7 Top-Rated Biotech Stocks to Buy for Q2

biotech stocks - 7 Top-Rated Biotech Stocks to Buy for Q2

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  • BioNTech (BNTX) rose to fame with the tech that delivered the Pfizer (PFE) vaccine, but there’s more there than just the vaccine.
  • BioCryst Pharmaceuticals (BCRX) is a commercial-stage biotech that has been researching and developing drugs for rare diseases since 1986.
  • Moderna (MRNA) is another “pandemic famous” stock, but its real potential lies with its messenger RNA (mRNA) research and pipeline.
  • Merus (MRUS) focuses on clinical-stage oncology drugs, and more specifically immuno-oncology drugs.
  • iTeos Therapeutics (ITOS) also specializes in immuno-oncology biopharmaceuticals.
  • Exelixis (EXEL) has four drugs in the market focused on various cancer treatments.
  • Regenxbio (RGNX) has been around since 2008 and focuses on the commercialization and licensing of its recombinant adeno-associated virus gene therapy.

The great thing about biotech stocks in a market like this is they aren’t affected by inflation, sector rotation, supply chain issues or commodity prices. They operate in their own bubble, working through the cash that investors have put in the companies, waiting for a payoff down the road.

Developmental and clinical stage companies need years of testing and drug trials to even get the chance to get their products to market.

Granted, two of the stocks here are household names since the pandemic. But they were just geeky biotechs like the rest of the crew until they were in the right place at the right time with their work.

Many of these companies are small cap stocks. That means you’re buying into their future, not their present.

That future can mean marketing and/or research deals with big pharmas or even buyouts. Certainly, it can also mean that their focused efforts don’t pan out. But they’ve made it this far, and investors are still interested. Just invest with a long time horizon and be patient.

BNTX BioNTech $154.61
BCRX BioCryst Pharmaceuticals $10.26
MRNA Moderna $150.80
MRUS Merus $23.50
ITOS iTeos Therapeutics $30.39
EXEL Exelixis $22.75
RGNX Regenxbio $31.04

BioNTech (BNTX)

The headquarters of BioNTech (BNTX) in Germany.

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One of the most interest trends in small biotech stocks these days is how this new generation of companies has found new and interesting technologies to explore.

For example, BioNTech (NASDAQ:BNTX) is focused on the intersection of immunology and synthetic biology. Basically the latter terms is the study of how to rearrange biology that is found in nature using multidisciplinary tools.

This is cutting edge stuff and was only theoretical a decade or two ago. But thanks to advances in technology, the theory is now proving itself in labs and real life.

Pfizer (NYSE:PFE) paired with this small German biotech and ended up getting a Covid-19 vaccine in a stunningly short period of time. Usually new vaccines take many years to make.

Now BNTX is a leader in the field, with enormous potential for its vaccines. And it has a $43 billion market cap to fund its work.

BNTX stock has lost its luster in the market. It has lost 40% year to date, and it’s trading at a P/E (price-to-earnings ratio) just above 5. It’s a bargain.

This stock has an “A” rating in my Portfolio Grader.

BioCryst Pharmaceuticals (BCRX)

Image of two scientists in lab coats studying results in a lab

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This North Carolina based biotech is what’s called a commercial stage biotech. That means BioCryst Pharmaceuticals (NASDAQ:BCRX) has drugs that are already commercially available.

You’re not buying a hope here but a real drug company that has two drugs in the market serving the rare disease community. BCRX provides drugs for rare diseases where there are no treatments available yet.

BCRX has two drugs on the market now, one for hereditary angioedema (HAE) related heart attacks and a flu treatment. The biotech also has a drug that can be used for Covid-19, Ebola and Marburg disease that’s still in trials. It also has other candidates progressing through trials as well.

BCRX has a $2 billion market cap and recently dropped 38% after pausing enrollment for a clinical study. But BCRX has been around since 1986, so it has weathered plenty of rough seas, especially when biotech was as uncharted as the metaverse is now.

This stock has a “B” rating in my Portfolio Grader.

Moderna (MRNA)

Moderna (MRNA) research Coronavirus (Covid 19) vaccine. Row of vaccine bottles with blurred Moderna company logo on background.

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As its ticker implies, Moderna (NASDAQ:MRNA) is a leading company in mRNA, or messenger ribonucleic acid. In simply terms, mRNA is what carries genetic code to form DNA, the building block of all carbon-based lifeforms.

