In this piece, we will take a look at the 12 best performing biotechnology stocks in 2023. If you want to skip our introduction to the biotechnology industry and some top players, then check out 5 Best Performing Biotech Stocks in 2023.
Biotechnology is one of the hottest industries these days and one that has risen to prominence after the outbreak of the coronavirus pandemic. The world's response to the pandemic revolved around mRNA vaccines, which were developed using breakthrough technologies that had previously been used to develop cancer vaccines.
Biotechnology refers to products that rely on natural raw materials that are sourced from biological sources. This ability to use novel materials allows the industry to target some of the most serious diseases known to humankind such as cancer. At the same time, biotechnology also allows researchers and firms to target plant and animal health as well.
The interest in the sector after the pandemic has seen vast amounts of capital flow into the biotechnology industry. Research from the consultancy firm McKinsey shows that between 2019 and 2021, venture capital firms plowed in $52 billion in biotechnology companies, which marked an increase not only in dollar terms but also in the number of companies that were invested in. McKinsey's data shows that during 2016, VC firms had invested in 2,200 biotechnology startups and this number jumped to 3,100 firms by 2021. Similarly, biotechnology firms had raised $34 billion in 2021, which was nearly twice the funding in 2020 that had sat at $16 billion.
Just like the broader consumer technology sector, the biotechnology industry is divided into several categories as well. These include cell therapy firms, those developing precision medicines, cancer treatment providers, and firms that leverage machine learning to develop new drugs among others. For the venture capitalists, the largest share of their investment flows during 2019 and 2021, $7.7 billion and $7.6 billion were invested into cell therapy firms and those developing next generation genetic therapies. Gene therapies and the broader genomics industry are also some of the hottest medical sectors these days. If you're interested in such firms, then we took a look at the 12 Gene Editing Stocks With the Best Long-Term Potential and found that the top three firms were Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), Agilent Technologies, Inc. (NYSE:A), and Exact Sciences Corporation (NASDAQ:EXAS).
However, while we've focused on the consumer end of biotechnology and some such stocks so far, there is also an industrial biotechnology sector. This sector involves using biological products to produce chemicals, fuels, and other raw materials and end products that are used by industrial users. For instance, biofuels are quite hot among airlines and other organizations these days due to their ability to reduce greenhouse gas emissions. In fact, estimates from the Department of Energy show that the U.S. can reduce its gasoline consumption by as much as 30% if it uses biomass feed stocks to produce ethanol. We also took a look at 10 Best Biofuel Stocks To Buy Now, and among these, the top three picks are NewMarket Corporation (NYSE:NEU), Green Plains Inc. (NASDAQ:GPRE), and KBR, Inc. (NYSE:KBR).
Delving deeper into the industrial biotechnology sector, research from FESTEL Capital shares quite a bit of details that have to be considered when investing in this space. It outlines that industrial biotechnology firms often face difficulties in raising capital when the global economy is in turmoil as venture capital firms are unable to easily raise capital. It adds that operating income is often the biggest source of financing for industrial biotechnology companies and that within the sector, agrochemical and pharmaceutical companies are among the most confident when making investments into new plants due to short term demand for their products.
Finally, before we head to the best performing biotech stocks in 2023, it's also important to look at the biggest developments in the industry this year. One of the biggest biotechnology developments in 2023 came from researchers at the State University of New York who developed a new strain of the E. Coli bacteria that is capable of producing biodegradable plastics that are environmentally friendly. Another key development came from the University of Pennsylvania where researchers were able to increase the number of root hairs in a plant's roots to increase their surface area to absorb water and nutrients from the soil.
With these details in mind, let's take a look at the top performing biotech stocks in 2023, with the notable ones being MoonLake Immunotherapeutics (NASDAQ:MLTX), Soleno Therapeutics, Inc. (NASDAQ:SLNO), and Tempest Therapeutics, Inc. (NASDAQ:TPST).
For our list of the best performing biotech stocks in 2023, we ranked all biotechnology companies by their year to date share price performance and picked the top performing stocks.
