Biotech stocks have been beaten down in 2023, with the sector off nearly 4% this year while the S&P 500 is up more than 15%. But some of the larger, better known biotech stocks have thrived -- Vertex Pharmaceuticals, Regeneron Pharmaceuticals, and Seagen, all large-cap biotechs, have seen their shares climb between 16% and 66% so far this year.

Then there are some lesser known biotechs. You may not be aware of Amylyx Pharmaceuticals (AMLX -1.12%), BioMarin Pharmaceuticals (BMRN -1.53%), and Exelixis (EXEL 0.72%), but you should be. All three stocks are underpriced despite growing revenue by double-digits and being profitable.

Amylyx is already on its way

Amylyx focuses on neurological disorders. Its amyotrophic lateral sclerosis (ALS) drug, Relyvrio, was approved in September of 2022 by the Food and Drug Administration (FDA) and has brought in more than $400 million since its launch. The company's stock has been caught up in the malaise that has hit many biotech companies this year, with its shares down more than 51% so far this year. The drop is in sharp contrast to the company's improving financials.

In the second quarter, the company reported revenue of $98.2 million, compared to no revenue in the same period last year. Quarterly net income was listed as $22.1 million or $0.31 in earnings per share (EPS), compared to a net loss of $54.1 million or a per-share loss of $0.93 in the same period last year. The company had, as of June 30, $357.3 million in cash to support its pipeline, which includes Relyvrio as a potential therapy for Alzheimer's disease, Wolfram syndrome, and progressive supranuclear palsy, as well as AMX0114 for a multitude of neurodegenerative disorders.

The company did just suffer a setback when Relyvrio (known as Albrioza in Europe and Canada) was turned down again on Oct. 13 at the European Medicines Agency as a therapy for ALS. The company is hoping that data from its ongoing Phoenix phase 3 trial of the drug, expected by mid-2024, will be sufficient to change that decision.

In the meantime, based on the company's Relyvrio sales in the U.S. and Canada, the stock is trading at roughly 14 times forward earnings, a bargain for a promising biotech company that has two consecutive quarters of being profitable and is growing revenue.

BioMarin is building on its success

BioMarin is a biotech company that focuses on gene therapies to treat rare diseases. The company already has eight approved therapies, including two recently approved potential blockbusters: Voxzogo and Roctavian. Voxzogo was approved by the FDA in 2021 to treat children five and older who have achondroplasia, a bone growth disorder that results in dwarfism due to a genetic mutation in the arms and legs.

In September, the therapy received preliminary approval in Europe to treat children four months and above. Roctavian was approved this summer in the E.U. and the U.S. as the first gene therapy for adults with severe hemophilia A.

The company reported second-quarter revenue of $595.3 million, up 12% year over year. Net income was $56 million or $0.29 in EPS, compared to $27.7 million or $0.15 in EPS in the same period last year. This year's second-quarter numbers don't include Roctavian, which was launched early in the third quarter.

The company's top-earning therapy is Vimizim, used to treat mucopolysaccharidosis type IVA, a rare genetic condition that can cause dwarfism. In the second quarter, the therapy brought in $177 million, up 2%. It will likely soon be overtaken by Voxzogo, which had $113.3 million in sales, up 229% year over year.

Despite that financial growth, the stock is down more than 18% this year. I don't think investors are pricing in prospects for Roctavian, a gene therapy that is said to have the potential to be a one-time fix for hemophilia A. The therapy is said to be priced at $2.9 million and is expected to bring in between $50 million and $150 million this year, BioMarin said in the first quarter.

Investors may also be overlooking BioMarin's pipeline, which includes 19 programs.

Exelixis is off to a strong start

Exelixis is a biotech that focuses on oncology therapies. The stock is the only of these three whose shares are up this year, roughly 34%, and the company's revenue growth still makes it a solid buy.

The company has two products and another on the way that could be a blockbuster. Its top seller is Cabometyx to treat kidney cancer while Cometriq treats thyroid cancer. Both drugs are variations of cabozantinib. Last month, Exelixis obtained global rights from Insilico Medicine, a Hong Kong-based AI biotech, to commercialize ISM3091, a potential first-in-class treatment for BRCA-mutated tumors, which are often found in ovarian, prostate, and breast cancer. The company also has 10 programs in its pipeline.

The company reported second-quarter revenue of $469.85 million, up 12% year over year. Net income was $81.2 million, or $0.25 in EPS, up from $70.7 million, or $0.22 in EPS in the same period last year.