5 Biotech Stocks Ready To Crush The Market In 2016

After a volatile 2015, the year ahead marks an important period for the biotech industry. Thanks to new technologies, discovery and development are moving at a rapid pace. The NASDAQ Biotechnology Index and NYSE ARCA BIOTECH INDEX were up 10.6% and 10.4%, respectively, comparing favorably with the overall stock market which had a rather lackluster year with the S&P 500 being down 0.7%.  

Importantly, for 2016, the fundamentals of the biotech sector still look strong.

M&A activity, which dominated the industry for the last couple of years, is expected to continue in 2016. Action on the M&A front continues to be strong among biotech companies with new therapies or interesting pipeline candidates attracting attention. Baxalta BXLT is set to be acquired by Shire plc SHPG for $32 billion.

Apart from M&A deals, industry bellwethers are also pursuing licensing activity to bolster their beleaguered pipelines. Immuno-oncology continues to be one of the favorite therapeutic areas in this regard. Last year, we saw a number of deals in which large-cap health care companies have shown interest in developing immuno-oncology therapies.

Celgene Corp. (CELG - Analyst Report) entered into a global collaboration for the development and commercialization of immunotherapies with Juno Therapeutics, Inc. (JUNO - Analyst Report). However, the deals are not limited to this therapeutic area alone. Other areas like hepatitis C virus (HCV) are also attracting a lot of attention.

In order to boost the bottom line, several health care companies are resorting to initiatives like restructuring, streamlining of operations by divesting non-core/redundant assets, cost cutting through job cuts and lowering operating expenses, which include cutting research and development (R&D) expenses. Several companies including Bristol-Myers Squibb Co. (BMY - Analyst Report) and Biogen (BIIB - Analyst Report) announced job cuts last year. This trend is expected to continue this year as well.

Meanwhile, with several product approvals and pipeline updates lined up, 2016 looks to be promising. Gilead Sciences, Inc. (GILD - Analyst Report) expects to receive a final decision from the FDA by Jun 28, 2016, on its once-daily, fixed-dose combination of its blockbuster HCV infection drug, Sovaldi with velpatasvir for the treatment of genotype 1-6 chronic HCV infection. Encouraging news on the clinical front could also boost the stock price.

In the second half of 2015, the biotech sector saw a major sell-off triggered by pricing concerns. Democratic Presidential candidate Hillary Clinton’s "price gouging" tweet had set the ball rolling. However, the sector staged a strong rebound with stocks posting solid gains toward the end of the year.

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Peter Craig 4 years ago Member's comment

It's great to see some positive coverage on $INO!