The biotech sector possesses a significant predicted Compounding Annual Growth Rate (CAGR) of 14% between 2023 to 2032. 

But the risks certainly match the rewards. One of the main characteristics of biotech companies is that they depend heavily on drug approvals from the Food and Drug Administration (FDA) and patent protection upon treatment development, which makes it difficult to predict the future outlook of individual stocks. Biotech companies also need heavy investment into research and development (R&D) in order to remain competitive, which requires high cash reserves and aggressive borrowing.

However, when invested correctly, biotech stocks have the potential to bring multiples in return for investors. Below are the three best biotech stocks that could be multibaggers in the making in July 2024. 

Moderna (MRNA)

Moderna (NASDAQ:MRNA) is an American pharmaceutical giant. The company already experienced a major growth from COVID-19 for pioneering a vaccine during the global pandemic, but since then, it has struggled to find a new growth engine. However, it looks like Moderna possibly found a catalyst that could lead to a major revenue stream. 

Using its MRNA technology, Moderna is currently developing vaccines for bird flu, which could be the next wave of pandemic. The pharmaceutical giant has already received $176 million from the U.S. government for vaccine development as the fear for H5N1 virus rises every day. 

Specifically, Moderna stock is down almost 10% from last month, and compared to its peak price of $449.38 in the third quarter of 2021, it is nearly at a quarter of the price as of writing. Its trailing price-to-earnings ratio is 7.06x, which is significantly lower than the industry average and comes at a discounted price.

If investors are betting on the possibility of a new health crisis from bird flu, there is no better biotech stock to buy than Moderna.

Halozyme Therapeutics (HALO)

Halozyme Therapeutics (NASDAQ:HALO) is an American biotech company that has a healthcare platform providing drug delivery solutions and products. Halozyme is known for pioneering Enhanze which is a human hyaluronidase-based drug delivery technology that optimizes drug delivery. The company has licensed this technology to other well known biotech and pharma companies. Additionally, Halozyme secured a new patent on Enhanze drug delivery technology from 37 European countries in June 2024.

Another positive about Halozyme Therapeutics is its financials. According to the first quarter earnings this year, Halozyme reported a 21% increase in annual revenue. This was mainly driven by an equivalent 21% growth in royalty revenue. Moreover, Halozyme’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) is expected to grow from $426 million in 2023 to a range of $535 million to $585 million this year, which would be a 26% to 37% year over year increase. 

Viking Therapeutics (VKTX)

Viking Therapeutics (NASDAQ:VKTX) is a California-based biotech company that develops therapeutics for patients who suffer from metabolic and endocrine disorders. 

One of the most promising things for Viking Therapeutics is VK2735, an oral tablet obesity treatment that is currently in Phase 1 clinical trial. The drug has proven to be safe and helped patients lose 3.3% of their body weight on average in the most recent 28-Day study, outperforming already existing other market products. A Phase 2 trial for VK2735 is expected to occur later this year. 

GLP-1/GIP Agonist VK2735 is another drug developed by Viking Therapeutics that successfully completed the phase 2 Venture trial. The results reveal that it was effective at helping patients lose more than 13% of their weight. This study was conducted over 13 weeks and adjusted for placebo effects. 

Financially, Viking Therapeutics ended the first quarter with $963 million in cash and short-term investments, a major increase in balance from $362 million in December 2023.

On the date of publication, Andy Kim did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.