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10 Best Biotech Stocks to Buy According to Alan Frazier’s Frazier Healthcare Partners

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·10 min read
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In this article, we discuss the 10 best biotech stocks to buy according to Alan Frazier. If you want to skip our detailed analysis of Frazier’s history and hedge fund performance, go directly to the 5 Best Biotech Stocks to Buy According to Alan Frazier.

Alan Frazier established Frazier Healthcare Partners in 1991. During his 27 years as chairman and managing partner, he has worked with tycoons to build many eminent medical care companies. Before starting Frazier Healthcare Partners, he was involved in growing numerous successful healthcare companies into national fame.

Frazier Healthcare Partners' Growth Buyout team invests in healthcare services and products and in related sectors. The hedge fund concentrates on obtaining controlling interests in healthcare companies with EBITDA between $10 million and $75 million where it can invest between $50 million and $300 million of capital. Investments can take the form of corporate carveouts of private and public limited companies, refinancing, and buy-and-build policies.

The biotech industry is gaining investors' attention amid long-term growth benefits, as the world looks to spend billions on biotech R&D to treat fatal diseases and protect against pandemics. The worldwide biotechnology services market is anticipated to grow to $163.92 billion in 2021 from $150.37 billion in 2020 at a compounded annual growth rate of 9%. The market is likely to reach $265.1 billion in 2025. Some of the notable biotech and pharma stocks that are trending these days include Moderna, Inc. (NASDAQ: MRNA), Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN), and Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX).

Moderna, Inc. (NASDAQ: MRNA) is a biotech company that develops therapeutics and vaccines based on mRNA to treat communicable diseases. On June 30, Thailand's Government Pharmaceutical Organization announced that it would buy 5 million doses of Moderna's COVID-19 vaccine. The country will receive 3.9 million doses in the fourth quarter of 2021, followed by another 1.1 million doses in the first quarter of 2022. Moderna, Inc. (NASDAQ: MRNA) stock reached an all-time high after Indian drugmaker Cipla Ltd gave an approval to distribute partner Moderna Inc's COVID-19 vaccine in the country.

Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) is occupied in developing and marketing therapies for treating cystic fibrosis. On June 24, the company announced that its board of directors sanctioned the repurchase of $1.5 billion of common shares in a buyback program running through the end of 2022.

But in this article, our focus would be on some of the most notable biotech and pharma stocks in AlanFrazier's Q1 portfolio.

Marcin Balcerzak/Shutterstock.com

Overall, analysts are bullish on the biotech industry. But it’s still extremely important to do research before investing in stocks. The rising financial volatility is not even sparing the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

With this context in mind, here is our list of the 10 best biotech stocks to buy according to Alan Frazier. We used Frazier's 13F portfolio for the first quarter for this analysis.

Best Biotech Stocks to Buy According to Alan Frazier

10. Gritstone bio, Inc. (NASDAQ: GRTS)

Frazier’s Stake Value: $9,721,000 Percentage of Alan Frazier’s 13F Portfolio: 0.77% Number of Hedge Fund Holders: 14

Gritstone bio, Inc. (NASDAQ: GRTS) is engaged in developing tumor-specific cancer immunoglobulin to fight various types of cancer and contagious diseases. It was founded in 2015 and is ranked tenth on the list of 10 best biotech stocks to buy according to Alan Frazier. Gritstone stock has offered investors returns of 39.39% in the past 12 months.

On May 6, Gritstone bio, Inc. (NASDAQ: GRTS) announced revenue for the first quarter of 2021. It posted revenue of $39.69 million, up 3,050% YoY, beating the estimates by $27.48. In addition, on February 1, Gilead Sciences collaborated with Gritstone Oncology to research and develop a vaccine-based immunization to cure HIV infection.

Like Moderna, Inc. (NASDAQ: MRNA), Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) and Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX), Gritstone bio, Inc. (NASDAQ: GRTS) is one of the best biotech stocks to buy.

The hedge fund run by Frazier owns 1.03 million shares in the medical company worth over $9.72 million, representing 0.77% of their investment portfolio. The company is also getting the attention of the smart money, as 14 hedge funds tracked by Insider Monkey reported owning stakes in Gritstone bio, Inc. (NASDAQ: GRTS) in the first quarter of 2021, up from 10 funds a quarter earlier.

9. Molecular Templates, Inc. (NASDAQ: MTEM)

Frazier’s Stake Value: $17,340,000 Percentage of Alan Frazier’s 13F Portfolio: 1.39% Number of Hedge Fund Holders: 20

Molecular Templates, Inc. (NASDAQ: MTEM) is a biotherapeutics company that discovers and develops medicines to treat cancer and other diseases. The company was founded in 2009, and it ranks ninth on the list of 10 best biotech stocks to buy according to Alan Frazier. Molecular stock currently has a $448.76 million market capitalization.

On May 13, Molecular Templates (NASDAQ: MTEM) declared earnings for the first quarter of 2021. The earnings per share was $0.51, beating the estimates by $0.26. On April 21, Molecular Templates reported its best one-day gain since December after Bank of America initiated the coverage on the stock with a “Buy” rating and a price target of $12 per share.

Frazier Healthcare Partners holds 1.37 million shares in Molecular Templates (NASDAQ: MTEM) worth $17.34 million. The fund has increased stakes in the firm by 64% in the past few months. In the first quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $129.51 million in Molecular Templates (NASDAQ: MTEM), same as the preceding quarter worth $67.88 million.

