Let me be clear: investing in biotech stocks isn’t for everyone. Investing in smaller biotech companies requires research, patience, and risk tolerance. Investing in A-rated biotech stocks offers high return potential if they make significant advancements in health care.
Biotech stocks represent companies that are involved in the research and development of drugs, therapies and medical devices. They include companies that work in fields such as genomics, biopharmaceuticals, bioinformatics and medical diagnostics.
A-rated biotech stocks are highly coveted because they are at the forefront — or in the midst of — groundbreaking innovation.
A biotech company that wins regulatory approval for a new drug can see a huge increase in stock price, providing lucrative returns to investors and billions of dollars in annual profit for the company.
But remember — bringing a drug to market costs a lot of money. Biotech stocks must absorb high research and development costs through laboratory research, preclinical trials and multiple phases of clinical trials.
It can take years to bring a drug to market, or even to get it in front of the Food and Drug Administration for approval. Any setback can derail the drug pipeline and cause the stock price to collapse.
By using the Portfolio Grader, we can identify A-rated biotech stocks based on analyst sentiment, earnings performance, growth and stock buying momentum. If you want to try your hand in the biotech sector, these A-rated biotech stocks are a good place to start.
Eli Lilly & Co. (LLY)
Eli Lilly & Co. (NYSE:LLY) can arguably be considered the best biotech stock on the market right now.
The Indianapolis-based biotech company is set to make billions of dollars a year through its weight-loss treatment drug. And now there’s yet another catalyst that is sending LLY stock higher.
First, let’s talk about Zepbound, which is Lilly’s FDA-approved drug to help people lose weight. The injectable drug won FDA approval in November 2023, so Lilly is just getting started on a long run of profits. About 42% of the U.S. population is obese and the window for Lilly to profit from Zepbound is huge.
The drug in Zepbound, tirzepatide, is also used in another highly successful Lilly product called Mounjaro, which is used to treat type 2 diabetes.
The drugs are so popular that Lilly is increasing its investment in its Indiana manufacturing facility from $3.7 billion to $9 billion to increase the production of tirzepatide and other pipeline products.
And now Lilly is set to score big on another treatment. An FDA panel voted unanimously in favor of the company’s donanemab drug, which would be used to treat Alzheimer’s. The full FDA still needs to give final approval, but the unanimous recommendation of its panel is a very good sign.
LLY stock reached a new 52-week high on the news. The stock is now up 48% on the year and gets an “A” rating in the Portfolio Grader.
Lexaria Bioscience (LEXX)
Lexaria Bioscience (NASDAQ:LEXX) is a much different biotech company than Lilly. But the company has its own wins and is worthy of its status as an A-rated biotech stock.
Lexaria developed DehydraTECH, which is a drug delivery technology that improves the way active pharmaceutical ingredients enter the bloodstream.
Lexaria says its platform promotes healthier delivery methods and increases the effectiveness of drugs that are delivered by tablets, capsules and oral suspensions.
Any drug delivery system that makes medications more effective and more tolerable to patients is going to be popular in the biotech field.
The DehydraTECH platform increases the absorption of the drug into a patient and helps the medication take effect faster. It also reduces the need for sugar-filled products because it can mask the taste of medications.
While R&D costs are still outweighing profits, there’s good reason to be bullish on LEXX stock, which is already up 159% this year. It gets an “A” rating in the Portfolio Grader.
Novo Nordisk (NVO)
Novo Nordisk (NYSE:NVO) has some of the same catalysts are work that are pushing LLY stock higher.
The European company has an injectable weight loss drug of its own, called Wegovy. Wegovy was approved in 2021 by U.S. regulators to treat weight loss and recently as also approved for treatment in the U.K.
Wegovy’s popularity has led to shortages in some pharmacies as Novo Nordisk struggles to keep up with demand. The company’s running its manufacturing operations 24 hours a day to meet demand.
Novo Nordisk has another huge drug on the market, Ozempic, which is a treatment for type 2 diabetes.
Earnings for the first quarter included days of 65.3 billion Danish kroner ($9.46 billion), up 22% from a year ago. Operating profit was up 27%, and net profits were up 29%.
Novo Nordisk reported earnings per share of 5.68 Danish kroner (85 cents per share), which was up 29% from a year ago.