ImmunoGen, Inc. (NASDAQ:IMGN) is a pure play cancer treatment company with several products in clinical trials. Its shares are rated Strong Buy on average, with JPMorgan upgrading its share rating to Overweight and Hold in September 2023.
Out of the 910 hedge funds tracked by Insider Monkey for their Q2 2023 shareholdings, 42 had held a stake in the company. ImmunoGen, Inc. (NASDAQ:IMGN)'s biggest hedge fund investor is Jeremy Green's Redmile Group due to its $334 million stake.
Along with Soleno Therapeutics, Inc. (NASDAQ:SLNO), MoonLake Immunotherapeutics (NASDAQ:MLTX), and Tempest Therapeutics, Inc. (NASDAQ:TPST), ImmunoGen, Inc. (NASDAQ:IMGN) is a top performing biotech stock in 2023.
Renovaro Biosciences Inc. (NASDAQ:RENB) is a small biotechnology company that is developing treatments for one of the most serious diseases known to humankind, HIV. In a shareholder letter issued in October 2023, its CEO shared that its AI division plans to introduce new cancer products in 2024.
Two hedge funds out of the 910 polled by Insider Monkey were Renovaro Biosciences Inc. (NASDAQ:RENB)'s investors as of June 2023. Israel Englander's Millennium Management is the largest shareholder out of these, owning 251,478 shares that are worth $142,487.
Genelux Corporation (NASDAQ:GNLX) is a California based biotechnology firm that develops treatments for pancreatic, ovarian, and lung cancer. Its shares are rated Buy on average and analysts have set an average share price target of $34.33. The firm's second quarter results saw it outline $27.1 million cash in hand, which, along with other holdings, should be sufficient to cover operations by 2026 according to management.
Reneo Pharmaceuticals, Inc. (NASDAQ:RPHM) is another small biotech firm. It is researching treatments for diseases that hamper the human cells' abilities to produce energy. The firm scored a win in June 2023 when it was added to the Russell 2000 stock index.
By the end of this year's June quarter, nine out of the 910 hedge funds provided by Insider Monkey had bought and owned Reneo Pharmaceuticals, Inc. (NASDAQ:RPHM)'s shares. Ting Jia's Octagon Capital Advisors is the largest stakeholder out of these through its $15.5 million investment.
Applied Therapeutics, Inc. (NASDAQ:APLT) develops treatments for patients with diabetes and nervous system disorders. The firm announced in September 2023 that it has filed a new application with the FDA for a disease that hampers the human body's ability to produce glucose.
As of June 2023, nine out of the 910 hedge funds tracked by Insider Monkey had held a stake in the firm. Applied Therapeutics, Inc. (NASDAQ:APLT)'s biggest hedge fund investor is Anand Parekh's Alyeska Investment Group as it owns $5.6 million worth of shares.
BridgeBio Pharma, Inc. (NASDAQ:BBIO) is an American biotechnology company headquartered in Palo Alto, California. The firm focuses its efforts on developing treatments for genetic diseases of the cardiovascular system, the renal system, and others. Its shares are rated Strong Buy on average and analysts have set an average price target of $46.40.
During Q2 2023, 32 out of the 910 hedge funds profiled by Insider Monkey held a stake in BridgeBio Pharma, Inc. (NASDAQ:BBIO). Out of these, the firm's largest shareholder is Andreas Halvorsen's Viking Global since it owns 26.6 million shares that are worth $457 million.
Minerva Neurosciences, Inc. (NASDAQ:NERV) is a specialized biotech firm that is developing treatments for nervous system disorders. The firm's second quarter results saw it report $51.9 million in cash and $1.9 million in quarterly research and development spending.
Only one hedge fund among the 910 tracked by Insider Monkey had invested in the firm as of June 2023. This lone Minerva Neurosciences, Inc. (NASDAQ:NERV) investor is Jim Simons' Renaissance Technologies due to its $898,000 investment.
MoonLake Immunotherapeutics (NASDAQ:MLTX), Minerva Neurosciences, Inc. (NASDAQ:NERV), Soleno Therapeutics, Inc. (NASDAQ:SLNO), and Tempest Therapeutics, Inc. (NASDAQ:TPST) are some of 2023's best performing biotech stocks.
