Top Biotech Stocks for 2021: These Seven Biotechnology Companies Are Leading the Pack
Biotechnology companies have received increasing attention from investors, in part because there’s never been a time in all of history when the marriage of technology and biology has been stronger.
Advanced scientific technology and research are allowing companies to create treatments and preventions of diseases at an unprecedented pace. This has caused a lot of investors to flock to biotech stocks and will create a $2.4 trillion global biotech industry by 2028.
Even though biotech companies are creating and testing drugs faster than ever, it still takes an average of 12 years for a drug to move from its initial development phase to receiving governmental approval and being used by patients.
But long-term investors know that biotech stocks with more than a handful of approved drugs are more than worth the wait. So let’s take a closer look at seven top biotech stocks that investors need to keep their eyes on.
7 Biotech Stocks for 2021
Here are the top biotech stocks for 2021.
- Vertex Pharmaceuticals
- Bristol-Myers Squibb Co.
- Novavax, Inc.
- Sanofi S.A.
- Axsome Therapeutics, Inc.
- Regeneron Pharmaceuticals
Vertex Pharmaceuticals (NASDAQ: VRTX)
Vertex Pharmaceuticals is best known for its development of cystic fibrosis (CF) treatments. The company has a three-drug combination approved by the U.S. Food and Drug Administration (FDA) to treat CF, making the company the clear leader in the CF treatment space.
And those CF drugs have created a strong financial foundation for the company, helping Vertex’s sales spike 55% in 2020, which contributed to net income skyrocketing 130%.
And Vertex’s management doesn’t think 2020’s momentum will slow down. The company has clinical programs for seven disease areas right now and it said recently that it’ll treat more CF patients and reach new research and development milestones in 2021, which “will fuel our growth this year and for many years to come.”
Like many biotech stocks, Vertex’s stock performance can be a bit volatile from time to time, but over the long term the company’s stock has outperformed the broader market. Over the past five years, Vertex’s stock gained 132% compared to the S&P 500’s 114% increase.
Bristol-Myers Squibb Co. (NYSE: BMY)
Bristol-Myers Squibb is a biopharmaceutical giant with more than 120 years of experience. Back in 2019 the company made a big move into the biotech space when it spent an eye-popping $74 billion to buy the biotech company Celgene.
At the time of the purchase, Bristol-Myers Squibb CEO Giovanni Caforio said,
“Together with Celgene, we are creating an innovative biopharma leader, with leading franchises and a deep and broad pipeline that will drive sustainable growth and deliver new options for patients across a range of serious diseases.”
The biopharma company certainly has a lot to be optimistic about. With its acquisition of Celgene two years ago and the more recent purchase of MyoKardia (which makes cardiovascular treatments), Bristol-Myers Squibb continues to expand its reach.
The company’s revenue skyrocketed 63% in 2020 to $42.5 billion and income investors will like the fact that this drugmaker pays a dividend yield of 2.94%.
Investors should also note that while this biotech continues to grow quickly, its stock performance hasn’t always kept pace with the broader market. Nevertheless, the company deserves a spot on this list for its leading position in cancer-fighting drugs and its ability to snatch up smaller companies to keep itself growing.
Where to invest $500 right now
Lots of new investors take chances on long shots instead of buying shares of great companies. I prefer businesses like Amazon, Netflix, and Apple — they’re all on my best stocks for beginners list.
There’s a company that “called” these businesses long before they hit it big. They first recommended Netflix in 2004 at $1.85 per share, Amazon in 2002 at $15.31 per share, and Apple back in the iPod Shuffle era at $4.97 per share. Take a look where they are now.
That company: The Motley Fool.
For people ready to make investing part of their strategy for financial freedom, take a look at The Motley Fool’s flagship investing service, Stock Advisor. They just announced their top 10 “best buys now” across the entire stock market. Whether you’re starting with $100, $500, or more, you should check out the full details.
Novavax (Nasdaq: NVAX)
Novavax’s biotechnology focuses on infectious diseases including the flu and, most recently, COVID-19. While other vaccines for the coronavirus have received a lot of attention and made it to market before Novavax’s vaccine, some experts are hailing the company’s vaccine as exceptional.
A recent article from The Atlantic said that Novavax’s vaccine is essentially just as effective compared to the Pfizer/BioNTech and Moderna vaccines, and has the added advantage of being made with simpler technology and a “substantially lower rate of side effects.”
The combination of the vaccine being made with previous vaccine technology and the ease with which it’s manufactured make it the “best COVID-19 vaccine we have” according to the publication’s author.
Of course, Novavax has much more going for it than just a coronavirus vaccine. One such example is the company’s NanoFlu vaccine, for which the company is currently seeking FDA approval.
Like other biotech companies, Novavax’s share price can be volatile, but over the past three years, its share price has beat the market by more than 12X!
Sanofi S.A. (Nasdaq: SNY)
Sanofi is a French pharmaceutical company that creates treatments for everything from the genetic disorder called Pompe disease to eczema and is even codeveloping a COVID-19 vaccine with GlaxoSmithKline (GSK).
