Biotech is big business. And getting bigger. That’s good news if you’re investing in biotech stocks.
According to market research firm Grand View Research, the global biotechnology industry is expected to reach $2.44 trillion by 2028, giving it a compound annual growth rate (CAGR) of 16% over the next seven years. Driving that huge growth is demand for new medications and therapeutics to treat a range of both common and rare diseases. Add to that supportive government policies and new technologies that are giving rise to novel and, increasingly, synthetic biological treatments.
With the explosive growth in the sector, it should not be surprising that new and established biotech companies are gaining more attention from investors who view the space as the new frontier in medicine. And, of course, while some companies thrive, others struggle just to survive.
Here are three biotech stocks that could boom or bust in the first quarter of 2022.
Biotech Stocks: Vertex (VRTX)
Boston-based Vertex has been a going concern since 1989. And the company that today has more than 3,000 employees and annual revenues that exceed $3 billion is widely credited with helping to usher in the area of “new pharma” that has moved away from traditional chemistry and towards novel therapeutics that are based on molecules, DNA and a person’s natural immune system.
Vertex has developed breakthrough medicines to treat cystic fibrosis and hepatitis C. The company has also been a leader in the practice of gene editing that is a cutting edge way of treating various genetic disorders in people. The company has a strong pipeline of drug candidates to treat illnesses ranging from sickle cell disease and beta thalassemia to Duchenne muscular dystrophy.
VRTX stock has stalled over the past year, rising only 6% in the last 12 months. However, the stock has gained 180% in the last five years. Between 2011 and 2016, Vertex was one of the top 15 performing stocks in the S&P 500. It might not be long before Vertex stock breaks out again.
Regeneron (REGN)
Tarrytown, New York headquartered Regeneron has been in the news a lot during the pandemic. The company, which was founded in 1988, has developed an antibody cocktail to lessen the severity of Covid-19 symptoms.
Its Covid-19 treatment was famously given to President Donald Trump when he contracted the respiratory disease. Trump was so impressed with Regeneron’s treatment that he took to social media to exclaim that it should be available to the public for “free.”
While not free, Regeneron’s Covid-19 treatment has received Emergency Use Authorization from the U.S. Food and Drug Administration and the company won a $450 million federal government contract to manufacture and distribute its Covid-19 relief treatment to hospitals throughout America.
More broadly, Regeneron see big potential for its Covid-19 treatment overseas, particularly in developing nations that have struggled to receive adequate supplies of Covid-19 vaccines.
REGN stock gained more than 42% since the pandemic struck in March 2020. Over the past 12 months, the share price has gained 24%, bringing its growth over five years to 74%. At more than $600 a share, Regeneron stock is by no means cheap. But it could be a solid long-term investment.
Beyond Covid-19, Regeneron has developed a variety of medications and therapies to treat diseases ranging from cancer and arthritis to rare autoimmune disease and even the deadly Ebola virus.
Biotech Stocks: Ocugen (OCGN)
Malvern, Pennsylvania-based Ocugen is a bit more of a wild card when it comes to biotech stocks. Younger, smaller and with less of a track record than either Vertex or Regeneron, Ocugen is a company that, before the pandemic, had been focused exclusively on developing treatments for various eye diseases such as macular degeneration and diabetic retinopathy.
However, with the onset of the global pandemic, Ocugen pivoted to focus almost exclusively on developing a vaccine against Covid-19.
Ocugen has partnered with India-based biopharma company Bharat Biotech for the development and distribution of its drug candidate Covaxin. Approval of Covaxin has been mixed. While it has been approved for widespread use in India, it has not been given any approvals in the U.S. or Canada, and skeptics say that Ocugen is now too late with its vaccine to have a meaningful impact.
However, Ocugen is holding out hope that it can still generate plenty of sales by distributing Covaxin in developing nations and where booster shots are needed.
As one might expect, Ocugen shares, which trade below the $5 penny stock threshold, have been on a wild ride over the last year. OCGN stock tends to move sharply on any news, positive or negative, related to its vaccine candidate. The stock is up 33% over the last year, however it is down 20% through the first three weeks of 2022.
While not for investors who have a low appetite for risk, Ocugen stock does have the potential to breakout in a big way should its Covid-19 vaccine finally win approval in the U.S. market.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
