It has been a year since we officially recognized the novel coronavirus as a serious threat. And while it seems like it has been far longer for us to manage our “new normal,” the fact that we’re seeing numbers drop and there are more than a dozen vaccines available around the world, goes to show the power of technology.
The initial Covid-19 vaccines that were launched in the U.S. were the first of their type ever approved. They use messenger RNA (mRNA), the building block of DNA, to help our bodies develop immunity to the virus. This takes a significant amount of technological know-how.
Also, the fact that the vaccines only took a year to develop is incredibly fast. Usually it takes years to sort out the virus, potential vectors to stop it, etc. The runway was significantly shortened by the technology currently available.
However, when looking for biotech stocks to buy, those which are producing Covid-19 vaccines aren’t the only ones you should be paying attention to. As such, these seven stocks are worth considering beyond Covid-19 vaccines:
- Denali Therapeutics (NASDAQ:DNLI)
- Moderna (NASDAQ:MRNA)
- Mirati Therapeutics (NASDAQ:MRTX)
- Zai Lab Ltd (NASDAQ:ZLAB)
- Novavax (NASDAQ:NVAX)
- Seagen (NASDAQ:SGEN)
- Fate Therapeutics (NASDAQ:FATE)
The work that these second-tier biotechs are doing now will continue to grab headlines in a post-coronavirus world.
Biotech Stocks: Denali Therapeutics (DNLI)
I have been a big fan of this clinical-stage biotech stock for quite a while for a couple reasons.
First, DNLI has been a strong performer during the past 12 months, which represents a well-managed company in a focused sector that doesn’t have significant, focused competitors.
Second, its key market is neurodegenerative diseases like Parkinson’s, ALS, dementia and Alzheimer’s. With drugs in the pipeline for all of these challenges and more, DNLI is addressing one of the biggest demands in the developed world — the graying of the population. DNLI has some very promising drugs making their way through trials now. In August of last year a major biotech agreed to partner with DNLI on two programs using DNLI’s unique blood-brain barrier crossing TV platform. That’s a big confirmation regarding the company’s proprietary technology.
The stock has come off its December highs, but it’s still up 290% in the past 12 months. However, given its potential, those old highs are certainly achievable as its drugs pass through trials. But be prepared for volatility.
Certainly if you haven’t heard the name by now, the ticker symbol should give you an idea of what the company focuses on. It’s all about mRNA and the possibilities of using it for vaccines as well as other medicines.
But its vaccine work is what has launched it, now that it has one of the few vaccines that is getting into Americans’ arms.
MRNA research has been going on for decades, but it’s very difficult to manipulate and until technology reached its current state it was very expensive to develop on a scale large enough for trials, much less broad distribution. But that has all changed now.
And the fact that this biotech stock went from around $19 a share 12 months ago to $132 today (and up to $189), means MRNA is in a much better place to become a leading player in mRNA research and development.
Mirati Therapeutics (MRTX)
This clinical stage biotech stock has a novel approach to treating cell growth and cell division using what are called KRAS inhibitors. This company is all about cancer drugs. And some of its drugs in the pipeline show best-in-class efficacy, outperforming KRAS inhibitors made by some of the biggest pharmaceutical companies on the planet.
With a market cap around $9 billion, however, this is a David in a David and Goliath battle. However, it’s the perfect size to be swallowed by a bigger, diversified pharmaceutical firm as a plug and play opportunity.
Like other biotech stocks, it has been on a wild ride this past year, with a 52-week range between $66 and $249. It’s around $188 now and is likely to consolidate around here. Its 12-month performance of 161% is still impressive, but there’s plenty of headroom if it goes it alone or a big pharma steps in with an offer.
Zai Lab Ltd (ZLAB)
If you’re looking for a way to play China’s growing demand for world-class medicines, this should be one of the biotech stocks you consider. It has a foot in China and the U.S., which means it can create value in both markets.
One of its recent deals is to license a drug made by a U.S. big pharma for use in China. This is a win-win for both sides. China gets a U.S. drug in a key strategic area and the U.S. company gets a revenue source in China without having to access the country on its own.
Of course, ZLAB also has its own drugs, four of them are already approved in the U.S. market. Currently it has 15 drug candidates in oncology, autoimmune and infectious disease trials. When approved they have easy access to both U.S. and Chinese markets.
Its current $11 billion market cap has been boosted significantly after the ZLAB’s 201% run in the past 12 months. But there’s a lot of promise here, especially as a conduit into the Chinese market.
Less than two years ago, this vaccine maker was having to face the reality of being delisted from Nasdaq because its stock had traded under $1 for 30 days in a row. It was selling office space and cutting jobs.
It had great ideas, but trying to develop them on a shoestring was hitting the biotech “valley of death” when scientists take a great idea from the lab and try to commercialize it. That requires a whole different level of management skills and often inflicts mortal wounds on promising biotech stocks.
But then Covid-19 rolled into the U.S. and NVAX got a $2 billion shot in the arm (I couldn’t resist) from the U.S. government to move forward with its research and development.
It now has a market cap nearing $13 billion and the stock is trading at $177 a share. NVAX is up 1,757% in the past 12 months, but it’s nearly 50% off its 52-week highs. And its vaccine, while not approved in the first round, demonstrated powerful resistance to Covid-19 — that’s especially true for the Brazil and U.K. variants.
In late January its Phase 3 trials in the U.K. were released, and it’s considered by experts to be one of the best vaccines out there.
If you’ve heard of onco-immunotherapy, then you have a pretty good idea what SGEN does. If you haven’t, then a quick description is using your own immune system to help fight cancer.
Given the fact that this was practically science fiction a decade ago, at least on a commercial level, it’s a significant step forward in cancer treatment. There are a number of biotech stocks that are in this field, but SGEN is one of the leaders, having been at this since 1997.
SGEN uses antibody-drug conjugates (ADCs), which attach small molecule drugs to naturally occurring antibodies to target tumor cells. The antibodies are absorbed and dissipate, but the drug goes to work on the tumor and destroys its ability to grow. The tumor dies.
This approach means unlike traditional chemotherapy, it’s highly targeted, so it doesn’t compromise the patient’s immune system, yet is highly effective.
SGEN stock is up 56% in the past 12 months. It has a $27 billion market cap, so it’s an established player in a very hot sector, which makes it a great growth story on its own or a buy-out target at a big premium.
Fate Therapeutics (FATE)
Another immunotherapy biotech, FATE targets cancers and other immune disorders using a proprietary induced pluripotent stem cell (iPSC) technology that sets it apart from similar biotech stocks.
IPSC allows FATE to create an unlimited cell source for differentiation into specialized cell types and development of “off-the-shelf” cellular therapies. Basically FATE can create master lines of iPSCs and then apply them to the particular diagnoses.
The company has been around since 2007, and is on the leading edge of immunotherapies, so it may take some time to gain real traction. It has a number of drugs in preclinical and Phase 1 trials, and a hematology drug in Phase 2 trials.
But given the fervor in tech-driven stocks, FATE is up 364% in the past 12 months, yet has a market cap of $8 billion. All that cash will help keep those trials moving and certainly help its burn rate.
On the date of publication, Louis Navellier has a position in NVAX in this article. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.