As a group, biotech companies were among the best performers in what was a stellar year for US stocks: The group was up 66%, outpacing the broader market by a staggering 3600 basis points. Behind that marquee performance, it was imperative to look at names that had the best therapies for the most onerous diseases.
Perhaps more than any other group, biotechs rise and fall on headlines, so for every whisper of FDA approval for new drugs, there’s the specter of rejection after years and billions of dollars are spent in development. For every rumored richly-valued takeout by a large cap pharmaceutical looking to beef up its product pipeline, there’s the chance that clinical trials can fail early and spectacularly before therapies even make it to regulatory hearings.
That’s why you see biotechs move double and even triple digit percentages in a day on good news, or plummet by as much as 50% or more on bad. This year undoubtedly will be a stock picker’s market, and especially so in biotech.
With that said, I want to give you some food for thought in the form of three companies that should be on your radar as buys, and one to sell.