The company has one of the only enzyme replacement therapy (ERT) drugs with FDA approval and is currently working on another.
One of Sanofi’s most important and successful drugs is DUPIXENT, a treatment for eczema. Revenue from the drug spiked 74% in 2020, which helped to offset some slowing sales from other drugs.
Investors should keep a close eye on the company’s COVID-19 vaccine development. Sanofi is currently in Phase 3 of clinical trials and the company will find out in late 2021 whether it receives approval. The company has already received 60 million pre-orders for the vaccine from the United Kingdom.
Axsome Therapeutics, Inc. (Nasdaq: AXSM)
Axsome Therapeutics should be on investors’ radar because of two important treatments the company is working on: AXS-05 and AXS-07.
The first is a treatment for major depressive disorder (MDD) and can also be used in Alzheimer’s patients who suffer from agitation caused by the disease. The FDA is currently reviewing it for approval and earlier tests show the drug has very promising results.
If approved, AXS-05 could tap into the vast $9 billion MDD treatment market.
The second drug, AXS-07, treats migraines and could receive FDA approval very soon. The company says that 30 million Americans suffer from migraines and that 70% of them aren’t satisfied with their current treatment.
Axsome could easily be the best growth stock on this list, as the company’s share price has flown into the stratosphere over the past three years, gaining a mind-boggling 2,000%!
Moderna Inc. (Nasdaq: MRNA)
As one of the leading providers of a COVID-19 vaccine in the United States, Moderna hardly needs an introduction. But it wasn’t all that long ago that the company was an unknown biotech and pharmaceutical company.
Moderna went public just a few years ago and since then its share price has soared more than 1,100%… with 434% gains in 2020 alone!
The company’s mRNA-based COVID-19 vaccine—which is 94% effective against the virus—has been a runaway success and is aiming for a total of 1 billion doses manufactured for 2021. So far, its orders of the coronavirus vaccine have totaled more than $19 billion in sales.
But Moderna could experience additional growth in the coming years. First, Moderna expects to produce 3 billion doses of its COVID-19 vaccine in 2022. And the company has more than 20 other vaccines and treatments in its pipeline, including an HIV vaccine and a personalized cancer vaccine. Yes, you read that right: a vaccine for cancer.
And as more countries look to bolster their vaccinated population and with booster shots potentially becoming necessary to maintain immunity from COVID-19, Moderna likely has a long road of vaccine-related growth ahead of it.
Regeneron Pharmaceuticals (Nasdaq: REGN)
Last but not least, biotech investors should also consider Regeneron Pharmaceuticals for their portfolio. Nearly 60% of the company’s total 2020 revenue came from Regeneron’s successful Eylea drug, which treats wet age-related macular degeneration (AMD) and other eye diseases.
But Regeneron has its hand in other treatments as well, including its antibody cocktail REGEN-COV, which received emergency approval for use last year for use in reducing the risk of symptomatic infections from COVID-19. The company has received payments of up to $2.6 billion in aggregate from the U.S. government for the treatments.
Regeneron had a strong 2020, with total sales spiking 30% and net income jumping 66% from the previous year. And the company expects continued growth.
Regeneron’s management said recently that it expects “further diversified growth” in 2021 through its COVID-19 treatments, Eylea, and market penetration from its joint venture with Sanofi for Dupixent. Additionally, the company says it has more than 30 product candidates in its pipeline that are in clinical development.
Biotech ETFs: Invest in a Basket of Biotech Stocks All at Once
If hand-selecting a few biotech stocks for your portfolio seems overwhelming, then investing in a biotechnology exchange-traded fund (ETF) may be the better way to go.
An ETF gives you exposure to a lot of stocks all at once, helping you to benefit from an industry’s growth without having the same level of risk that one, or even just a few stocks, can have.
Three solid biotechnology ETFs investors should consider are the SPDR S&P Biotech ETF (XBI), Global X Genomics & Biotechnology ETF (GNOM), and iShares Genomics, Immunology, and Healthcare ETF (IDNA).
Frequently Asked Questions
What is the best biotech stock?
There are a lot of fast-growing companies in the biotechnology industry and many of them could end up being great long-term investments. But of the companies on this list, Moderna has returned the biggest share price gains, rising 1,100% since it went public in 2018.
What is the price of a biotech stock?
Each publicly traded biotechnology company will have its own share price and these prices will vary. For example, one share of Moderna is about $240, while the price of an Axsome Therapeutics share is about $69 (as of June 30, 2021).
Investors should keep in mind that a higher price for one share of a particular company doesn’t necessarily mean the stock is expensive relative to its peers. Investors should look at other metrics, like a company’s price-to-earnings ratio, to determine whether a company’s share price is expensive or cheap.
What are the best biotech stocks to buy in 2021?
Many of the companies on this list are benefiting from growth in the biotechnology industry. But the best-performing biotech stock on the list, by far, is Moderna. Moderna’s share price skyrocketed 126% in the first six months of 2021. The second best-performing biotech stock on this list has been Novavax, which gained 92% in the first half of 2021.