Biotech has been so bloodied and battered this year that the sector is 30%   off its peak from last summer, as measured by the iShares Nasdaq Biotech ETF (IBB -0.47%)..

However, from a big-picture standpoint, this is an industry with a lot to love, especially as merger and acquisition activity heats up. Taking the long-term view, biotechs are up 141% over the last five years, beating the pants off the return of the S&P 500.

In fact, looking at the industry from a fundamental perspective, right now looks like a great opportunity to buy. Why? First, the customer base is growing, since the postwar Baby Boom is rapidly aging and consuming more biotech treatments. Second, the Affordable Care Act greatly expanded insurance coverage, meaning many more people have the opportunity to use those treatments.

But possibly the greatest reason is simply timing. Remember the Human Genome Project? It decoded our genetic makeup and gave scientists huge amounts of new data. A decade later, biotech companies that developed drugs based on that data are finally reaching the end of testing and approval.

But with so many innovative drugs headed for prime time, which biotech could see the biggest gain over the next 12 months? Our contributors take a ringside seat and handicap their winners.

Multiple targets

Cory Renauer: Shares of Celldex Therapeutics (CLDX -3.88%) took a pounding when its lead drug failed to outperform the standard of care in a form of brain cancer earlier this year. The stock is still down more than 80% year to date, and its enterprise value (a theoretical purchase price that factors in cash and debt) is just $182 million.

The company has a targeted cancer therapy, entirely different from the one that failed, in a trial that could support an approval for a well defined group of underserved breast cancer patients. Glemba, rang the bell in a previous study among smaller group of patients similar to those enrolled in its registrational trial. If it performs in line with previous results, it's eventual approval is nearly certain.

While I think Glemba alone is worth more than the stock's current valuation, it also has varlilumab, an immune system modulator that binds to a specific target on the surface of many cancer cells. When varlilumab reaches its target it tells the immune system to "step on the gas" While drugs it's in combination studies with, for example Opdivo from Bristol-Myers Squibb, in effect release the brakes on immune responses to cancer cells, Celldex's varlilumab steps on the gas once it reaches its target. There were fears varlilumab might overstimulate the immune system, but according to Celldex's management, its safety profile is clean.

Further out, the company also has three more drugs aimed at different targets, for a total of five clinical-stage candidates in 13 trials at present. There will be a lot of data coming out of Celldex over the next twelve months that could send this stock into the stratosphere.

Waiting for regulators

Brian Feroldi: One company that I think could move substantially higher over the next year Radius Health (RDUS), a clinical-stage biopharma primarily treating diseases of the bone.

Radius Health is currently on-deck to hear from regulators in both the US and EU about a go/no go decision on the company’s lead compound, which is called abaloparatide. The company believes that this drug could help to strengthen to bones of millions of women who suffer from osteoporosis, thereby helping to prevent some of the 2 million bone fractures that this disease causes in the US alone.  Osteoporosis is a huge problem around the world, so perhaps it’s no surprise to see that some analysts see peak sales of this drug eventually eclipsing $1 billion.

While we won't know a decision for quite some time, my hunch is that the drug will get the green light from regulators. My reasoning is that in Phase 3 clinical trials patients who used abaloparatide showed an 86% reduction in their risk of having a spinal fracture compared to those in the control group. That’s a huge difference, which hints that this drug holds real promise to help keep women with osteoporosis healthy.

Regulators have not yet released a target decision date on abaloparatide’s application as of yet, but we do know that the Committee for Medicinal Products for Human Use – a European committee of healthcare providers who offer recommendations on potential product approvals – should release their option on abaloparatide within about 6 months. If they offer up a positive opinion then it bodes quite well for the company's chances of winning approval both here and abroad, so I could easily see shares of Radius Health soaring higher if they get good news..

Screamingly cheap

Cheryl Swanson: When I look over the long list of biotech stocks that are still going begging in the face of a nine-month old tweet  from Hillary Clinton announcing possible proposals to halt escalating drug prices, United Therapeutics (UTHR 1.18%) stands out as the juiciest prey an investor could bite into.

United looks insanely cheap right now. The  forward P/E is hovering below eight, and the P/S (price to sales) is slightly over five. Those kind of ratios are extremely low for an orphan drug company.

If you're not familiar with United, it's the leading player in the treatment of PAH, or pulmonary hypertension. PAH is a life-threatening disease afflicting around 500,000 people globally, with only a small percentage receiving treatment. In fact, one huge plus for United is that it doesn't follow the bad example of its peers in the rare disease market, who boost revenue by continually hiking prices on their already nose bleed-level priced orphan drugs.

A great example of how United differs from the pack is its leading drug Remodulin. United has refused to raise its price for over five years. But by focusing on enlarging the market, Remodulin sales have kept growing year-over-year.  While the late-stage PAH treatment is growing slowly (single digits yearly), drugs designed to treat the disease in earlier stages are exploding. For example, oral therapy Orenitram saw 85% revenue growth year-over-year last quarter. The company is also attempting to expand its drug Tyvaso into a variant of PAH projected to be worth about $3-$4 billion yearly (WHO Group III). United's research pipeline for PAH also includes implantable Remodulin, further Orenitram trials, and Esuberaprost.

Analysts  cite PAH drug competition from the likes of Gilead, Bayer AG, and Actelion Pharmaceuticals as headwinds. But United is rapidly expanding outside of PAH, having launched the only FDA-approved therapy for the childhood cancer neuroblastoma. The company is also seeing success in its projects on organ transplants, with Mayo Clinic recently becoming a key collaborator.

 Biotech investing is risky. You can lose your shirt, but you can also win big. Just remember, you don't need every biotech stock you own to win. You just need some of them to win big.