5 Biotech Stocks to Watch

The nature of biotechnology means investor sentiment will often oscillate on news, trial data and FDA approvals. Here is a collection of stocks that have issued updates in recent weeks.

• Beam Therapeutics to cut a fifth of its staff and focus on research areas with the most long-term potential.
• Gilead Sciences reaffirms Biktarvy as a long-term HIV treatment.
• Rocket Sciences reaches agreement with the FDA on the design of a phase 2 Danon disease trial.

Beam Therapeutics

The Precision Genetics Stock

Beam Therapeutics [BEAM] announced last week that it’s to reduce its headcount by approximately a fifth in a bid to extend its cash runway to 2026. The company said in a statement that the challenging economic environment has reinforced the need to “focus our resources on those clinical programmes and research areas we believe have the highest potential for near-term value creation”. The two areas it will prioritise are its sickle cell disease programmes like BEAM-101 and Escape, and BEAM-302, a treatment aimed at lowering the risk of developing lung-related diseases.

Gilead Sciences

The HIV Treatment Stock

Gilead Sciences [GILD] last week revealed data showing its blockbuster drug Biktarvy remains a long-term treatment option for patients living with HIV. The latest data shows that the drug can be highly effective, with 97% of 3,772 trial participants showing no sign of resistance after three years. Biktarvy revenue was $3bn in the second quarter of 2023, up 17% year-over-year, while total product sales were up 11% to $6.3bn. Over 80% of Biktarvy’s sales are in the US.

Alnylam Pharmaceuticals

The Heart Disease Stock

Alnylam Pharmaceuticals [ALNY] announced at the start of October that it will no longer be pursuing the expansion of Patisiran, a drug intended to treat heart disease problems caused by ATTR amyloidosis, after failing to secure approval from the US Food and Drug Administration (FDA). The FDA argued that Patisiran wouldn’t meaningfully improve the condition of patients with heart muscle issues, but it didn’t find any issues with the drug’s quality or safety. Alnylam said it will focus on vutrisiran, another drug candidate for treating heart diseases related to ATTR amyloidosis.

Rocket Pharmaceuticals

The FDA Alignment Stock

Rocket Pharmaceuticals [RCKT] reached an agreement with the FDA with regard to the design of a phase-2 rare disease trial. Rocket CEO Gaurav Shah said in a statement that the news, which sent the stock rocketing 39% on 13 September, puts the company on “the most efficient and rapid path to delivering this potentially transformative therapy to Danon disease patients who would otherwise progress to heart transplantation or death”.

Ginkgo Bioworks

The Generative AI Stock

Ginkgo Bioworks [DNA] is moving into the large language model space after signing a five-year agreement with Google [GOOGL] Cloud at the end of August. The partnership will see Google provide funding “to help Ginkgo achieve certain milestones over the next three years”, which will “supercharge our mission to make biology easier to engineer”, according to Co-founder and CEO Jason Kelly. Essentially, the company wants to be able to build an AI model that can ‘speak’ DNA, just as ChatGPT can speak English.

Another Way to Invest in Biotech

The Global X Genomics and Biotechnology ETF

The Global X Genomics and Biotechnology ETF [GNOM], which holds all five stocks except Ginkgo Bioworks, has allocated 82.9% of its portfolio to biotechnology, while medical specialities accounts for 10.2%. Medical services and major pharmaceuticals have weightings of 5% and 0.5% respectively as of 30 September. The fund is down 25.3% in the past year through 20 October, and 16.5% in the past six months.

The WisdomTree BioRevolution UCITS ETF [WDNA.L] holds Alnylam, Beam, Gilead and Ginkgo. Healthcare accounts for 81.2% of the portfolio, and materials 11.2%. Consumer staples, energy and industrials all have weightings of under 5% as of 23 October. The fund is down 18.3% in the past year and down 19.4% in the past six months.