Biotech stocks have been on a roller-coaster ride, but have trended lower for several years.

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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.

Investor’s Business Daily’s biotech industry group has mostly fallen since February 2021. The group now has a Relative Strength Rating of 71, according to IBD Digital. This puts it just below the top one-quarter 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. 61 out of 197 industry groups that IBD tracks. Meanwhile, the pharma group ranks No. 150.

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:

• Amphastar Pharmaceuticals (AMPH)
• Vertex Pharmaceuticals (VRTX)
• Hutchmed (HCM)
• Immunogen (IMGN)
• Neurocrine Biosciences (NBIX)

The No. 1 Biotech Stock: Amphastar

Amphastar Pharmaceuticals develops, manufactures and sells a variety of injectable drugs. It also works on drugs that can be inhaled or delivered via the nose.

During the third quarter, Amphastar’s sales surged 50% to $180.56 million. Adjusted earnings ramped 203% to $1.15 per share.

This follows the acquisition of Baqsimi, a nasally administered medicine for people with diabetes and low blood sugar. Baqsimi brought in $28.7 million in third-quarter sales. Amphastar acquired Baqsimi from Eli Lilly (LLY). Lilly is still selling Baqsimi but will soon transfer distribution to Amphastar.

Also during the quarter, sales of glucagon, a treatment for low blood sugar, rocketed 107% to $29.5 million. Glucagon is Amphastar’s biggest moneymaker. Revenue from asthma inhaler Primatene Mist jumped 35% to $24.8 million.

But sales of a man-made form of vitamin K tumbled 47% and revenue from an overdose medication fell 31%.

Amphastar stock broke out of a cup-with-handle base, topping a buy point at 58.35 on Dec. 1. But shares sank as much as 7.4% below their entry on Dec. 15. That was enough to trigger a sell rule. Savvy investors are encouraged to cut their losses when a stock falls 7%-8% below its entry.

Shares remain above their 50-day moving average, however. The biotech stock has a perfect Composite Rating of 99 and a Relative Strength Rating of 95.

Biotech stock Amphastar is a Tech Leader.

Moving Beyond Cystic Fibrosis

Vertex is one of the biggest biotech stocks in terms of market cap. It trails only Amgen (AMGN), now leading Gilead Sciences (GILD) and Regeneron Pharmaceuticals (REGN).

The company is the de facto leader of the cystic fibrosis drug market. Third-quarter sales — dominated by its triple regimen Trikafta — jumped 18% to $2.33 billion.

But it’s now expanding into other efforts. Vertex and partner Crispr Therapeutics (CRSP) just gained Food and Drug Administration approval for a gene-editing approach to sickle cell disease, a blood disorder marked by severe pain episodes called vaso-occlusive crises. The drug, now known as Casgevy and also approved in the UK, will cost $2.1 million for a single treatment.

Vertex also bought its diabetes treatment partner, privately held ViaCyte. The companies are testing a cell replacement drug in type 1 diabetes.

Importantly, Vertex said this week its alternative to opioids in pain treatment reduced pain levels by 50% for 30% of patients, and by more than 20% of patients reported a 70% reduction in pain levels. Across three doses, patients with diabetic peripheral neuropathy reported at least a 2-point reduction in pain on an 11-point scale.

Vertex stock broke out of a flat base with a buy point at 387.42 on Dec. 13, surging on the pain drug news. Shares are now narrowly in the buy zone, which runs from 387.42 to 406.79.

The biotech stock has a Composite Rating of 93 and a Relative Strength Rating of 87. Shares are also above their key moving averages.

China-Based Biotech Stock

Hutchmed is a China-based biotech company working on numerous cancer treatments. Its efforts have led to collaborations with big-name pharmaceutical companies like AstraZeneca (AZN), Lilly and Takeda Pharmaceutical (TAK).

On Nov. 9, Hutchmed’s partner, Takeda, won FDA approval for Fruzaqla, a treatment for patients with previously treated metastatic colon cancer. This is the first targeted therapy approved in the U.S. for this patient group regardless of biomarker status or prior types of therapies in more than a decade.

The approval triggered a milestone payment of $35 million from Takeda to Hutchmed. Hutchmed will also receive royalties on net sales.

Biotech stock Hutchmed is consolidating with a buy point at 20.73. Shares are also narrowly above their 50-day and 200-day moving averages.

Hutchmed stock has a Relative Strength Rating of 93 and a Composite Rating of 89.

Riding The ADC Rollercoaster

ImmunoGen is known for its targeted cancer treatment, Elahere, which is approved for patients with fallopian tube cancer and primary peritoneal cancer. In late November, AbbVie (ABBV) announced its $10.1 billion plan to buy ImmunoGen.

In the third quarter, Elahere sales were $105.2 million, accounting for the lion’s share of $113.4 million in revenue. Revenue handily beat FactSet-polled analysts’ expectations for $103.7 million. ImmunoGen also reported its first profit in 11 quarters.

AbbVie says ImmunoGen’s late-stage testing efforts for Elahere provide it with an opportunity to move into reaching patients earlier in the treatment paradigm.

Elahere belongs to the antibody drug conjugate class, or ADCs. These drugs deliver toxic chemicals directly to tumors, limiting their damage to nearby healthy tissue. This area of medicine has gotten a lot of attention following Pfizer’s acquisition of ADC expert Seagen, which wrapped this week.

Shares of ImmunoGen broke out of a cup base with a buy point at 20.69 on Nov. 30, the day AbbVie pledged to pay $31.26 per share of the biotech stock. ImmunoGen stock is well above its key moving averages with a perfect Relative Strength Rating of 99. ImmunoGen also has a Composite Rating of 90.

ImmunoGen stock is also a Tech Leader.

Neurocrine Faces Recent Setbacks

Despite recent setbacks for its seizure and depression treatments, Neurocrine Biosciences is once again a top-rated biotech stock.

On Nov. 9, Neurocrine said a treatment for focal onset seizures failed to 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.

But the third-quarter report showed some upside for Neurocrine. Total sales popped almost 29% to $499 million, above expectations for $479.1 million. Adjusted earnings also came in at $1.54 per share, beating forecasts by 20 cents a share and climbing 43%.

Ingrezza, Neurocrine’s treatment for tardive dyskinesia drove almost all of those sales. Tardive dyskinesia is a movement disorder.

Further, on Dec. 5, the FDA 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.

The biotech stock broke out of a cup-with-handle base and a buy point at 119.29 on Dec. 6. Shares are now on the lower boundary of the buy zone, which runs from 119.29 to 125.25. Neurocrine stock is still above its 50-day and 200-day moving averages.

Shares have a Composite Rating of 94, though a lower Relative Strength Rating of 79.

Neurocrine stock is also a Tech Leader.

Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.

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