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3 Large Biotech Stocks Worth Adding to Your Portfolio

REGN, MRNA & VRTX are the three biotech companies that are likely to outperform the sector on the back of strong fundamentals.

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This story originally appeared on Zacks

The coronavirus outbreak has put the spotlight on the volatile biotech sector once again.  The sector has had a decent run in the year so far as the Nasdaq Biotechnology Index registered a 14.2% gain. 

- Zacks

The second quarter saw a revival in demand for most established drugs even though some continue to face challenges. Most of the bigwigs witnessed a revival in sales and provided an encouraging outlook for the remainder of the year. Moreover, new drug approvals are likely to maintain the momentum. The FDA’s approval of Biogen’s BIIB Alzheimer's disease (AD) drug, Aduhelm, in June propelled the entire sector and put the spotlight on other companies as well that are developing drugs for AD as investors are now optimistic about the prospects of these pipeline candidates.

With deadly emerging variants of COVID-19 creating havoc across the world, the development of coronavirus vaccines and treatments remains the underlying story of the sector for the time being. Consequently, companies like Moderna MRNA and Novavax NVAX, which have been developing vaccines, continue to be in the spotlight and the massive surge in their share price has fueled the overall sector.  The same trend is expected to continue with booster doses of the vaccines becoming the need of the hour.

While mergers & acquisitions have always taken centerstage in the sector, there hasn’t been much happening on that front in the year so far, baring a few. AstraZeneca completed the acquisition of Alexion Pharmaceuticals in July 2021. In April 2021, Amgen acquired Five Prime Therapeutics. The pace is expected to pick up as pharma/biotech bigwigs constantly eye lucrative acquisitions to bolster their portfolio/pipeline and combat rivalry.

However, given the uncertain economic environment, the inherent risks of the sector get intensified. In such a scenario, choosing a biotech stock for investment can be tricky. Particularly, smaller biotechs are riskier as their product pipelines are several years away from commercialization.

Here we zero in on three big biotech companies, which hold enough room for an upside, backed by strong fundamentals.

3 Top Stocks Likely to Outperform

Biotech giant Regeneron Pharmaceuticals REGN has had a pretty good run in 2021 so far on the back of a solid product portfolio and a stupendous contribution from REGEN-COV, its antibody cocktail for COVID-19.  Regeneron has a diverse product portfolio. Demand for ophthalmology drug, Eylea, revived significantly after a slowdown last year. Asthma drug, Dupixent, developed in partnership with Sanofi, maintains its stellar performance. Immunotherapy drug, Libtayo, is off to a good start and sales are expected to get a boost from the recent label expansions. Moreover, an incremental contribution from REGEN-COV, its antibody cocktail for COVID-19, has significantly boosted the top line in the last couple of quarters and should propel sales as the pandemic continues.

Regeneron currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The company's shares have gained 41% in the year so far compared with the industry’s growth of 1.2%.

 

Zacks Investment Research

Image Source: Zacks Investment Research

Moderna is riding high on the success of its COVID-19 vaccine, and the company has had an outstanding year so far.  The company’s COVID-19 vaccine, mRNA-1273, has shown robust demand following its authorization in multiple countries. Significant product sales have boosted the top line and the same trend is expected to continue as the company has advanced purchase agreements with multiple countries for initial doses. The company is seeking full approval for the vaccine in the United States for individuals 18 years or older. The company is also focused on expanding the vaccine’s label. Further, Moderna is developing several promising candidates as therapies and vaccines targeting oncology indications and rare diseases.

Moderna currently carries a Zacks Rank #2 (Buy). Shares are up 273.3% in the year so far.

Zacks Investment Research

Image Source: Zacks Investment Research

Vertex Pharmaceuticals’ VRTX boasts a market leading portfolio of cystic fibrosis (CF) products. The company’s lead marketed products are Trikafta (elexacaftor/tezacaftor/ivacaftor and ivacaftor), Symdeko/Symkevi (tezacaftor/ivacaftor and ivacaftor), Orkambi (lumacaftor/ivacaftor) and Kalydeco (ivacaftor). Triple therapy, Trikafta/Kaftrio’s early approval and launch marked a significant milestone for Vertex. Approval of Trikafta/Kaftrio in more regions, additional reimbursement agreements for Kaftrio in EU countries, and approval of all CF medicines for additional mutations and younger patient populations should further boost the company.

Vertex currently carries a Zacks Rank #2.





 

Zacks Investment Research

Image Source: Zacks Investment Research



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Regeneron Pharmaceuticals, Inc. (REGN): Free Stock Analysis Report

 

Biogen Inc. (BIIB): Free Stock Analysis Report

 

Vertex Pharmaceuticals Incorporated (VRTX): Free Stock Analysis Report

 

Moderna, Inc. (MRNA): Free Stock Analysis Report

 

Novavax, Inc. (NVAX): Free Stock Analysis Report

 

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