Despite the strength of the economy overall, 2024 was a challenging year for the biotech industry. The high cost of borrowing—particularly prior to the Fed's first rate cut in several years in September—coupled with a shifting landscape for the healthcare sector dampened prospects for many firms. As a result, the benchmark iShares Biotechnology ETF (NASDAQ: IBB) was highly volatile but ended up down by 1.2% in the year leading to January 17, 2025.

Biotech is a high-risk, high-return space though, as a large number of young companies in this industry work to string together enough funding to keep operations going long enough to hopefully see an important new product come to market. When things do come together, it can be a huge boon for investors—blockbuster drug approvals and even positive clinical trial results can sometimes send shares skyrocketing by hundreds of percentage points.

As always, trying to time the market is likely futile. But investors looking for an opportunity to buy the dip on two trending firms—Avadel Pharmaceuticals plc (NASDAQ: AVDL) and Sana Biotechnology Inc. (NASDAQ: SANA)—might be in luck early in 2025. At the same time, a third firm with a recent history of rallying, ADMA Biologics Inc. (NASDAQ: ADMA), could still present an opportunity for future growth.

Avadel Pharmaceuticals: Disappointing Guidance Presents Buy Opportunity

Avadel is known for Lumryz, a one-of-a-kind treatment for excessive daytime sleepiness for adults with narcolepsy. Despite the fact that the company announced $50 million in net product revenue for the fourth quarter, an increase of more than 150% year-over-year, shares plunged early in January along with news that Avadel set net product revenue guidance in the range of $240– 260 million, below analyst expectations.

Lumryz faces the hurdle of patient attrition, but Avadel is proactively working to boost uptake among patients switching from other medications. The company is also enrolling patients in a phase 3 trial to evaluate certain other aspects of the efficacy and safety of Lumryz. Fortunately for investors, Avadel has some leeway to address the underlying issues: the company has more than $70 million in cash on hand and a positive cash flow likely to generate between $20 million and $40 million this year.

Investors comfortable taking a risk on the long game for Avadel may find that now may be an opportune time to invest—as of January 17, 2025, shares are down more than 48% in the last year.

Sana Biotechnology: Potential to Unlock New Means of Treating Type 1 Diabetes

Sana is a gene and cell therapy clinical-stage biotech firm and a penny stock that has fallen by 48.5% in the year leading to January 17, 2025. What may set this company apart from a host of similar penny stock biotechs, however, is its investigational allogeneic cell therapy being studied in type 1 diabetes.

Sana revealed in early January data from its study involving an allogeneic transplant—the transplanting of healthy donor cells in the body of a patient seeking treatment. Specifically, the study showed "survival of an allogeneic transplant with no immunosuppression or immune-protective device," according to Sana, potentially the first study of its kind. This may unlock new means of treating type 1 diabetes and various other diseases as well, should the company be able to replicate safe cell transplantation without immunosuppression.

Immediately after the news was announced, Sana shares more than doubled in value. They remain up about 65% in the last month as of January 17, and four out of five analysts continue to see the stock as a Buy with upside potential of more than 350% based on a consensus price target of $14.25.

ADMA Biologics: Fast-Track for Growth

ADMA had a big year in 2024; as it moved toward increased commercialization of some of its products, revenue and net income grew considerably. In the third quarter of 2024, revenue climbed by 78% year-over-year to nearly $120 million, while net income increased an incredible 1,300% to just under $36 million.

The top- and bottom-line growth should help ADMA to strengthen its balance sheet—the company said it anticipated reaching a net leverage-neutral position in the fourth quarter of 2024. It also increased its full-year 2025 revenue guidance to more than $485, from more than $415 million, as it anticipates full-year 2026 revenue to be over $600 million. What's more, ADMA believes it will achieve $1 billion in total annual revenue before 2030, suggesting that the pace of growth may continue.

Though ADMA shares are up 228% in the last year, analysts believe there is still plenty of upside potential remaining.