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3 Beaten-Down Biotech Stocks to Buy for a Turnaround in 2025

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The biotech sector witnessed a see-saw performance in 2024. Though the year started on a positive note, those gains were erased in the second half due to disappointing third-quarter results, guidance cuts, pipeline setbacks and the appointment of vaccine skeptic Robert F. Kennedy Jr. as the head of Health and Human Services.

Despite these setbacks, the sector continued to attract investors’ attention due to demand for innovative medicines, especially in areas with great commercial potential, like obesity, immunology and gene therapy. New drug approvals, pipeline progress and an increase in M&A activity were some of the positives in the sector in 2024.

Here, we discuss three drug/biotech stocks that took a beating in 2024 but are likely to bounce back in 2025 based on anticipated regulatory approvals and/or positive pipeline updates. These are Immunocore Holdings IMCR, Allogene Therapeutics ALLO and Day One Biopharmaceuticals DAWN.

Immunocore Holdings

IMCR is a commercial-stage biotech focused on developing a novel class of TCR bispecific immunotherapies called ImmTAX targeting a broad range of diseases, which include cancer, autoimmune and infectious diseases. Kimmtrak, the sole-marketed drug in the company’s portfolio, is the first FDA-approved immunotherapy for metastatic uveal (ocular) melanoma, a rare form of cancer. In the first nine months of 2024, sales of the drug rose 32% year over year to $226 million, driven by increased demand.

Despite the encouraging top-line growth, the stock has plummeted 58% year to date. This downside can be attributed to investor-perceived risks in pipeline development. The most advanced candidate in Immunocore’s pipeline is brenetafusp, which is being evaluated across two separate clinical studies – a late-stage study for cutaneous melanoma and a phase I/II study for multiple solid tumors, including ovarian, non-small cell lung cancer (NSCLC), and endometrial carcinoma.

Several Wall Street analysts have expressed concerns over brenetafusp’s efficacy beyond cutaneous cancer, given the company’s delay in reporting results from the NSCLC cohort of the phase I/II study. Some analysts also stated that the company’s data on the drug in cutaneous melanoma (reported earlier this year) was ‘underwhelming’.

The stock is anticipated to experience a major upside in early 2025 as Wall Street expects IMCR to provide a positive update on the early-stage study of an investigational HIV therapy. The company is also evaluating Kimmtrak in two separate late-stage studies — one as a second or later-line treatment for cutaneous melanoma and another as an adjuvant treatment for uveal melanoma. It is also moving multiple oncology candidates to clinical development. Earlier this month, management started dosing patients in two separate early-stage studies on IMC-R117C and IMC-P115C across advanced gastrointestinal cancer and advanced solid tumors, respectively.