It’s been a roller-coaster ride for the biotech sector in 2015, with several stocks seeing major highs and lows as the year progressed. The year continued to see mergers and acquisitions (M&A) and licensing and collaboration deals being signed. Other highlights were the pricing controversy, stretched valuations and the usual pipeline updates.

Some of the important acquisitions announced/completed in 2015 include those between Shire-NPS Pharmaceuticals, Alexion-Synageva and AbbVie (ABBV​ - Analyst Report)-Pharmacyclics among others. AbbVie’s hefty price tag of $21 billion for Pharmacyclics may have raised quite a few eyebrows but it goes to show that lofty valuations will not deter large companies from pursuing acquisitions to boost their pipelines and product portfolios.

Licensing agreements and deals including those with opt-in arrangements also picked up pace with immuno-oncology remaining a favorite area. Companies like Kite, Ionis, Achillion and Juno were pretty active on the collaboration front. Most of the deals are with big pharma and biotech companies and are focused on immuno-oncology as well as hepatitis C virus (HCV).

Meanwhile, the FDA approved 45 new molecular entities (NMEs) and biological products in 2015, up from 41 in 2014. Some of the important new product approvals in 2015 include Vertex’s cystic fibrosis treatment, Orkambi, Amgen’s (AMGN - Analyst Report) PCSK9 inhibitor, Repatha, Regeneron/Sanofi’s PCSK9 inhibitor Praluent, Gilead’s Genvoya (HIV) and label expansions for products like Kyprolis.

But the sector had its share of hiccups with pricing concerns remaining a major issue - democratic presidential frontrunner Hillary Clinton’s “price gouging” tweet triggered a slide in healthcare stocks in September.

2015 also marked the FDA approval and launch of the first biosimilar in the U.S. – Sandoz’s Zarxio – a biosimilar of Amgen’s Neupogen. The approval is a landmark decision and follows years of debate regarding the regulatory path for biosimilars. Unlike their pharma counterparts, biotech companies have not been exposed to generic competition in the U.S. But with the approval of Zarxio, the floodgates have opened.

However, despite these headwinds, the Nasdaq Biotechnology Index gained 10.5% in 2015.

A Look at 5 Biotech Stocks that Doubled in 2015

Here is a look at 5 biotech stocks that doubled in 2015 and should continue performing well this year.

First on our list is Ligand Pharmaceuticals Inc. (LGND - Analyst Report). La Jolla, CA-based Ligand’s business model is based on developing or acquiring assets which generate royalties, milestones or other passive revenues for the company.

This Zacks Rank #1 (Strong Buy) stock had a good run in 2015 with its share price soaring 101.8% during the year. The company has a strong track record with earnings surpassing expectations in each of the last three quarters and an average earnings surprise of 43.66% over the last four quarters. 2016 earnings estimates for the company have been increasing. The company recently announced its intention to acquire OMT, Inc. and raised its revenue outlook for 2016.

Ligand also has partnerships with several leading health care companies like Novartis (NVS), Amgen and Pfizer (PFE) among others that provide the company with funds in the form of milestone and royalty payments.

Next on our list is Newark, CA-based Revance Therapeutics, Inc. (RVNC - Snapshot Report), a company focused on the development, manufacturing and commercialization of novel botulinum toxin products for multiple aesthetic and therapeutic indications.  

Shares of this Zacks Rank #2 (Buy) stock were up 105% in 2015. The company’s shares shot up in late Oct 2015 on positive 24-week data from a mid-stage study comparing injectable RT002 to the current market leader Botox Cosmetic 20U and a placebo control in treating glabellar lines.

Revance’s earnings track record is also pretty good with the company surpassing expectations in the last three quarters with an average surprise of 4.74% over the last four quarters. 2016 estimates are also seeing some positive revisions.

Revance has quite a few catalysts lined up for 2016 with the company expected to present results from some studies this year.

Exelixis, Inc. (EXEL - Analyst Report) is another stock that had an excellent 2015. The company, whose shares slumped almost 77% in 2014, more than made up for lost ground in 2015 with its shares gaining 241.8%.

The South San Francisco, CA-based company has two approved products in its portfolio - Cometriq (cabozantinib) and Cotellic. This Zacks Rank #3 (Hold) company is currently looking to get cabozantinib approved for additional indications and recently finished submitting a rolling NDA for an advanced renal cell cancer indication.

Another company that saw its shares shoot up last year is Sarepta Therapeutics, Inc. (SRPT - Analyst Report). This Cambridge, MA-based company is currently seeking FDA approval for its experimental Duchenne muscular dystrophy treatment, eteplirsen. The company has an important regulatory event coming up later this month with an FDA advisory panel expected to review eteplirsen. This Zacks Rank #3 company’s shares gained 158.2% in 2015.

Rounding off our list is Heron Therapeutics, Inc. (HRTX - Snapshot Report), another Zacks Rank #3 stock. Heron’s shares were up 167.8% in 2015 on positive pipeline updates. The company is currently awaiting a response from the FDA regarding the approval status of Sustol for the prevention of acute and delayed chemotherapy-induced nausea and vomiting associated with moderately emetogenic chemotherapy or highly emetogenic chemotherapy regimens. The FDA action date is Jan 17.

In Conclusion

High risk and high returns -- this is a term that is often associated with the biotech sector. Biotech drugs, which are developed through a biological process/system or by using living organisms, require a lot of investment. The drugs are complex in nature and take several years to develop. Companies which hit the bull’s eye become overnight success stories with shares even doubling or tripling on positive news. However, negative outcomes have an equally strong effect on the shares and failure may very well spell doom for these companies.

Strong pipelines, innovative treatments, impressive results, growing demand for drugs especially for rare-to-treat diseases, an aging population and increased health care spending should support growth in this sector. With the sector witnessing a lot of M&A and licensing activity, expectations are high that more such deals will follow. Catalysts remain in the form of regulatory events and pipeline updates.

On the flip side, the high cost of treatments, pricing controversies and the threat of biosimilars remain dampeners for this high risk-high return sector.

Irrespective of who wins the presidential race, drug pricing will remain a topic of discussion among policymakers, the media and the general public.