Biotech stocks almost always have the potential for significant growth over time. Companies in the sector operate in areas including drug development, medical devices, and diagnostics. The rewards for bringing such products to market are significant. But biotech growth stocks also generally carry much higher risk than the average stock. Additionally, companies in the biotech industry face regulatory approval processes and intellectual property disputes that can result in significant near-term volatility.
Nevertheless, the potential for substantial returns makes biotech stocks perpetually attractive. Identifying companies with the best chances of developing breakthrough drugs or therapies is paramount to success.
Let’s take a look at seven companies that I think fit that profile.
| ITOS | iTeos Therapeutics | $17.30 |
| VIR | Vir Biotechnology | $22.84 |
| BEAM | Beam Therapeutics | $39.10 |
| KNSA | Kiniksa Pharmaceuticals | $12.28 |
| DVAX | Dynavax Technologies | $10.44 |
| CMRX | Chimerix | $1.63 |
| APVO | Aptevo Therapeutics | $2.15 |
iTeos Therapeutics (ITOS)
Stocks like iTeos Therapeutics (NASDAQ:ITOS) are the kind of equity biotech investors ought to be looking for. The company’s stock is trading at a level I’d call objectively cheap. At $17.85, the upside potential with ITOS stock could exceed 200%, if you believe the analysts’ consensus price target.
Further, at nearly $20 per share, iTeos Therapeutics stock is much more stable than biotech penny stocks that often possess similar upside.
That’s because the company develops immuno-oncology therapeutics. These are drugs that work in concert with the body’s immune system to fight cancer. The company is just a decade old, but boasts two clinical-stage product candidates: EOS-408 and Inupadenant. Those drugs are being studied in Phase 2 clinical trials, with management projecting significant advances for both in 2023.
The company’s third business line, EOS-984, is also anticipated to enter clinical studies in mid-2023. At the end of Q3 2022, the company reported $752 million in cash, which is expected to fund iTeos through 2026. If management is correct, and the company reaches new milestones this year, I think ITOS stock may appreciate quickly, providing solid returns.
Vir Biotechnology (VIR)
Vir Biotechnology (NASDAQ:VIR) is a clinical-stage immunology company focused on developing treatments for infectious diseases, including COVID-19. The company’s lead product candidate, VIR-7831, treats COVID-19 by targeting the spike protein on the virus. Like iTeos Therapeutics stock, VIR stock represents high upside potential alongside a relatively stable valuation. And like iTeos Therapeutics, Vir Biotechnology is focused on immunology.
The company is centered around four technology platforms; Antibody, T-Cell, Innate Immunity, and siRNA. To me, the company’s antibody platform is most exciting. The company identifies rare antibodies in survivors that can potentially cure previously untreatable pathogens. It’s reminiscent of Ellie in Last of Us, who harbors rare immunity.
Vir Biotechnology also leads the development of small interfering RNA (siRNA), also known as silencing RNA. It can shut off or silence genes that can become harmful when replicated.
The company ranked first on the 2022 Deloitte Technology Fast 500 as one of the fastest-growing tech firms in North America.
Beam Therapeutics (BEAM)
Beam Therapeutics (NASDAQ:BEAM) is one of the leading companies in terms of the development of gene-editing technology. It is a biotechnology company that develops precision genetic medicines using its proprietary base editing technology.
Beam’s base editing technology allows the firm to modify cytosine to thymine and adenine to guanine. It manipulates the genetic code to cure, reverse, and prevent diseases. The firm believes this innovative platform will be able to identify patterns specific to particular conditions, and edit deleterious sequences to fix patients.
The company’s most promising progress relates to sickle cell disease and beta-thalassemia. Both disorders affect hemoglobin production, interrupting expected oxygen delivery to cells. Beam Therapeutic’s BEAM-101 program activates fetal hemoglobin and is furthest along with its pipeline in Phase I/II clinical stages. If successful, it could prevent children from being born with seriously-limiting diseases, allowing them to carry out normal, healthy lives.
