The best biotech stocks to buy are in companies that put a lot of resources into research and development, often with nothing to show for it for years.
Regulatory hurdles make finding biotech stocks to buy challenging if you don’t have the patience to wait it out.
But when biotech companies win approval to sell and marketing a drug, the potential for profits can be off the charts. That’s why it’s a good idea to at least consider biotech, and whether they have a spot in your portfolio.
Biotech stocks represent companies involved in the research, development and commercialization of biological-based products that are designed to improve health. These companies can include pharmaceuticals, biotechnology, medical devices, and healthcare services.
While the industry is challenging because of the regulatory approval process and keen competition, biotech stocks do have some significant advantages.
For example, they are relatively immune to economic downturns. Even when the economy does poorly, people and insurance companies will spend money on monthly medications they need to improve their quality of life.
As the population ages, healthcare spending for pharmaceuticals and other medical products will continue to increase.
We’re using the Portfolio Grader to find the best biotech stocks to buy in today’s market. Each of these stocks gets top grades.
Eli Lilly & Co. (LLY)
Weight loss drugs are one of the most popular trends in the biotech industry right now, with an estimated 42% of the U.S. population considered obese. That’s why the first two companies on our list are top picks, both of them are soaring on the strength of their weight loss medications.
The U.S.-based company in this equation is Eli Lilly & Co. (NYSE:LLY), which markets its obesity drug under the name Zepbound. About 1 in 3 people who took the injectable drug at its highest dose (15 mg) report losing more than 58 pounds over a 72-week period.
The drug in Zepbound, tirzepatide, is also used in another highly successful Lilly product called Mounjaro, which is used to treat type 2 diabetes. Analysts believe that Zepbound can eventually be worth $25 billion a year in sales, and that Mounjaro sales could jump from $5.2 billion in 2023 to $16 billion in 2024.
Novo Nordisk (NVO)
The European entry into this equation is Novo Nordisk (NYSE:NVO), which has an injectable weight loss drug of its own called Wegovy. Wegovy was approved in 2021 in the U.S. to treat obesity and recently expanded to the U.K.
Expansion came with some growing pains, though. Some pharmacies continue to report shortages, and Novo Nordisk says its running its manufacturing lines 24 hours a day to try to maintain the supply.
Norvo Nordisk also manufactures the drug Ozempic as a treatment for type 2 diabetes, but doctors have also prescribed it as a treatment for weight loss.
NVO saw revenue of $21.4 billion in the fourth quarter, up 31% from the previous year. Profits of $7.7 billion were a 51% increase from the previous year.
NVO stock is up 20% in 2024 and gets an “A” rating in the Portfolio Grader.
Corbus Pharmaceuticals (CRBP)
Corbus Pharmaceuticals (NASDAQ:CRBP) is a Massachusetts-based drugmaker specializing in oncology treatments. The company has potential drugs in its pipeline to treat solid tumors with antibody drug conjugates and monoclonal antibodies.
The most advanced treatment is treating U.S. patients with metastatic urothelial cancer in a trial study.
Corbus also started work on a treatment for obesity and related conditions, although trials for that aren’t expected to begin until the fourth quarter of this year.
Corbus doesn’t have revenue coming in yet, so it’s seeing steep losses – $8 million in the fourth quarter and $44.6 million for the full year. But that’s expected for a biotech stock that has drugs in the pipeline but none yet for sale. You have to be willing to ride it out.
Many investors are. CRBP stock is up more than 500% so far this year as the market reacts to positive developments in the company’s clinical trials. It gets an “A” rating in the Portfolio Grader.
Aptorum Group (APM)
Aptorum Group (NASDAQ:APM) is a U.K.-based pharmaceutical company developing oncology and infectious diseases treatments.
Its approach includes screening approved drug molecules and using its research platform to seek and develop new treatments and therapies.
The company recently agreed to a reverse merger between its wholly owned subsidiary and YOOV Group, specializing in AI techniques to optimize business operations. APM shareholders will own 10% of the combined company after the merger.
Aptorum also plans to split off its legacy business assets into a subsidiary to be called Aptorum Therapeutics.
News of the merger and restructuring turbocharged APM shares, which are now up 264% in 2024. It gets an “A” rating in the Portfolio Grader.
Merck & Co. (MRK)
Merck & Co. (NYSE:MRK) is a New Jersey-based pharmaceutical company best known for its Keytruda cancer treatment. Keytruda brought in $25 billion in sales in 2023, making it the top-selling drug in the world.
But Merck also has many other drugs on the market, including Gardasil for human papillomavirus; ProQuad, which is a vaccine for measles, mumps, rubella and chickenpox; and Januvia for type 2 diabetes. And that’s important, as Merck will lose exclusivity for Keytruda in 2028, making it available for generic substitutes.
Merck expanded that pipeline last month by completing its acquisition of Harpoon Therapeutics. The company’s lead drug candidate treats small cell lung cancer and neuroendocrine tumors.
Earnings for the fourth quarter included revenue of $14.6 billion, up 6% from a year ago. The company reported a loss of $1.2 billion and 48 cents per share as part of previously announced charges incurred in its deal with Daiichi Sankyo to jointly develop three cancer treatments.
MRK stock is up 16% in 2024 and gets an “A” rating in the Portfolio Grader.
Gyre Therapeutics (GYRE)
Gyre Therapeutics (NASDAQ:GYRE) is a North Carolina-based biotech company developing treatments for organ fibrosis and inflammatory diseases.
The company completed a Phase 2 trial in China for its treatment of hepatitis B-induced liver fibrosis.
It’s now planning a Phase 2 trial for the treatment in the U.S. The drug candidate, Hydronidone, is a structural analog of pirfenidone, which is already approved in the U.S. and China for the treatment of idiopathic pulmonary fibrosis.
The company says there are more than 140 million people who have liver fibrosis from hepatitis B, with no approved therapies on the market. So, its treatment has the potential to be profitable for investors.
Gyre posted full-year revenue in 2023 of $113.5 million, up from $102.3 million in 2022.
GYRE stock is up 330% in the last 12 months, but has been falling so far in 2024. It gets an “A” rating in the Portfolio Grader.
Neurogene (NGNE)
Neurogene (NASDAQ:NGNE) is a biotech company that is developing what it calls EXACT gene therapy technology.
The platform can be used to achieve optimized levels of transgene expression for each drug candidate, which Neurogene says gives it an advantage over traditional gene therapy.
It’s currently working with the platform to develop its lead gene therapy candidate for Rett syndrome, which is a disorder seen in children that impairs their ability to walk, eat, speak or breathe.
The company went public just last year in a reverse merger with cancer drug developer Neoleukin Therapeutics backed by investment firms that put $95 million into the newly formed company. The investment is expected to assure Neurogene of funding until the second half of 2026.
That gives it a solid window to develop and get approvals.
NGNE stock is up 95% this year and gets an “A” rating in the Portfolio Grader.
On the date of publication, Louis Navellier held LLY and NVO. He did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.