Biotech stocks are scorching hot right now as Big Pharma stalwarts like Pfizer and Bristol Myers Squibb go shopping for takeovers.
Investor's Business Daily tracks 197 industry groups. On Friday, the biotech group was ranked fifth. But it's not just acquisitions driving the recently bullish biotech move.
Positive studies, strong earnings and a promising regulatory environment have also pushed some of the outperformance, says Brad Loncar, whose firm provides the indexes for two exchange traded funds focused on biotech stocks.
"All the arrows are pointed in the right direction," he told Investor's Business Daily.
Renewed Enthusiasm Drives Biotech Stocks
Why the enthusiasm?
It's not hard to see why biotech stocks turned up recently, Loncar says. Biotech companies like Alnylam Pharmaceuticals and Karuna Therapeutics have had market-moving clinical news. Bluebird Bio recently won Food and Drug Administration approval for a potential one-time gene therapy aimed at sickle cell disease, and priced at a whopping $2.8 million per dose.
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There have also been mergers aplenty. Pfizer is buying Global Blood Therapeutics, Amgen is taking over ChemoCentryx and Merck is rumored to have interest in Seagen. Bristol just wrapped its acquisition of Turning Point Therapeutics.
Even drug-pricing regulations, usually quick to shock drug stocks, aren't carrying the same weight for the biotech segment — though pharma stocks can't say the same.
But not all biotech stocks are created equal. The best among them have a record of strong performance over the last 12 months, measured by the IBD Digital Relative Strength Rating. Out of 805 companies in the biotech industry group, 36 have perfect RS Ratings. That's 4% of the biotech stocks group.
Acquisitions And IPOs And Data — Oh My!
The cream of the crop started the year priced above 10 and remains there today.
Their names include takeover candidates GBT and ChemoCentryx whose shares have surged a respective 130% and 40.5% this year, as of Friday's close. GBT sells a sickle cell disease treatment called Oxbryta while ChemoCentryx is working on drugs for autoimmune and inflammatory diseases as well as cancer.
There are also companies like Belite Bio and Cincor Pharma. Belite is focused on treatments for blindness, liver diseases and diabetes. Cincor is working on hypertension and other cardio-renal diseases.
Neither company has a commercial product today, but that hasn't stopped the new biotech stocks from popping off their initial public offerings in April and January, respectively. Belite shares have rocketed 145% from their first day trading, and Cincor stock has soared 136%.
Cincor is expected to log its first sales in 2026, the same year analysts project it will become profitable.
Fellow IPO biotech stock Amylyx Pharmaceuticals is hoping to get its first approval in amyotrophic lateral sclerosis, or ALS. This neuromuscular condition is also known as Lou Gehrig's disease. Amylyx stock began trading in January and has enjoyed a double-digit gain since.
Axsome Therapeutics has also gained handsomely after the Food and Drug Administration approved its new anti-depression pill.
Top-Performing Biotech Stocks
| Company | Ticker | Year-To-Date Performance |
|---|---|---|
| Immunocore Holdings | IMCR | +57% |
| Belite Bio | BLTE | +145% |
| ChemoCentryx | CCXI | +40.5% |
| Cincor Pharma | CINC | +136% |
| G1 Therapeutics | GTHX | +40% |
| Global Blood Therapeutics | GBT | +130% |
| Pliant Therapeutics | PLRX | +41% |
| Axsome Therapeutics | AXSM | +78% |
| Karuna Therapeutics | KRTX | +99% |
| Amylyx Pharmaceuticals | AMLX | +46% |
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
