Some experts say we’re in “the golden age of biotechnology.” Scientific advances are opening up possibilities for the treatment and prevention of diseases that could only have been imagined in the past.
This golden age is also presenting tremendous opportunities for investors. Biotech stocks offer the potential for huge long-term returns. Plus, it’s not unheard of for a winning biotech stock to produce 10x or 20x returns in a very short period of time regardless of what’s happening elsewhere.
The best biotech stocks to buy boast strong pipelines, and some already have winning drugs on the market. In this article we’ll cover a few of the biotech companies that investors should watch closely.
Vir Biotechnology (VIR) is a commercial-stage immunology company focused on combining immunologic insights with cutting-edge technologies to treat and prevent infectious diseases. Its current development pipeline consists of product candidates targeting COVID-19, hepatitis B, influenza and human immunodeficiency virus.
The company’s partnership with GlaxoSmithKline (GSK) on Sotrovimab, a dual-action antibody, is helping increase the drug’s reach. Sotrovimab has been authorized for emergency use in the U.S. and the E.U. and is undergoing review in several other nations. Binding agreements have already been received for the sale of more than 420,000 doses of Sotrovimab worldwide, including a portion of those procured by the U.S. government. In addition, more than 220,000 doses have been reserved through other agreements.
There’s much more to Vir’s pipeline than just their COVID antibody. The company has made headway, along with some established collaborators, in some of the most profitable infectious diseases. For instance, their stage 2 collaboration with Anyalam on SiRNA (small interfering RNA) and antibody treatments for hepatitis B has produced VIR-2218; a treatment experts have touted as the potential best-in-class siRNA and a “backbone” of hepatitis B therapy.
Vir also has exciting prospects in HIV and influenze. Their collaboration with the Bill & Melinda Gates Foundation on a T-cell treatment for HIV is rounding the corner into the second phase. If all goes according to plan, Vir investors will have a rosy future.
The analyst community is taking notice of Vir. Last week, JPMorgan analyst Anupam Rama upgraded Vir, saying that the company’s broader pipeline (beyond COVID) should come into increasing focus in the next 12 months. The analyst said he will be looking for the broader non-Covid pipeline to “emerge as a larger component value driver.”
The current consensus among 8 polled analysts is to Buy VIR. There are 5 Buy ratings, 3 Hold ratings and no Sell ratings. A median 12-month price target of $65 represents a 61% increase from the current price. VIR is set to report Q3 earnings on November 12th. Who knows, maybe they will also touch on exciting revelations from their pipeline
Global healthcare leader Eli Lilly And Company (LLY) has been creating high-quality medicines for more than a century. The drug firm focuses on endocrinology, oncology, neuroscience and immunology. Key products include Trulicity, Jardiance, Humalog and Humalin for diabetes; and Taltz and Olumiant for immunology; and Verzenio and Alimta for cancer.
Last month, Lilly’s immunology drug Olumiant received emergency use authorization from the FDA to treat hospitalized COVID-19 patients. What’s more, the drug has produced impressive results from phase 3 trials examining Olumiant’s efficacy as a hair loss treatment. Positive final results and FDA approval for the drug as a hair loss treatment could be a game changer for the drug maker.
The mega-cap pharmaceutical giant’s pipeline is locked and loaded with promising advancements which means plenty of upcoming potential opportunities for investors to benefit. In the first half of 2021 Lilly increased research and development spending for its up-and-coming treatment for diabetes Tirzepatide by 21% to $3.36 billion. The drug is currently in phase three trials and has already proven to be more effective than competitors.
Berenberg Analyst Herry Holford recently upgraded Eli Lilly to Buy from Hold and raised the price target from $240 to $270. “Pipeline progress has effectively locked in Eli Lilly’s long-term sales growth, which now stands at 10% annually through 2030 versus a peer average of 4%,” Holford tells investors in a research note. The analyst says a “confluence of catalysts, superior growth and superior returns” on Research and development, compounded by the recent pullback in the stock, prompts a revisit to the investment thesis.
The board of directors at Eli Lilly recently declared a fourth quarter dividend of $0.85. The dividend will be payable on December 10th to shareholders of record as of November 15th. LLY’s dividend payout for the year is set for the low 40% range, which should allow for robust future dividend growth.
A strong pipeline and a stable dividend make Eli Lilly an attractive consideration. The pros on Wall Street also think so. Among 17 polled analysts, 12 say to Buy LLY, 4 call it a Hold and only 1 rates the stock a Sell. A median 12-month price target of $279 represents a 12.6% increase from its current price.
iShares Genomics Immunology and Healthcare ETF (IDNA)
IDNA holds a concentrated portfolio of global companies in the biopharmaceutical and healthcare equipment and services industries that could benefit from the long-term growth and innovation in genomics, immunology and bioengineering. The fund is passively managed and holdings are weighted by market-cap and are constrained such that no individual security exceeds 4% weight of the portfolio. The index rebalances semi-annually.
It’s worth noting that IDNA beat Cathie Woods’ ARK Genomic Revolution ETF (ARKG) in the first ten weeks of 2020, when global markets were rocked by the coronavirus outbreak and investors were eagerly hunting for potential profit in companies researching treatment and vaccines.
- Weighted Average Market Cap $34.48B
- Price / Earnings Ratio -95.16
- Price / Book Ratio 4.97
- YTD Daily Total Return 14.59%
- YTD Return 18.82%
- Yield 0.18%
- Expense Ratio 0.47%
- Net Assets 327.82M
- Number of Holdings 50
- Top Holdings: Moderna MRNA, Intellia Therapeutics NTLA, BioNtech SE BNTX
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