The Biotech Industry in 2024: A Look at Biomea Fusion, Inc. and Other Penny Stocks
The healthcare industry in 2024 has been thriving, attracting investors to explore new opportunities, particularly in the biotech sector. Despite the risks associated with continuous mergers and acquisitions, biotech is expected to be profitable. With a projected 11.8% compound annual growth rate (CAGR), the global biotechnology market is set to reach USD 4.25 trillion by 2033, showing rapid expansion. In the U.S., the market is forecasted to grow at an 11.90% CAGR, reaching USD 763.82 billion by 2033, up from USD 246.18 billion in 2023. In 2023, the U.S. led North America in terms of revenue share.
Fitch Ratings maintains a neutral outlook for the global biotech industry in 2024, citing moderating inflation rates as a key factor. The industry is supported by factors such as a growing aging population, increased healthcare access, and a rise in chronic and specialist conditions. Fitch also predicts a heightened focus on drug pricing and patient value.
Biotech stocks like Vincerx Pharma (VINC), Corbus Pharmaceuticals (CRBP), and Viking Therapeutics (VKTX) have seen substantial gains in 2024, with returns ranging from 134% to 446%, despite receiving less media attention compared to industries like technology and cryptocurrencies. Positive results from weight loss drug trials, for example, have allowed companies like Viking Therapeutics to tap into potentially billion-dollar market opportunities. Although individual stock successes indicate potential gains, broader indexes such as the NASDAQ Biotechnology PR USD Index reveal the industry’s volatility; it fell 11% between 2022 and 2023 due to economic challenges but rebounded by 3% by February 2024.
Investors interested in biotech stocks may be curious about potential buyout areas. Laura Chico highlighted key areas to watch for potential acquisitions, including oncology, immunology, inflammation, neurology, and rare diseases. Chico advises investors to monitor FDA approval news, scientific and clinical risks, and the disease categories that companies are targeting, as these could provide insights into company success.
Healthcare Equity Strategist Jared Holz discussed the potential in the biotech sector on CNBC’s “The Exchange,” noting that the industry has been challenging since mid-2021 but is showing signs of improvement. Holz emphasizes the opportunities in well-positioned small-cap choices and suggests that it’s not too late to invest in large-cap biotech stocks.
To identify the best biotech penny stocks to buy now, we first selected large biotech companies priced under $5 and then ranked the top 10 based on the number of hedge fund holders in Q1 2024. Hedge funds’ interest in certain stocks can indicate potential market outperformance, as shown by our research.
Biomea Fusion, Inc. (NASDAQ:BMEA) is a clinical-stage biopharmaceutical company focused on developing irreversible small molecules to treat patients with genetically defined cancers and metabolic diseases. Despite facing setbacks, such as an FDA clinical hold on trials for their lead candidate BMF-219, Biomea Fusion remains dedicated to advancing its innovative treatments. Analysts have rated Biomea Fusion as a moderate buy, with a potential price target increase of 353.86% from its current market price. As of Q1 2024, 15 hedge fund holders were invested in the company, with Cormorant Asset Management holding the largest position.
In conclusion, the biotech industry in 2024 presents numerous opportunities for investors, with both small-cap and large-cap stocks showing potential for growth. By staying informed about industry trends and individual company developments, investors can make informed decisions about where to invest in this dynamic sector. In the first quarter of 2024, general and administrative costs for BMEA increased to $7.3 million from $5.6 million. This rise was primarily due to higher personnel-related expenses, particularly stock-based compensation, which totaled $5.0 million.
BMEA is currently ranked 8th on the list of the best biotech penny stocks to buy. While there is potential for investment in BMEA, we believe that AI stocks offer greater promise for higher returns in a shorter timeframe. For those seeking a more promising AI stock trading at less than 5 times its earnings, our report on the cheapest AI stock may be of interest.
For more insights, consider reading about a new $25 billion opportunity for NVIDIA and Jim Cramer’s recommendations for 10 stocks in June.
Note: This article is originally published on Insider Monkey and does not contain any disclosures.