8 Best Biotech Stocks to Buy

·5 min read

JPMorgan Chase analysts recommend these biotech stocks.

Small- and mid-cap biotechnology stocks are among the most high-risk, high-reward stocks in the market. Many biotech companies are working to develop one or two world-changing drugs or therapies for billion-dollar markets. The fates of these often volatile stocks are tied closely to study data and approval from the U.S. Food and Drug Administration or other global drug regulators. The biotech group has struggled as a whole in 2021, but the JPMorgan Chase analyst team says the innovation that has always supported the industry is alive and well. Here are JPMorgan's eight top biotech stocks to buy.

BioMarin Pharmaceutical Inc. (ticker: BMRN)

BioMarin develops pharmaceuticals for serious rare diseases. Analyst Cory Kasimov is anticipating new phase 3 data for investigational gene therapy Roctavian in early 2022. Assuming positive data, Kasimov projects a Committee for Medicinal Products for Human Use opinion on Roctavian in the first half of 2022 followed by potential European regulatory approval. He anticipates a potential Prescription Drug User Fee Act filing in the U.S. in the second half of next year. In addition, the FDA recently approved BioMarin's Voxzogo for treatment of children with achondroplasia. JPMorgan has an "overweight" rating and a $135 price target for BMRN stock, which closed at $86.48 on Dec. 17.

Seagen Inc. (SGEN)

Seagen develops therapies targeting cancer. Following the approval of Tivdak in September, Kasimov says Seagen is one of the best diversified oncology growth stocks in the biotech space. Seagen has now launched four commercial products, and Kasimov says the market doesn't fully appreciate the number of options in the company's early-stage pipeline. Kasimov is particularly optimistic on pancreatic cancer treatment SEA-CD40 and anticipates phase 1 data in the first half of 2022. Kasimov says Seagen is a top biotech growth stock and has "underappreciated strategic value." JPMorgan has an "overweight" rating and a $201 price target for SGEN stock, which closed at $150.15 on Dec. 17.

SpringWorks Therapeutics Inc. (SWTX)

SpringWorks Therapeutics is a clinical-stage biopharmaceutical company focused on treating rare diseases and cancer. Analyst Anupam Rama says SpringWorks is his top value stock pick in the small- and mid-cap biotech space. Rama is anticipating phase 3 trial data for SpringWork's lead asset nirogacestat in treating desmoid tumors by early 2022. He says nirogacestat could be a "transformative catalyst" for investors. Rama says the drug has a high probability of commercial success, and the market doesn't seem to fully appreciate the size of the desmoid tumor market. JPMorgan has an "overweight" rating and a $107 price target for SWTX stock, which closed at $70.19 on Dec. 17.

Kiniksa Pharmaceuticals Ltd. (KNSA)

Kiniksa Pharmaceuticals is a development-stage biopharmaceutical company focusing on treating autoinflammatory and autoimmune diseases. Kiniksa is Rama's top biotech value stock pick. He says Kiniksa shares are undervalued based on anti-inflammatory drug Arcalyst alone, which he projects will generate more than $650 million in peak sales. In addition, he says the extended duration of Arcalyst treatment will be a long-term growth driver. Rama is also optimistic about the company's mid-stage pipeline and is expecting phase 2 data on vixarelimab in treating chronic skin disease prurigo nodularis in the second half of 2022. JPMorgan has an "overweight" rating and a $27 price target for KNSA stock, which closed at $13.62 on Dec. 17.

Ascendis Pharma A/S (ASND)

Ascendis Pharma's lead asset is Skytrofa, which is approved for treating pediatric growth hormone deficiency. Analyst Jessica Fye says investors have an attractive entry point with Ascendis shares down about 20% in 2021. Fye says near-term Ascendis investor sentiment will hinge on phase 3 PaTHway trial data on TransCon PTH in treating hypoparathyroidism, which she expects will come in the first quarter of 2022. Fye projects a biologics license application filing in mid-2022 and has high hopes for the TransCon platform in the future. JPMorgan has an "overweight" rating and a $180 price target for ASND stock, which closed at $132.39 on Dec. 17.

United Therapeutics Corp. (UTHR)

United Therapeutics is a commercial biopharmaceutical company focused on treating pulmonary arterial hypertension. Fye says United's share price outperformance in 2021 has been driven by strong business metrics from its treprostinil franchise, especially Tyvaso. Fye says Tyvaso's momentum will continue in 2022 thanks to several positive catalysts, including Medicare reimbursement in the first half of the year and the approval of Tyvaso DPI no later than summer 2022. Despite new generic competition, Fye says United Therapeutics' Remodulin franchise has been resilient as well. JPMorgan has an "overweight" rating and a $240 price target for UTHR stock, which closed at $196.06 Dec. 17.

Relay Therapeutics Inc. (RLAY)

Relay Therapeutics is a clinical-stage biopharmaceutical company focused on targeted cancer treatments. Analyst Eric Joseph says Relay is his top biotech stock pick after the stock has significantly underperformed its peers in 2021. Joseph says the company's latest phase 1 data on RLY-4008 significantly de-risked its Dynamo platform. In addition, the company is expected to begin phase 1 trials of RLY-2608 to tackle PI3K?-driven cancer in the second half of 2022. Joseph says PI3K? is a "holy grail" oncology target. JPMorgan has an "overweight" rating and a $47 price target for RLAY stock, which closed at $29.21 on Dec. 17.

Edgewise Therapeutics Inc. (EWTX)

Edgewise Therapeutics is a clinical-stage biopharmaceutical company focused on treating severe, rare muscle disorders. Analyst Tessa Romero says phase 1b data on EDG-5506 in treating Becker muscular dystrophy (BMD) will be a near-term catalyst, and she says positive safety and efficacy data could significantly de-risk the drug candidate and potentially drive valuation upside for Edgewise shares. The stock is still a high-risk bet for investors at this point given Romero is estimating between a 25% and 30% probability of success for EDG-5506 in BMD and Duchenne muscular dystrophy. JPMorgan has an "overweight" rating and a $30 price target for EWTX stock, which closed at $15.50 on Dec. 17.

8 best biotech stocks to buy:

-- BioMarin Pharmaceutical Inc. (BMRN)

-- Seagen Inc. (SGEN)

-- SpringWorks Therapeutics Inc. (SWTX)

-- Kiniksa Pharmaceuticals Ltd. (KNSA)

-- Ascendis Pharma A/S (ASND)

-- United Therapeutics Corp. (UTHR)

-- Relay Therapeutics Inc. (RLAY)

-- Edgewise Therapeutics Inc. (EWTX)

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