In this article we will take a look at the 10 best Biotech stocks to buy for 2021. You can skip our detailed analysis of the biotech industry’s outlook for 2021 and some of the major growth catalysts for biotech stocks and go directly to 5 Best Biotech Stocks To Buy For 2021.
During the course of the COVID-19 pandemic over the past year, many investors were aggressively pursuing biotechnology stocks in the hopes of a rapid surge in value as vaccine research moved ahead. For some, the gamble paid off. For others, it did not. The episode highlighted the high-risk, high-reward nature of the biotechnology industry where stocks soar and plummet with the approval or rejection of a single drug. These drugs are developed by companies after years of costly research and trials, a somewhat unpredictable process.
If ever there was a need for due diligence before the sale or purchase of shares, it is in the biotechnology sector. Investors need to be wary of many factors, including but not limited to, market catalysts, research parameters, future prospects, and competitive edge. The risky nature of this endeavor often puts off investors. However, those who understand the game realize that the value of biotech stocks lie in long-term gain, something to be measured in years instead of months. For those looking to make a quick buck, perhaps this is not the best of options.
However, it is equally true that few industries can boast of single-product companies that have valuations in the hundreds of millions. Biotechnology is certainly one of these market segments. One product can change the fortunes of a firm and the investors overnight, For example, last March, the stock of German firm BioNTech soared more than 60% after it announced that it was the first European firm to conduct COVID-19 vaccine trials on humans. The company partnered with pharma giant Pfizer for the testing which was ultimately successful.
The biotech industry comprises firms that develop drugs and other technologies for the treatment of viruses, medical conditions, and diseases. The strict regulatory frameworks governing these firms ensure that there is years of research and extended trials before a product is approved for commercial production. As such, for investors looking to turn quick profits, opportunities are few and far between, since it is not altogether easy to predict success. The success and failure stories of coronavirus vaccine developers are a classic example.
Best Biotech Stocks to Buy Now
Since the pandemic, many biotech companies have sought to develop a coronavirus vaccine, shifting their focus away from other projects. This has resulted in some biotech stocks returning slightly lower overall returns than projected for the year. However, as the coronavirus shadow recedes and the economy opens up, these firms look set to bounce back to pre-pandemic highs. Health is of paramount importance to every individual and as such, biotech shares are mostly a safe bet in the long run. Here is a look at ten top-performing biotech stocks.
Overall, analysts are bullish on the biotech industry. But it's still extremely important to do research before investing in stocks. The rising financial volatility is not even sparing the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Best BioTech Stocks To Buy For 2021
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With this context and industry outlook in mind, let’s start our list of 10 best biotech stocks to buy for 2021.
Seagen Inc (NASDAQ: SGEN) is an American biotechnology company that is trying to develop revolutionary new therapies for cancer. These include the plan to commercialize a monoclonal, antibody-based technique to stop cancer spread. The firm has a market cap of close to $26 billion and its annual revenue has more than doubled the past year from just under $1 billion in 2019 to $2.2 billion in 2020. Seagen has collaboration agreements with other pharma giants too.
The company markets antibody drugs for treatment of Hodgkin lymphoma, metastatic urothelial cancers and breast cancer. It is headquartered in Bothell, Washington. Carillon Tower Advisers, an investor management firm, has stated that it remains optimistic that Seagen shares will pick up after witnessing a slight slump.
Carillon Tower Advisers, in their Q4 2020 investor letter, mentioned Seagen Inc. (NASDAQ: SGEN). Here is what Carillon Tower Advisers has to say about Seagen Inc. in their Q4 2020 investor letter:
"Seagen is a biotechnology company engaged in the development and commercialization of monoclonal antibody-based therapies for the treatment of cancer. The stock slumped a bit in the quarter after the firm announced it was lowering guidance for its drug Adcetris, which is an antibody medication used to treat lymphoma. We remain optimistic on the stock, primarily due to the company’s appealing pipeline of new products as well as the continued growth of Padcev (for metastatic urothelial cancer) and Tucatinib (for breast cancer).”
Novavax (NASDAQ: NVAX) is a drug company trying to develop nanoparticle vaccines and adjuvants. The firm has a market cap of close to $14 billion and annual revenue near $500 million. Novavax is especially known for using a recombinant vaccine technology to develop new products. The firm is seeking a cure for COVID-19, Ebola, seasonal influenza and many other infectious diseases. Last month, the firm announced that the vaccine it developed had a 96% efficacy against the coronavirus, making it one of the highest around. NVAX ranks 9th in our list of 10 best biotech stocks to buy for 2021.