Like Moderna, Inc. (NASDAQ: MRNA), Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) and Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX), Molecular Templates, Inc. (NASDAQ: MTEM) is one of the best biotech stocks to buy.

8. AnaptysBio, Inc. (NASDAQ: ANAB)

Frazier’s Stake Value: $19,389,000 Percentage of Alan Frazier’s 13F Portfolio: 1.55% Number of Hedge Fund Holders: 18

AnaptysBio, Inc. (NASDAQ: ANAB) is a biotechnology company engaged in developing medicines for inflammation and immuno-oncology symptoms. AnaptysBio, Inc. (NASDAQ: ANAB) was incorporated in 2005. It ranks eighth on the list of 10 best biotech stocks to buy according to Alan Frazier. AnaptysBio stock has returned 12.40% to investors in the last 12 months. Like Moderna, Inc. (NASDAQ: MRNA), Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) and Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX), AnaptysBio, Inc. (NASDAQ: ANAB) is one of the best biotech stocks to buy.

On June 22, H.C. Wainwright analyst Mike King Jr. initiated a coverage on AnaptysBio (NASDAQ: ANAB) with a “Buy” rating and a price target of $54. On May 4, AnaptysBio (NASDAQ: ANAB) declared earnings per share for the first quarter of 2021. It announced earnings per share of -$0.66, beating the estimates by $0.03.

Alan Frazier’s Frazier Healthcare Partners currently holds 899,700 shares of AnaptysBio, Inc. (NASDAQ: ANAB) that amounts to $19.39 million. AnaptysBio occupies 1.55% of Frazier Healthcare Partners’ total portfolio. Oleg Nodelman’s EcoR1 Capital is the company’s most significant stakeholder, with 7.15 million shares worth $154.12 million. Nodelman’s hedge fund increased its stake in the company by 122% in the first quarter of 2021.

7. Sutro Biopharma, Inc. (NASDAQ: STRO)

Frazier’s Stake Value: $22,792,000 Percentage of Alan Frazier’s 13F Portfolio: 1.82% Number of Hedge Fund Holders: 28

Sutro Biopharma, Inc. (NASDAQ: STRO) is a clinical-stage drug invention, development, and manufacturing company. It aims on creating protein therapeutics for cancer. Sutro Biopharma, Inc. (NASDAQ: STRO) was founded in 2003 and is placed seventh on the list of 10 best biotech stocks to buy according to Alan Frazier. Sutro Biopharma, Inc. (NASDAQ: STRO) shares have gained about 139.25% in value over the last 12 months.

Like Moderna, Inc. (NASDAQ: MRNA), Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) and Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX), Sutro Biopharma, Inc. (NASDAQ: STRO) is one of the best biotech stocks to buy. On June 18, Andrew Fein, an analyst at H.C. Wainwright, initiated a coverage on Sutro Biopharma, Inc. (NASDAQ: STRO), rating the stock as “Buy,” with a price target of $35. On May 7, Sutro Biopharma, Inc. (NASDAQ: STRO) declared revenue for the first quarter of 2021. It posted revenue of $14.66 million, up 105% YoY, beating the estimates by $9.86 million.

The hedge fund run by Alan Frazier owns more than 1 million shares in Sutro Biopharma, Inc. (NASDAQ: STRO), worth $22.79 million, representing 1.82% of their investment portfolio. RA Capital Management is the company’s most significant stakeholder, with 2.12 million shares worth $48.21 million.

6. Syndax Pharmaceuticals, Inc. (NASDAQ: SNDX)

Frazier’s Stake Value: $32,088,000 Percentage of Alan Frazier’s 13F Portfolio: 2.57% Number of Hedge Fund Holders: 33

Syndax Pharmaceuticals, Inc. (NASDAQ: SNDX) is a biopharma company that develops therapies for cancer treatment. The company was incorporated in 2005 and is ranked sixth on the list of 10 best biotech stocks to buy according to Alan Frazier. Syndax Pharmaceuticals, Inc. (NASDAQ: SNDX) has offered investors returns of 19.52% over the course of the past 12 months. Like Moderna, Inc. (NASDAQ: MRNA), Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) and Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX), Syndax Pharmaceuticals, Inc. (NASDAQ: SNDX) is one of the best biotech stocks to buy.

On June 28, Syndax Pharmaceuticals (NASDAQ: SNDX) declared that the U.S. FDA granted accelerated designation to SNDX-5613 to treat adult and pediatric patients with critical leukemia. Accelerated status is designed to promote the development and hasten the review of drugs to treat serious conditions and accomplish an unmet medical need.

On June 3, Baird analyst Joel Beatty initiated coverage on Syndax Pharmaceuticals, Inc. (NASDAQ: SNDX), rating the stock as “Outperform” with a price target of $31. On May 11, the company posted revenue for the first three months of 2021. The revenue was $0.38 million, flat YoY, beating market predictions by $0.15 million.

Alan Frazier increased his hold in Syndax Pharmaceuticals, Inc. (NASDAQ: SNDX) by 3% in the first quarter of 2021, ending the period with $32.09 million worth of the company’s shares. Kurt Von Emster’s VenBio Select Advisor is the company’s most significant stakeholder, with 2.50 million shares worth $55.90 million.

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Disclosure: None. 10 Best Biotech Stocks to Buy According to Alan Frazier is originally published on Insider Monkey.