Biotech companies utilize cutting-edge science to create medicines and treatments for a plethora of diseases, making them unique investment opportunities for investors looking to cash in on a cure. But don't think that every biotechnology investment will be an automatic slam dunk – while a drug approval or a nod from the U.S. Food and Drug Administration can send shares of biotech stocks straight to the moon, a botched trial or poor rollout of a new medication can have dire consequences for these companies. Smart investors will look for biotech stocks that have drug pipelines full of good prospects, as well as balance sheets strong enough to withstand any unforeseen problems. Here are seven biotech stocks to buy that fit the bill.
Most of the top biotech stocks on this list have perhaps one or two drugs in the pipeline, and no matter how impressive each medicine's potential may be, that isn't much diversification. Gilead (GILD) is different – the multibillion-dollar biotech behemoth provides investors with exposure to treatments for a wide range of ailments, from rheumatoid arthritis to cancer. While Gilead has long been known for its immensely profitable cure for hepatitis C, this year, its antiviral remdesivir has taken center stage as the world looks to find a way to end the pandemic. Yet the future for Gilead is in its HIV treatment Biktarvy, which continues to see growing demand despite the pandemic. The diverse range of treatments in Gilead's portfolio couldn't prevent the company from posting a 10% decline in sales during the second quarter, but the future remains bright for one of the biggest names in biotech.
It's impossible to talk about the best biotech stocks to buy without mentioning the race to find a vaccine that will end the pandemic, and while there are plenty of options for investors looking to bet on the first company to come up with a cure, Novavax (NVAX) is clearly a top contender. This biotech company has been a front-runner from the very beginning, and as the finish line draws nearer and its vaccine candidate NVX-CoV2373 enters phase 3 trials in the U.K., Novavax looks like it's in prime position. That said, Novavax isn't a one-trick pony – the company is also the creator of NanoFlu, a flu vaccine that met all of its endpoints in a phase 3 trial earlier this year and is now poised for accelerated approval from the FDA. While a vaccine would bring incredible rewards in the short term, over the long run, NanoFlu may be an even bigger catalyst.
Regeneron (REGN) has a one-two punch that investors love: short-term profitability from its drugs already on the market and long-term potential from the drugs in its pipeline. In the near term, Regeneron enjoyed a 24% increase in revenue during the second quarter. Though sales of Eylea, which is used to treat a variety of eye diseases, declined a modest 6%, the product remains extremely profitable. Meanwhile, the big winner last quarter was asthma and eczema drug Dupixent, sales of which rose an impressive 70%. Longer term, Regeneron sees a lot of potential in its oncology drug Libtayo, which is a treatment for cutaneous squamous cell carcinoma but might also help those suffering from lung cancer. While investors may be focused on the hype over its REGN-COV2 cocktail, Regeneron's robust pipeline means that this biotech stock still has plenty of room to run.
For a biotech company like ImmunoGen (IMGN), positive results from drug candidates in its pipeline matter far more than what the company earns in a given quarter. Case in point: IMGN reported a net loss of $24.3 million in the second quarter. While that was a nearly $20 million improvement year over year, investors were less concerned with the bottom line and more focused on results from ImmunoGen's ovarian cancer treatment. Mirvetuximab soravtansine, ImmunoGen's ovarian cancer medicine, has yielded positive results throughout the company's Soraya study, which, if successful, could mean accelerated approval for the drug. Meanwhile, mirvetuximab has also been tested alongside another cancer treatment, Avastin, and phase 2 trials are proceeding nicely. The potential of ImmunoGen's cancer treatment drugs are incredible, and while the next phase of trials likely won't begin until next year, investors are understandably optimistic about ImmunoGen's future.
One of the most innovative treatment techniques in the world is gene editing, and the most advanced form of gene editing today uses CRISPR technology. CRISPR stands for clustered regularly interspaced short palindromic repeats. It allows for extremely precise genetic engineering that many scientists believe will be the key to curing a plethora of genetic disorders. Crispr Therapeutics (CRSP) was founded in 2013 by Emmanuelle Charpentier, one of the co-discoverers of CRISPR technology and co-recipient of the 2020 Nobel Prize in Chemistry – and while its pedigree is impressive, investors should focus on CRSP stock's bright future. The company has a slew of promising ongoing clinical trials addressing diseases like cancer, sickle cell disease and transfusion-dependent beta-thalassemia. Any one of these could be the key to unlocking incredible profits for shareholders.
Vertex Pharmaceuticals (VRTX) began 2020 with a bang when the company announced that sales of its new cystic fibrosis drug Trikafta had far outstripped what anyone was expecting, as Trikafta joined Vertex's three older cystic fibrosis drugs to give Vertex dominance over the cystic fibrosis treatment market. Vertex's tried-and-true cystic fibrosis treatments provide the company with steady income, as well as the freedom to invest in other experimental treatments – for instance, Vertex has partnered with Crispr Therapeutics to create a gene-editing therapy targeting sickle cell disease and, eventually, cystic fibrosis. Unfortunately, earlier in October, Vertex halted phase 2 trials of its promising new protein-deficiency drug VX-814 due to side effects in its test subjects. Shares have plummeted 20% in the time since – but this provides new health care investors with an excellent opportunity to buy into a company with strong long-term prospects.
Global Blood Therapeutics
Global Blood Therapeutics (GBT) has one goal: to cure sickle cell disease. That focus means that investors are putting all of their eggs in one basket labeled "Oxbryta," Global Blood's sickle cell disease medicine. During Oxbryta's first full quarter after launch, the drug brought in $14.1 million in revenue, and last quarter, that jumped quarter over quarter to $31.5 million thanks to approximately 1,000 new prescriptions for the treatment. Launching a new drug in the midst of a pandemic keeping people from visiting doctor's offices is a difficult process, but Global Blood saw an "increased use of virtual engagements and telemedicine by healthcare professionals" that corresponded with increased prescriptions, and the company expects that the number of patients using Oxbryta will only continue to grow. For GBT, the growth in telemedicine is unabashedly bullish.
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