5 Biotech Stocks That Are Bucking the Selloff

Jan 19, 2022

Biotech equities started 2022 considerably worse than the market as a whole. The SPDR S&P Biotech exchange-traded fund, a key benchmark for the industry, is down 12.8 percent this year, compared to a 2.1 percent decline in the S&P 500 index.

This follows a year in which biotech equities significantly underperformed the market, with the SPDR S&P Biotech ETF (XBI) down 26.9 percent in 2021, compared to the S&P 500's 27 percent gain.

If investors had expected a large biotech purchase to match with J.P. Morgan's healthcare conference last week, they were disappointed. Though there was lots of news this week, no significant biotech M&A occurred.

Despite the fact that the major biotech indices have continued to fall in recent weeks, certain biotech stocks continue to attract investors' interest. To find biotechs that remain hot despite the bear market for biotech equities, we searched two biotech exchange-traded funds (ETFs) for recent winners.

Our screen searched for companies in the XBI and another biotechnology exchange-traded fund, the iShares Biotechnology ETF (IBB), that was up more than 15% between December 17 and the market close on January 14. We confined our search to companies with a market capitalization greater than $1 billion.

BioCryst Pharmaceuticals (BCRX), up 18.8 percent during the period, Protagonist Therapeutics (PTGX), rise 18.5 percent, Prometheus Biosciences (RXDX), up 18.4 percent, Rani Therapeutics Holdings (RANI), up 16.3 percent, and Emergent BioSolutions (EBS), up 15.9 percent are the resulting biotechs that investors continue to like, despite the broader selloff.

Between December 17 and January 14, the XBI fell 13.1 percent, while the IBB fell 10%.

5 Biotech Stocks Investors Still Like

Biotech stocks in the IBB or the XBI up more than 15% over the past month.

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With the exception of Emergent, which is better known as a contract manufacturer, all of the stocks are very modest biotechs. Emergent announced the retirement of the company founder and executive chairman, Fuad El-Hibri, on Friday after the market closed. The stock plummeted on Tuesday, after the celebration of Martin Luther King Jr. Day and the expiration of the stock screen period.

Other stocks have brought great news in recent weeks so far. BioCryst, which offers Orladeyo, a rare illness therapeutic, and Rapivab, a flu medicine, surprised investors last week when it preannounced Orladeyo selling for the fourth quarter of 2021 and provided estimates for 2022 sales that were far higher than Wall Street expectations.

"We are astounded by the 2022 forecast of at least $250 million, which is much higher than the $221 million consensus," Evercore ISI analyst Liisa Bayko said in a January 10 note.

Protagonist, which is exploring medicines for a kind of blood cancer and ulcerative colitis, hasn't made any significant announcements in recent weeks, though it did provide updated data on its polycythemia vera program on December 12

"With each incremental cut of data, we gain greater confidence in rusfertide's potential to meet the primary objective of the impending Phase 3 trial," SVB Leerink analyst Joseph P. Schwartz said in a December 12 note referring to the company's experimental polycythemia vera medication.

Prometheus said on January 3 that it had received a milestone payment from partner Dr. Falk Pharma, a German pharmaceutical company, as part of cooperation on an inflammatory bowel disease treatment program. SVB Leerink's Thomas Smith noted in a letter following the revelation that Prometheus is one of his top selections for 2022.

Finally, Rani, which is developing technology to enable the oral delivery of biological medications rather than injections, has had no major news events in recent months. Over the summer, the stock became public.