There’s no denying the appeal of owning healthcare stocks over the long term. As we continue to age and populations grow, demand for new and innovative healthcare solutions is only growing as well. That makes stocks in the healthcare sector a prime place to profit over the long haul.
Some of the most exciting opportunities in the sector exist in the recently launched initial public offerings (IPOs).
A variety of new biotech and medical device firms have taken advantage of the sector’s good times and have now made themselves public. That’s huge news for investors looking to cash in on healthcare’s continued demand and the need for innovation. Even better is that investors are able to get in on the ground floor. As long as trends continue in their favor, these IPOs have a great chance at success.
But which ones should you own? Here are three new healthcare stocks that should be in your portfolio.
Healthcare Stocks to Buy Right Now: MorphoSys AG/S ADR (MOR)
Usually when a biotech stock IPOs, it’s a small clinical-stage concern that needs the funding to begin developing a key compound. That’s not the case with German giant MorphoSys AG/S ADR (NYSE:MOR). The firm has a long history. It was founded back in 1992, and has been trading in Germany since the late 1990s. Over that time, the firm has partnered with a variety of pharma-giants to develop various antibodies and other compounds. And as such, MorphoSys receives plenty of royalties.
So why raise capital now? Crashing the CART-T party, of course.
With its IPO proceeds, MOR now has a $500 million war chest to help develop its anti-CD19 antibody MOR208. Already preliminary data shows that MOR208 could be a better therapy than the so-called cell therapies when used in combination to cure cancer. But running clinical trials is an expensive endeavor. With a huge cash hoard, MOR will be able to run plenty of studies and provide extra research dollars to make its case for MOR208. Analysts already think that case is pretty good.
And even if MOR208 doesn’t pan out, the firm’s pipeline is a staggering 114 deep. There’s plenty of future profit potential there.
For investors, the MorphoSys IPO could represent one of the best healthcare stocks to come along in a while.
Healthcare Stocks to Buy Right Now: Inspire Medical Systems, Inc. (INSP)
Sleep apnea is a condition that affects a growing number of Americans each year. Traditionally, the treatment for sleep apnea has been a so-called Continuous Positive Airway Pressure (CPAP) device. It’s basically a giant face mask that you wear while sleeping to help keep airways open. They are cumbersome, hot and incredibly uncomfortable. Because of that, many patients with sleep apnea forgo treatment and skip wearing the device. This leads to other medical issues.
That’s where Inspire Medical Systems, Inc. (NYSE:INSP) comes in.
Originally a spin-off from device giant Medtronic (NYSE:MDT), INSP makes an implantable device that delivers mild stimulation to the hypoglossal nerve. This nerve controls the movement of your tongue and other key airway muscles. By stimulating these muscles, the airway remains open during sleep and apnea is controlled. It basically builds off of MDT’s expertise in pacemakers and other similar heart devices. Sales of Inspires device have continued to grow and it’s the only device of its kind.
With a huge market for sleep apnea patients — including rising incidences due to obesity as well as in children — INSP has a long runway to grow its already robust sales and eventually profits. Moreover, there’s a good chance that Inspire becomes a buyout candidate as sales of its device catch on.
Healthcare Stocks to Buy Right Now: Unity Biotechnology (UBX)
One of the reasons for the rise in healthcare spending comes down to longevity. Aging and staying alive longer creates a lot of problems for people. The forefront of this could be newly IPO’d Unity Biotechnology Inc (NASDAQ:UBX).
Unity is a very early stage clinical biotech — the opposite of previously mentioned MorphoSys. But its approach seems worthy of a portfolio position. UBX is developing so-called senolytic therapies to treat age-related diseases. These medicines selectively induce the death of senescent cells. Senescent cells are those that have stop dividing. For age-related disorders, this is fertile ground for treatment. By blocking these cells, Unity hopes to halt various age-related diseases.
So far, that seems to be the case. Recent studies in mice have shown that eliminating senescent cells have improved life spans and the overall health of the subjects. This underscores the firm’s novel approach.
For investors, Unity could be a blockbuster long-term play as the firm moves into real testing of its senolytic therapies. There’s risk here and the IPO was used to raise cash for discovery. But the long-term potential is there.
Disclosure: As of this writing, the author does not own any of the securities mentioned.