This has been a grail-like goal for decades. If you can access mRNA you have a chance to build all sorts of incredible drugs that can help with diabetes, cancers, genetic diseases and more. But mRNA is very delicate and has been notoriously difficult to build into a robust structure that can be produced efficiently at scale.

Because of this reputation, it didn’t get much funding until the pandemic hit. Now sitting on market cap of $62 billion, MRNA has a war chest to work with that will help turbocharge its efforts.

MRNA stock is down 40% year to date, but it’s trading at a P/E of 5.4 and has a bright future ahead. It’s finally on sale.

This stock has a “B” rating in my Portfolio Grader.

Merus (MRUS)

A close-up concept image of a tiny glass vial with a strand of DNA in it.

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This Dutch company is another relative newcomer to the biotech stocks space. Merus (NASDAQ:MRUS) was launched in 2003 and is focused on its unique platform using full length human immunoglobulin antibodies (naturally occurring antibodies) that it adapts and applies proprietary screening technologies to engage and harness the power of the immune system to target tumor cells.

Basically, that puts it in the immuno-oncology therapy sector, where companies are attempting to use the body’s natural immune system to fight a disease, in this case, tumors.

MRUS has five clinical trials underway. And it looks like the technology is being well received. But currently it has a $1 billion market cap and the stock is down 26% year to date. Use risk capital and patience here.

This stock has a “B” rating in my Portfolio Grader.

iTeos Therapeutics (ITOS)

Pipette adding fluid to one of several test tubes

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iTeos Therapeutics (NASDAQ:ITOS) is another immuno-oncology-focused company. It’s a U.S.-based company that has been in the game for decade now. ITOS focuses on tumor microenvironments and being able to actively disaggregate them and stop them from reproducing.

Again, immuno-therapy has only really hit its stride in the past decade or two, as technologies have advanced enough to allow researchers to study and test these environments with much more speed and finesse.

It has a handful of trials in phase-1 or phase-2 and has recently seen interest from a big pharma regarding its work.

ITOS stock is down 34% year-to-date but has strong earnings and a P/E of 5.4. Having backers from the big drug companies is encouraging.

This stock has an “A” rating in my Portfolio Grader.

Exelixis (EXEL)

Biochemical/biotech research scientist team working with microscope

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While not an immuno-oncology biotech, Exelixis (NASDAQ:EXEL) uses its gene therapy platform to develop drugs that target various cancers. It has three drugs currently in the market.

That makes EXEL unique among these biotech stocks because it’s not specifically a hopeful, since it has drug revenue fueling its pipeline as well as proven products. It also has relationships with big pharma firms. That puts square in the middle. It’s an innovative gene therapy company with a revenue-generating portfolio, but still has a market cap of $7 billion.

At this phase, while it’s important to maintain a healthy pipeline, there are also other aspects of the business that become important since EXEL is now a company with revenue. That means Wall Street values it differently than clinical stage biotechs. And so far it’s doing what it needs to do to succeed.

EXEL stock has gained 25% year to date and has a PE around 3/2. That’s not overly pricey for a biotech that on the move.

This stock has a “B” rating in my Portfolio Grader.

Regenxbio (RGNX)

Medical technology network team meeting concept. Doctor hand working smart phone modern digital tablet laptop computer graphics chart interface, sun flare effect photo, PTE

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This gene therapy focused clinical biotech isn’t focused on a specific disease. It’s creating a platform to deliver healthy genetic material to cells so that the body can replicate from the healthy genetic material.

By creating an effective platform like this, Regenxbio (NASDAQ:RGNX) makes it possible to insert healthy genetic material for a variety of diseases. It also means that other caustic drug therapies don’t have to be used or that these drugs can be used in lower doses to complement the gene therapy.

RGNX was launched just 14 years ago. Yet it has 15 clinical stage products and more than 20 partnered programs, including with some major pharmaceutical companies. These partnerships show proof of concept and function as important funding for research and drug trials.

While RGNX stock only has a market cap of just over $1 billion, it has strong earnings and a PE of just 11. The stock is down 5% year to date but is showing distinct promise and has a good management team.

This stock has a “C” rating in my Portfolio Grader.

On the date of publication, Louis Navellier has no positions in the stocks in this article. Louis Navellier 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.

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