The biotechnology industry includes companies that develop drugs and diagnostic technologies for the treatment of diseases and medical conditions. These products must go through rigorous, costly, and time-consuming trials before potentially obtaining approval from the U.S. Food and Drug Administration (FDA). This means that investors may wait for years before knowing whether a drug under development will pay off. The industry includes smaller start-up companies with recent traction as well as large, well-established corporations that aim to develop a range of drugs and technologies. Many biotech companies have shifted their focus entirely or added COVID-19 vaccine and treatments to their product pipeline.
Early-stage biotech companies are prone to wild swings in revenue due to going from nearly no revenue to having a significant revenue stream once a drug is approved or a partnership with another company is reached. That means that growth numbers have to be thought of more as indicative of the company having achieved some sort of breakthrough regarding where they were with research, corporate partnerships, or other events in their corporate lifecycle, rather than how you’d normally think of growth.
During the past year, biotech stocks, as represented by the iShares Biotechnology ETF (IBB), have posted a total return of -11.5%, significantly below the Russell 1000’s total return of 15.5% as of March 24, 2022. These market performance figures and all statistics in the tables below are as of March 24, 2022.
Here are the top biotech stocks with the best value, the fastest earnings growth, and the most momentum.
These are the biotech stocks with the lowest 12-month trailing price-to-sales (P/S) ratio. For companies in early stages of development or industries suffering from major shocks, this can be substituted as a rough measure of a business’s value. A business with higher sales could eventually produce more profit when it achieves, or returns to, profitability. The price-to-sales ratio shows how much you’re paying for the stock for each dollar of sales generated.
Intercept Pharmaceuticals Inc.: Intercept Pharmaceuticals is a biopharmaceutical company focused on developing and selling therapeutics to treat chronic liver diseases. On Dec. 9, 2021, the company announced that it had formally notified the European Medicines Agency (EMA) of its decision to withdraw its Marketing Authorization Application (MAA) for obeticholic acid (OCA) for the treatment of certain types of liver fibrosis. The company said it would assess the possibility of submitting a new application pending new analyses.uniQure NV: uniQure NV is a Netherlands-based gene therapy company. It develops one-time administered treatments for patients with a variety of genetic diseases including hemophilia B and Huntington’s disease.Atea Pharmaceuticals Inc.: Atea Pharmaceuticals Inc. is a clinical-stage company focusing on the discovery, development, and commercialization of antiviral therapeutics. Atea’s current product pipelines include antiviral drugs to treat COVID-19, Dengue virus, Hepatitis C, and Respiratory Syncytial Virus (RSV).
These are the biotech stocks with the highest year-over-year (YOY) sales growth for the most recent quarter. Rising sales can help investors identify companies that are able to grow revenue organically or through other means, and find growing companies that have not yet reached profitability. In addition, earnings per share can be significantly influenced by accounting factors that may not reflect the overall strength of the business. However, sales growth can also be potentially misleading about the strength of a business, because growing sales on money-losing businesses can be harmful if the company has no plan to reach profitability. Due to the nature of biotech business models, especially early on, revenue can undergo large growth spurts when a deal is made or a drug is approved, so our typical ceiling for removing outliers has been raised from 2,500% growth to 10,000%.
Market Cap ($B)
Revenue Growth (%)
Beam Therapeutics Inc. (BEAM)
Vir Biotechnology Inc. (VIR)
Syndax Pharmaceuticals Inc. (SNDX)
Beam Therapeutics Inc.: Beam Therapeutics Inc. develops and commercializes DNA base editing technologies for the treatment of human disease. Its licensed platform includes a suite of gene editing and associated delivery technologies to enhance the scope of base editing. Throughout 2021, Beam Therapeutics made important advancements across its platforms. A key business highlight was the execution of a four-year research collaboration between Beam and Pfizer for base editing programs targeting rare genetic diseases of the liver, muscle, and central nervous system. Bean received $300 million upfront in a deal potentially worth $1.35 billion.Vir Biotechnology Inc.: Vir Biotechnology Inc. operates as a commercial-stage immunology company focused on treating infectious diseases. The company’s current development pipeline consists of product candidates targeting hepatitis B virus, COVID-19, influenza A, and HIV, also known as human immunodeficiency virus. On Feb. 24, 2022, the company reported results for Q4 and full year 2021 for the period ended Dec. 31. Total revenues for the year 2021 were $1.1 billion compared to $76.4 million in 2020. The vast majority of revenue was generated in the last quarter of 2021 and was largely attributed to the profit-sharing arrangement with GSK for the sale of sotrovimab, a medicine used to treat COVID-19.Syndax Pharmaceuticals Inc.: Syndax Pharmaceuticals Inc. is a clinical-stage biopharmaceutical company that develops cancer therapies. For the full year 2021, ended Dec. 31, Syndax’s license revenue skyrocketed more than 93-fold year-over-year (YOY) to $139.7 million. Results were driven mainly by a license and collaboration agreement with Incyte Corp.
Biotech Stocks with the Most Momentum
These are the biotech stocks with the highest total return over the last 12 months.
Market Cap ($B)
12-Month Trailing Total Return (%)
Aadi Bioscience Inc. (AADI)
Liquidia Corp. (LQDA)
Iveric Bio Inc. (ISEE)
iShares Biotechnology ETF (IBB)
Aadi Bioscience Inc.: Aadi Bioscience is a clinical-stage biopharmaceutical company. It develops therapies for genetically-defined cancers. The company serves patients in the U.S.Liquidia Corp.: Liquidia Corp. is a biopharmaceutical holding company. It operates through its two wholly-owned subsidiaries, Liquidia Technologies Inc. and Liquidia PAH, to develop and commercialize products to treat illnesses including in pulmonary hypertension. In November 2021, the FDA issued a tentative approval for Liquidia’s YUTREPIA inhalation powder for the treatment of pulmonary arterial hypertension (PAH). Pending U.S. regulatory approval, it plans to launch the product in late 2022.Iveric Bio Inc.: Iveric Bio Inc. is a biopharmaceutical company engaged in the discovery, development, and commercialization of novel treatments for retinal diseases. Its product candidates include Zimura.
The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.
Intercept Pharmaceuticals Inc. “Intercept Announces Withdrawal of EMA Marketing Authorization Application for Obeticholic Acid for Advanced Liver Fibrosis Due to NASH.”
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