinical-stage biotech company working on treatments for neurodegeneration diseases. Previously, CervoMed was known as EIP Pharma.
The company's leading drug is in testing for patients with dementias, including Lewy body dementia and Alzheimer's disease. Laboratory testing also suggests CervoMed's leading drug, dubbed neflamapimod, could help patients recover after having a stroke.
It's important to note, CervoMed is steeped in losses and that trend isn't expected to change until 2029, according to FactSet. But revenue could ramp quickly. Biotech stock analysts project $66.9 million in 2028 sales growing to $484.6 million the following year.
CervoMed stock has a top Relative Strength Rating of 99 and a slightly lower Composite Rating of 94.
Shares are also well above their key moving averages after recently hitting a two-year high at 26.38 on March 20.
CervoMed stock just joined the IBD Tech Leaders list.
Gyre Is Working In Hot Spaces
Gyre Therapeutics is a new addition to the list of top biotech stocks. The company is working on a drug to treat liver fibrosis due to hepatitis B and metabolic dysfunction-associated steatohepatitis, or MASH.
Gyre is also considering treatments for chronic obstructive pulmonary disease, or COPD, pulmonary arterial hypertension, or PAH, and acute/acute-on chronic liver failure.
The MASH space has heated up with the FDA approval of the first-ever treatment, a drug called Rezdiffra from Madrigal Pharmaceuticals (MDGL). Merck (MRK) just won approval for the first drug that treats an underlying cause of PAH, Winrevair.
Like other early-stage biotech companies, Gyre has reportedly years of annual losses, though came in with $113.5 million in sales last year. Analysts don't currently have any sales projections for future years, however.
Today, Gyre stock has a top RS Rating of 99 and a Composite Rating of 88. But the biotech stock undercut its 50-day line on April 10.
Gyre is also a new addition to the IBD Tech Leaders list.
Biotech Stock Nabs Takeover Deal
Alpine Immune Sciences is working on treatments for inflammatory diseases and just scored a $4.9 billion acquisition from Vertex Pharmaceuticals (VRTX). Vertex will pay $65 per share of the biotech stock.
Alpine's most advanced drug is in testing for IgA nephropathy, a form of chronic kidney disease. The company expects to begin a Phase 3 study in the second half of this year. The Vertex takeover is on deck to wrap up later this quarter.
Notably, others are in the same space — including Novartis (NVS), Vera Therapeutics (VERA) and Otsuka Pharmaceutical — but analysts says Alpine's drug could be the best in its class. Importantly, it also requires fewer doses than its competitors' drugs.
Alpine also says its drug could potentially work for patients with other autoimmune conditions like membranous nephropathy and lupus nephritis.
The company is also partnered with Adaptimmune Therapeutics (ADAP) and Horizon Therapeutics, a division of Amgen (AMGN). The Horizon project is focused on immunology while the Amgen deal is for next-generation cancer treatments.
Alpine stock lands on the list of Tech Leaders.
Shares have a perfect Relative Strength Rating of 99 and a nearly perfect Composite Rating of 98.
Notably, the biotech stock remains above its 50-day and 200-day moving averages.
A New Top-Rated Biotech Stock
GeneDx is a new addition to the list of top-notch biotech stocks.
The company makes sequencing tests that scan a person's exome or genome. The exome accounts for all protein-coding genes within a person's DNA, while the genome accounts for all genes, regardless whether they code for proteins.
Last year, the company brought in $226.1 million in sales, growing more than 16%. GeneDx continues to report losses, however, and analysts don't expect that to change in the near future.
Still, shares are on the rise with a perfect Relative Strength Rating of 99. GeneDx stock rose out of dollar-stock status earlier this month and touched a record high at 12.57 on April 23 and April 24.
The biotech stock has a promising Composite Rating of 88.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
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