Top-rated biotechs with negative enterprise values

After four consecutive years of underperformance, biotech stocks are among the most unloved segments in the market. Major industry benchmarks SPDR S&P Biotech ETF (NYSEARCA:XBI) and the iShares Biotechnology ETF (NASDAQ:IBB) have both trailed the S&P 500 (SP500) over the past 12 months.

Operating in an industry highly sensitive to interest rates, many biotechs are trading with negative enterprise values, meaning their net assets exceed their market capitalization.

If an investor buys all of the shares in a biotech with a negative EV and pays off its debts, cash and cash equivalents remaining in its balance sheet could be worth more than the investor’s outlay.

According to Seeking Alpha data, out of more than 500 publicly traded biotechs, about 120 biotechs are trading with negative enterprise values, meaning their value is more when dead than alive.

However, there are pockets of interest. According to Seeking Alpha Stock Screener, Wall Street has Strong Buy ratings on these 14 biotechs despite their negative EVs (market cap >$100M).

1. Acelyrin (SLRN)
2. Sutro Biopharma (STRO)
3. iTeos Therapeutics (ITOS)
4. Zenas BioPharma (ZBIO)
5. Voyager Therapeutics (NASDAQ:VYGR)
6. Perspective Therapeutics (NYSE:CATX)
7. Nkarta (NKTX)
8. TScan Therapeutics (TCRX)
9. Artiva Biotherapeutics (ARTV)
10. Annexon (ANNX),
11. Erasca (ERAS)
12. Acrivon Therapeutics (ACRV)
13. Immatics (IMTX)
14. Larimar Therapeutics (LRMR)

Including the stocks representing XBI and IBB, the following biotechs with negative EVs also join the top-rated list

1. Alumis (ALMS)
2. Climb Bio (CLYM)
3. Lexeo Therapeutics (LXEO)
4. Inozyme Pharma (INZY)
5. Pyxis Oncology (PYXS)
6. Mersana Therapeutics (MRSN)