Despite starting the year off strong, biotech stocks have had a rough summer. The recent weakness in the biotech sector is causing biotech exchange-traded funds (ETFs) like the VanEck Vectors Biotech ETF (BBH), the iShares NASDAQ Biotechnology ETF (IBB), and the SPDR S&P Biotech ETF (XBI) to drop steeply.
Some believe the reason for the six consecutive weeks of outflows from biotech ETFs is due to the growing debate over the House’s high-profile drug pricing bill, which has the potential to do further damage if approved. Meanwhile, analysts are suggesting the sector is lagging due to underperforming gene therapy companies.
Luckily, the sector experienced a glimmer of hope last week when Biogen (NASDAQ:BIIB) made a surprise announcement that it will be seeking FDA approval in early 2020 for its early Alzheimer’s disease treatment, aducanumab.
As the biotech market begins to recover from recent losses, investors have the opportunity to buy biotech stocks at a discount. Of course, with so many new biotech stocks hitting the market, it can be hard to know which ones are the most promising.
Let’s take a look at the biotech companies that have been performing well this year despite the dire state of the market.
Biotech Stocks That Could Offer Major Upside
Axsome Therapeutics (NASDAQ:AXSM) is one of the biotech stocks that has had a stellar year so far. Instead of developing new drugs, Axsome is focused on improving the activity of treatments that have been around for decades. A major advantage of revamping well-understood FDA-approved drugs is that the company can use data gathered by its predecessors to support its own applications.
In January, Axsome revealed very promising results from the phase 2 trial of its AXS-05 for major depressive disorder (MDD). The drug is a combination of the over-the-counter cough suppressant dextromethorphan (DM) and popular antidepressant bupropion. The results from the AXS-05 phase 2 trial saw 47% of patients with MDD achieve remission compared to just 16% of patients who used bupropion on its own. If this drug hits the market, it could generate $1 billion in annual sales in a few years.
The company is also running a phase 3 study for AXS-07, a drug that includes a combination of well-known migraine headache drugs, which could mean another major breakthrough for Axsome in the next year.
Axsome’s stock has had an outstanding year so far, increasing by 787.69% since the beginning of 2019 to $23.79 USD. Meanwhile, its market cap is relatively low at $818 million USD.
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Kodiak Sciences (NASDAQ:KOD) is another company that has skyrocketed in 2019. Since January, the company’s share price has increased by 195.5% to $21.69 USD thanks to advancements in its leading candidate KSI-301, a vision loss prevention drug.
Kodiak developed its anti-VEGF antibody to alleviate the vision loss experienced between treatments, something Regeneron’s (NASDAQ:REGN) leading vision-loss drug Eylea hasn’t been able to do. During the phase 1 trial of KSI-301, 87% of patients treated were able to go more than three months between injections without suffering further loss of vision. Meanwhile, Eylea needs to be injected every four weeks.
Biotech Stocks Generating Meaningful Revenues
When investing in any company, it’s usually a good idea to opt for those who are turning a profit. Acadia Pharmaceuticals (NASDAQ:ACAD) is one company that has continued to grow its revenue throughout the year.
The biopharmaceutical company’s Q2 2019 results revealed $83.2 million in net sales of its FDA-approved drug NUPLAZID (pimavanserin), which represents a 46% increase from Q2 2018. Acadia’s share price has also done very well this year, increasing by 153.81% from $16.65 USD to $42.26 USD.
Genomics-based drug discovery company Exelixis (NASDAQ:EXEL) has also been fairing well in recent months. Exelixis is the creator of cabozantinib, a leading tyrosine kinase inhibitor prescribed for advanced kidney cancer, and has four products on the market, which it is bringing to patients worldwide through partnerships with leading pharmaceutical companies.
Net revenue generated from Exelixis’ cabozantinib drugs in Q2 2019 was $193.7 million for the quarter, representing a 32.8% increase year-over-year, while the company’s total revenue for the quarter was $240.3 million, up nearly 30% from Q2 2018.
Whether you decide to invest directly in one of these biotech stocks or opt for a biotech ETF, there are plenty of lucrative opportunities in the sector that could help boost the health of your portfolio.
Are there any small-cap biotech stocks that are on your radar? Let us know in the comments!
Featured Image: DepositPhotos ©BrunoWeltmann