NVO stock is up 38% this year and gets an “A” rating in the Portfolio Grader.
Ocugen (OCGN)
Ocugen (NASDAQ:OCGN) is a small biotech company based in Pennsylvania. With a market capitalization of less than $400 million, Ocugen is working on developing and commercializing gene and cell therapies.
The company has a breakthrough modifier gene therapy platform that has the potential to treat multiple retinal disease with a single product, which could be highly lucrative if brought to market.
The company has multiple retinal products in various phases of testing in an effort to treat hard-to-treat eye disease.
It also has a treatment in Phase 3 testing to treat knee cartilage damage and ideally help prevent osteoarthritis, and it has started on a potential inhaled vaccine that would help prevent Covid-19.
The company’s stock will get a boost later this month when it joins the Russell 3000, an inclusion that should improve the trading volume as funds that track the index purchase OCGN shares.
The company reported cash and cash equivalents of $25.4 million at the end of the first quarter, with total operating expenses for the quarter of $13.2 million.
Bringing a drug to market is expensive. But since it has FDA approval for Phase 3 trials for its retinal treatment, the company is on the verge of bringing to market a treatment that affects an estimated 300,000 people in the U.S. and Europe.
OCGN stock still trades for less than $2 per share, but probably won’t be that low for long. The stock is up 154% so far in 2024 and gets an “A” rating in the Portfolio Grader.
Candel Therapeutics (CADL)
Candel Therapeutics (NASDAQ:CADL) is a Massachusetts that works with viral immunotherapies in an effort to treat cancer.
Its treatment platform includes combining an anti-tumor component and an immune-stimulatory component to attack malignant cells.
The company developed two clinical stage investigational viral immunotherapies designed to produce an individualized cancer response, based on genetically modified adenovirus and herpes simplex virus gene constructs, respectively.
It currently has several drug candidates in Phase 2 and Phase 3 trials, including treatments for prostate, lung and pancreatic cancer. Like Ocugen, Candel is also joining the Russell 3000 this year.
The company had cash and cash equivalents of $25.7 million at the end of the first quarter, which is says will be sufficient to fund operations into the fourth quarter. R&D expenses in the first quarter were only $4.1 million, while general and administrative expenses were only $3.8 million.
CADL stock soared since April and is now up more than 400% this year. It gets an “A” rating in the Portfolio Grader.
Teva Pharmaceutical (TEVA)
Teva Pharmaceutical (NYSE:TEVA) is a leading manufacturer of generic pharmaceuticals. Once a company loses exclusivity in a drug several years after bringing it to market, any drug manufacturer can offer a generic equivalent that can be sold for less than the name-brand drug. That’s where Teva comes in.
Teva says nearly 200 million people around the world use drugs that it manufacturers, with production sites in 53 locations spanning 33 countries. The company says its generic equivalents help patients save more than $40 billion a year in health care costs.
One of its newest treatments is with a strategic partner, Alvotech (NASDAQ:ALVO), which won FDA approval for an injectable drug to be used as an alternative to Humira, which is a prescription drug to treat rheumatoid arthritis.
Humira is made by AbbVie (NYSE:ABBV), and was one of the biggest pharmaceutical products in the world last year with $12.2 billion in sales.
Revenue for the first quarter was $1.72 billion, up from $1.67 billion a year ago. The company reported profits of $350 million, up from $338 million in the first quarter of 2023.
TEVA stock is up 64% this year and gets an “A” rating in the Portfolio Grader.
GSK (GSK)
GSK (NYSE:GSK), also known as GlaxoSmithKline, is a British biotech company that focuses on making treatments for infectious diseases, HIV, immunology and respiratory conditions and cancer.
Its top drugs include Calpol, which treats cold systems in infants; Ceftum, an antibiotic, and Neosporin, which in cream form treats skin pain, itches and wounds.
The company has more than 70 vaccine candidates and specialty medications in clinical development, with 18 in Phase 3 testing.
Sales in the first quarter were 7.4 billion British pounds ($9.46 billion), up 10% from a year ago. Profits were 2.4 billion British pounds, up 27% from a year ago.
GSK stock is up 11% this year and gets an “A” rating in the Portfolio Grader.
On the date of publication, Louis Navellier had long positions in NVO and LLY. 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.
