If you look at the S&P 500, which is up more than 18% this year, or the Nasdaq Composite, which is up more than 34% in 2023, it appears the markets are booming. If you look specifically at biotech stocks, it appears they are still caught up in a downturn. The iShares Biotechnology ETF is down more than 3% so far in 2023, and the SPDR S&P Biotech EFT is down more than 5%. The two ETFs reflect negative market sentiment toward biotech stocks, in general, this year.

However, there are specific biotech stocks that are defying that trend and apparently thriving. 

Regeneron Pharmaceuticals (REGN -0.84%) and Alkermes (ALKS 0.98%) stocks are both trading up more than 7% so far in 2023, while Vertex Pharmaceuticals (VRTX -0.06%) is up more than 19% in 2023. On top of that, all three biotech companies saw revenue and earnings per share (EPS) rise year over year in the second quarter.

Let's take a closer look at these three stocks defying the bear market in biotech.

1. Regeneron is bouncing back

Regeneron's annual revenue of $12.17 billion last year was down 24% because of declining sales of its COVID-19 therapies REGEN-COV and Ronapreve. However, that slump appears to be over, even if its COVID-19-related sales are still waning.

In the second quarter, Regeneron reported $3.16 billion in revenue, up 11% year over year, with EPS of $8.50 compared to $7.47 in the same period last year. Anti-inflammatory multitool Dupixent, which has been approved to treat atopic dermatitis, asthma, chronic rhinosinusitis with nasal polyps, eosinophilic esophagitis, and prurigo nodularis (a chronic skin disorder characterized by itchy bumps) led the way with almost $2.8 billion in sales, up 33% year over year. Regeneron splits Dupixent's sales 50/50 with Sanofi.

The company has a big pipeline as well, with 35 programs. Sales of its other blockbuster, eye drug Eylea, declined by 7% to $1.5 billion. However, that trend could reverse as the company hopes to get approval for a higher-dosage version of the drug to compete with Vabysmo, made by Roche.

In its second-quarter report, Regeneron said it expects to finish its resubmission of higher-strength Eylea by the middle of this month to the Food and Drug Administration (FDA). That means the company could get approval for the indication as early as the third quarter. The FDA declined to approve the higher-dose version in June after a failed inspection at Catalent, a third-party manufacturer. 

2. Alkermes is focusing on its core strengths

Alkermes focuses on therapies to treat alcohol dependence, opioid dependence, schizophrenia, and bipolar I disorder, and has drugs in its pipeline to treat other neurological disorders and cancer. It's a small but growing biopharmaceutical company with four approved therapies: Vivitrol, to treat alcohol or opioid dependence; Lybalvi, to treat manic episodes associated with bipolar I disorder and schizophrenia; and Aristada and Aristada Initio, two schizophrenia treatments. 

The company said it plans to split off the oncology therapies in its pipeline into a separate company, Mural Oncology, by the latter half of this year, which should help it focus on its core of neurological therapies.

In the second quarter, Alkermes reported revenue of $617.4 million, up 124% year over year, thanks in a big part to the reinstatement of product royalties from long-acting Invega after it won its arbitration with Johnson & Johnson subsidiary Janssen Pharmaceuticals. Alkermes also reported second-quarter EPS of $1.13, up from an EPS loss of $0.18 in the same period a year ago.

On June 6, Alkermes upgraded yearly guidance to say it expects 2023 revenue of between $1.55 billion and $1.68 billion, up from earlier estimates of between $1.13 billion and $1.25 billion. It also increased yearly EPS to between $1.31 and $1.54, compared to an earlier range of an EPS loss between $0.96 and $1.20. 

The growth of the company's own sales, in addition to the arbitration win, are the reasons cited for the improved guidance. Alkermes said it expects an additional $197 million in 2022 royalties, late payments, and interest on the payments from Johnson & Johnson. In 2023, it said it expects Invega royalties to be between $265 million and $280 million.

3. Vertex is waiting on a big announcement

Vertex Pharmaceuticals is already profitable and thriving, thanks to its cystic fibrosis (CF) franchise. In the second quarter, the company reported revenue of $2.49 billion, up 14% year over year, and EPS of $3.52 compared to $3.15 in the same period a year ago. The growth primarily comes from CF therapy Trikafta (known as Kaftrio overseas), which was responsible for $1.51 billion in second-quarter revenue, up 14% year over year.

The company raised guidance for the year to show revenue of between $9.7 billion and $9.8 billion, up from earlier forecasts of between $9.55 billion and $9.7 billion. The company reported $8.75 billion in 2022 revenue.

The next big catalyst for growth could come in late December. Exa-cel, the CRISPR gene-editing therapy the company has developed with CRISPR Therapeutics, has a Prescription Drug User Fee Act date (PDUFA) date from the FDA of Dec. 8 as a therapy to treat sickle cell disease and a PDUFA date of March 30 to treat transfusion-dependent beta thalassemia, two rare genetic blood disorders. In trials to treat both diseases, exa-cel was effective as a functional cure. It could be the first CRISPR-based therapy to be approved by the FDA, but first, an FDA advisory committee is expected to weigh in on exa-cel.

The company has two other therapies that could be launched soon: VX-548 is in three phase 3 trials, all expected to be completed by the end of the year. It is a non-opioid therapy to treat moderate to severe pain and fared well in a phase 2 proof-of-concept trial. The company's next-generation CF medication, vanzacaftor triple combination therapy, is also in a phase 3 trial expected to wrap up this year.