This led to a 9% jump in the shares of the company. The data released by the firm indicated the Novavax vaccine was effective against new strains of the virus too, putting it ahead of other competitors in this regard. Last week, the British government announced that 10 million doses of the Novavax vaccine would be produced and packaged in England. The firm is waiting for regulatory approval before going ahead with the production. Mabion, a Polish biotech firm, has also announced that it will produce the Novavax vaccine for use in Europe.
Regeneron Pharmaceuticals (NASDAQ: REGN) is a New York-based drug firm that develops and manufactures medicines for serious medical conditions. The company has a market cap of over $50 billion and an annual revenue of over $8 billion. The revenue for the firm has increased 30% in 2020 compared to 2019. Some unique products help the company stand from the rest of the pack in the biotech sector. These include Eylea, a drug for an eye disease, Dupixent, an anti-inflammatory drug, and Libtayo, a kind of cancer immunotherapy.
Last month, the drugmaker, which ranks 8th in our list of best biotech stocks to buy now, said it would approach the US authorities for authorization to produce a dose of its coronavirus vaccine that had shown encouraging results in trials, reducing deaths and hospitalizations by 70%.
In one of their investor letters, Polen Capital highlighted a few stocks and Regeneron Pharmaceuticals Inc. (NASDAQ:REGN) is one of them. Here is what Polen Capital said:
"Regeneron was our largest absolute detractor in the third quarter, although year to date, the shares have appreciated nearly 60%. Before the end of the third quarter, Regeneron released early data on its COVID-19 antibody cocktail therapy. Data showed a strong reduction in viral load for patients who had not yet produced their own antibodies and almost no adverse events in approximately 275 patients. Soon after Regeneron’s data was released, it was announced that the President received the same therapy early in his own COVID battle.
Ranking 7th in our list of best biotech stocks to buy for 2021 is French healthcare firm Sanofi (NASDAQ: SNY), which develops and manufactures medicines, consumer healthcare and vaccines in line with patient requirements globally. The company has partnerships with other drug makers for producing medicines as well, including Regeneron Pharma. The firm has a market value of $128 billion and an annual revenue of $45 billion. Last year, the company purchased Principia Biopharma, a firm that is making drugs to treat multiple sclerosis. The company plans to expand further in the coming years.
Earlier this month, Sanofi said that it had agreed to sell off its anti-inflammatory drugs portion of the company to an Italian firm. It justified the move as a tactic to streamline already established products. Meanwhile, the Canadian government has announced that it will be partnering with Sanofi to develop a new flu vaccine facility outside of Toronto. The report suggested that the new facility would have the capability to manufacture vaccines at scale.
Artisan Value Fund, in their Q4 2020 investor letter, mentioned Sanofi (NASDAQ: SNY). Here is what Artisan Value Fund has to say about Sanofi in their Q4 2020 investor letter:
"Top detractors in Q4 included Sanofi. This defensive security was out of favor as vaccine distribution started in earnest and the market shifted focus to a post-COVID world. Sanofi performed about in line with other global pharmaceuticals companies. We believe Sanofi’s management team will have success improving the pipeline and managing costs through restructuring. For perspective, Swedish Match was down ~4% in the quarter but provided a 54% total return for 2020.”
US-based drug giant Pfizer (NASDAQ: PFE) was one of the first companies to publicly market the coronavirus vaccine and the company has since partnered with many country governments for the supply of the vaccine. The company has a market cap of well over $200 billion and an annual revenue that exceeds $40 billion. The company’s shares are set to rise further as the US government ramps up vaccine production with the aim of vaccinating all adult US population. According to reports, the US is presently administering 3 million vaccine doses daily.
Since vaccinating children is one of the foremost challenges in order to get life back to normal across the world, the company has released a study detailing that the vaccine it produces is highly effective for children aged between 12 and 14 years. The study is short in scope, and British firm AstraZeneca PLC (NASDAQ: AZN) has promised a large clinical trial for its vaccine which will begin soon. Past vaccine trials have tended to concentrate on older patients since that age group was the most vulnerable to the coronavirus.
