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3 Biotech Stocks Worth Adding to Your Portfolio in 2021

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·5 min read
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The biotech sector had a fairly good run in 2020 and continues to grab the spotlight, as leading biotech companies strive hard to come out with effective treatments and vaccines to combat and prevent the coronavirus contagion.

The development of coronavirus vaccines and treatments was in the forefront throughout 2020 and gained further steam, of late, as the second wave of the pandemic grapples the world, resulting in more and more fatalities with each passing day. Consequently, companies developing vaccines, like Novavax NVAX, and antibodies, like Regeneron REGN, grabbed investors’ attention in 2020 and the trend continues in 2021.

While the coronavirus treatments will take centerstage in 2021 as well, other regulatory and pipeline developments will also be in focus. Quite a few new drug approvals (Ayvakit, Tazverik, Zeposia, Tukysa, Pemazyre and Oxlumo) and label expansions of prominent drugs helped maintain the momentum for some biotech companies in 2020 and the pace should pick up further in 2021 as the regulatory environment normalizes.

Meanwhile, the pace of mergers & acquisitions had somewhat slowed down in 2020 compared to previous years but is gradually picking up now. Mergers and buyouts should be in the spotlight in 2021 as pharma/biotech bigwigs eye lucrative acquisitions to bolster their portfolio/pipeline and combat rivalry woes. While oncology and immuno-oncology are the key areas of focus, treatments for rare diseases and gene-editing companies also promise potential, making them lucrative areas of investment.

However, given the uncertain economic environment, the inherent peril of the sector gets intensified. In such a scenario, choosing a biotech stock for investment can be tricky. Particularly, smaller biotechs are more hazardous as their product pipelines are several years away from commercialization.

Here we zero in on three biotech companies, which have outperformed the sector in 2020 and still hold enough room for an upside, backed by a broad and strong product portfolio.

3 Biotech Stocks to Bet on in 2021

The year 2020 was an eventful one for biotechnology company, Moderna, Inc. MRNA, pioneering messenger RNA (mRNA) therapeutics and vaccines. The company received a significant boost on Dec 18, 2020, as the FDA authorized the emergency use of its COVID-19 vaccine (mRNA-based vaccine) in individuals 18 years of age or older. The European Commission has also granted a conditional marketing authorization (CMA) to the same.  Demand is expected to be strong throughout, given the urgent need. Additionally, the company has a deep pipeline. It is also developing several promising mRNA-based pipeline candidates, targeting a wide range of indications. Moderna’s partnerships with pharma bigwigs also bode well, providing it with funds through upfront and milestone payments and enabling it to share research and marketing costs.

Moderna currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of the company have skyrocketed 540.1% in the past year compared with the industry’s growth of 5.4%.

Blueprint Medicines BPMC is a precision therapy company focused on genomically defined cancers, rare diseases and cancer immunotherapy. The company had a good run in 2020 on the back of solid pipeline progress and the momentum is expected to continue this year as well.  In January 2020, lead drug Ayvakit (avapritinib), a kinase inhibitor, was approved by the FDA for the treatment of adults with unresectable or metastatic gastrointestinal stromal tumor (GIST) harboring a PDGFRA exon 18 mutation, including PDGFRA D842V mutations. The recent approval of second precision medicine, Gavreto (pralsetinib), for the treatment of patients with advanced/metastatic rearranged during transfection (“RET”)-mutant medullary thyroid cancer should fuel sales. In September 2020, Gavreto was also approved for the treatment of adults with metastatic RET fusion-positive non-small-cell lung cancer (“NSCLC”). The approval of these medicines positions Blueprint for strong growth.

Blueprint currently carries a Zacks Rank #2. Shares of the company have increased 33% in the past year.

Halozyme Therapeutics, Inc. HALO is a biopharma technology platform company that provides innovative and disruptive solutions for improving patient experience and outcomes. Halozyme’s ENHANZE drug delivery technology has been used in the development of subcutaneous formulations of various approved drugs in partnerships with J&J, Roche and Takeda. This, in turn, generate a steady stream of revenues through royalties on sales of marketed drugs, milestone payments for pipeline candidates and annual license fees.  The restructuring initiatives undertaken by the company also boost the bottom line and should generate returns.

Halozyme currently carries a Zacks Rank #2. Shares of the company have surged 143.1% in the past year.

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Regeneron Pharmaceuticals, Inc. (REGN) : Free Stock Analysis Report
Moderna, Inc. (MRNA) : Free Stock Analysis Report
Novavax, Inc. (NVAX) : Free Stock Analysis Report
Halozyme Therapeutics, Inc. (HALO) : Free Stock Analysis Report
Blueprint Medicines Corporation (BPMC) : Free Stock Analysis Report
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