Biotechnology is one industry that's focused on making our lives better, increasing our quality of life as well as our lifespan by marrying cutting-edge innovations with healthcare. The biotechnology field combines biology, chemistry, engineering, and technology like computer science and artificial intelligence (AI) to manipulate living organisms and their products for beneficial use. In simpler terms, it's the science of using living things (or parts of living things) to develop new products or technologies.
Primarily used in medicine, biotech has applications in the development of agricultural and industrial products, as well. The global biotechnology market is expected to clock a CAGR of 11.8% between 2024 and 2033, to reach a size of $4.25 trillion.
So, how can an investor take advantage of this burgeoning market? In this piece, we'll highlight five small-cap biotech stocks that have majorly outperformed their parent Russell 2000 Index (RUT) in 2024 - and in fact, all of these breakout stocks are among the top 10 best-performing RUT components YTD. Plus, these 5 picks come highly recommended by analysts, with more room to run to Wall Street's consensus price targets.
Biotech Stock #1: Janux Therapeutics
Founded in 2017, San Diego-based Janux Therapeutics (JANX) is a clinical-stage biopharmaceutical company. It develops tumor-activated immunotherapies for cancer treatment. They have two main platforms: Tumor Activated T Cell Engagers (TRACTr) and Tumor Activated Immunomodulators (TRACIr). These platforms focus on creating bispecific antibodies to target and eliminate cancer cells. Its market cap currently stands at $2.36 billion.
JANX stock is up a whopping 313% on a YTD basis.
Analysts have a mean target price of $72.60 for Janux stock, which indicates additional upside potential of about 63.8% from current levels.
The biotech has garnered a unanimous “Strong Buy” rating from 7 analysts, up from 5 analysts in coverage a few months ago.
Biotech Stock #2: Viking Therapeutics
Also based out of San Diego, Viking Therapeutics (VKTX) is a clinical-stage biopharmaceutical company that develops innovative therapies for metabolic and endocrine disorders, including Wall Street's current favorite - GLP-1 weight-loss drugs. Founded in 2000, the company's pipeline includes treatments for nonalcoholic steatohepatitis (NASH), obesity, hypogonadism and acute heart failure. Its market cap currently stands at $6.95 billion.
VKTX stock has rallied 240.8% on a YTD basis.
Overall, 10 analysts have unanimously deemed the stock a “Strong Buy,” with a mean target price of $114.33. This denotes an upside potential of roughly 81% from current levels.
Biotech Stock #3: Longboard Pharmaceuticals
Founded in 2020, Longboard Pharmaceuticals (LBPH) is a biopharmaceutical company focused on developing treatments for central nervous system (CNS) disorders. Their current pipeline includes drugs targeting spinal muscular atrophy (SMA) type 3 and Huntington's disease. Its market cap is currently $767.1 million.
LBPH stock is up 217% on a YTD basis.
All 8 analysts in coverage have unanimously deemed Longboard Pharma stock a “Strong Buy,” with a mean target price of $42.25. That indicates upside potential of about 114.1% from current levels.
Biotech Stock #4: Arcutis Biotherapeutics
Based out of Westlake Village, California, Arcutis Biotherapeutics (ARQT) focuses on treating immune-mediated dermatological diseases and conditions. Its pipeline features multiple clinical programs for a range of inflammatory dermatological conditions, including scalp and body psoriasis, atopic dermatitis, seborrheic dermatitis, and alopecia areata. The company's market cap is $1.15 billion.
ARQT stock has delivered a standout rally of 189% on a YTD basis.
Overall, analysts have a consensus rating of “Strong Buy” for ARQT stock, with a mean target price of $18.67. That suggests an upside potential of 99.3% from current levels. Out of 6 analysts covering the stock, 4 have a “Strong Buy” rating, compared to 1 “Moderate Buy” and 1 “Hold” rating.
Biotech Stock #5: Avidity Biosciences
Founded in 2014, Avidity Biosciences (RNA) is a biopharmaceutical company developing RNA therapeutics using their proprietary Antibody-Oligonucleotide Conjugate (AOC) platform. This platform targets specific genetic diseases by delivering oligonucleotide drugs directly to diseased cells. Its market cap currently stands at $2.83 billion.
RNA stock is up an impressive 213.5% on a YTD basis.
Overall, analysts rate RNA stock a “Strong Buy,” with a mean target price of $46. This denotes an upside potential of about 63.4% from current levels. Out of 8 analysts covering the stock, 7 have a “Strong Buy” rating and 1 has a “Moderate Buy” rating.