Beam Therapeutics enrolled its first patient in BEAM-101 in mid-November last year.
Kiniksa Pharmaceuticals (KNSA)
Kiniksa Pharmaceuticals (NASDAQ:KNSA) is a biopharmaceutical company focusing on discovering, developing, and commercializing therapeutic medicines for patients suffering from autoimmune and inflammatory diseases and cancer. The company’s lead product candidate, Rilonacept, is being developed to treat recurrent pericarditis, an inflammatory cardiovascular disease affecting the sack that covers the heart.
That drug is sold under ARCALYST and is currently available commercially. It was granted breakthrough therapy designation in 2019 by the FDA and orphan drug designation in 2020. ARCALYST accounted for $33.424 million in Q3 and $82.585 million in sales through the first nine months of 2022. That represented a dramatic increase year-over-year as Kiniksa reported under $20 million in sales a year earlier.
Kiniksa Pharmaceuticals also generated $65.7 million in licensing and collaboration revenues for vixarelimab from Genentech, a subsidiary of Roche (OTCMKTS:RHHBY). Kiniksa’s development and commercialization of ARCALYST, as well as the company’s significant collaboration revenue, suggest Kiniksa should continue to appreciate further from here.
Dynavax Technologies (DVAX)
Vaccine stocks, including Dynavax Technologies (NASDAQ:DVAX), are inherently interesting as we rebound from the pandemic. The company has developed a vaccine to prevent hepatitis B in adults, with several other vaccine candidates in its pipeline, including candidates for influenza and Covid-19.
The company released earnings on Feb. 23. Those earnings showed annual revenues of $723 million, up 64% from a year earlier. The company’s hepatitis B vaccine, HEPLISAV-B, accounted for $126 million of the company’s $723 in revenues. Indeed, this growth rate was substantial, amount to a year-over-year surge of 104%. HEPLISAV-B is the only hepatitis B vaccine approved in the U.S. and EU that prevents hepatitis B with a two-series dose over the course of one month.
The company anticipates that HEPLISAV-B’s revenues will increase to $165-185 million in 2023. Accordingly, I think this is a biotech stock with solid fundamentals worth buying at this current valuation.
Chimerix (CMRX)
Chimerix (NASDAQ:CMRX) is another exciting biotech stock experiencing strong growth. The company recently sold one of its products for a substantial windfall for investors. That sale has left the company with a healthy cash balance, funding the company’s development of its pipeline of other therapeutics.
Chimerix sold Tembexa in September to Emergent for $238 million. That deal came with additional milestones worth up to $136.5 million.
Chimerix is now flush with cash from that deal, debt free, and has a drug with orphan designation for treating mutant glioma. This drug is awaiting FDA review and is in Phase 3 trials. The company expects a higher probability of success for that drug than other in-class therapeutics. Additionally, the company is awaiting news from the FDA about a potential path to accelerated approval for that drug, ONC201.
In short, Chimerix is a well-funded biotech that is debt free. It has a clear path ahead, with the potential for a breakthrough treatment and an expedited approach to FDA approval.
Aptevo Therapeutics (APVO)
Aptevo Therapeutics (NASDAQ:APVO) is a biotech company focusing on developing and commercializing oncology and hematology therapeutics. The company’s lead product, APVO436, is a potential treatment for acute myeloid leukemia and other blood cancers. APVO also collaborates with Alligator Bioscience AB to develop other therapeutics.
It should be noted that APVO436 is in Phase I trials, while most of the firm’s other candidate drugs remain in the pre-clinical stage. However, the company also began Phase I trials evaluating ALG.APV-527 for efficacy against solid tumors.
Aptevo is an early-stage investment which is reflected in its price of $2.15. Penny stocks are risky, but APVO has a significant upside, with a consensus target price of $18.00 per share. The potential for exceptional gains is obvious with the stock.
Aptevo reported $3.114 million in revenues through the first nine months of 2022, all of which were royalty based.
Penny Stocks
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Alex Sirois 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.
