Growth investors are frequently looking for biotech stocks to buy. So what exactly is a biotech stock? It’s a company that’s somehow involved in the creation of innovative drugs. This can be through research, development, or production. This sector saw a huge pandemic-related boost when the mRNA technology that many of them specialize in was thrust into the spotlight.
The biotech industry is underpinned by some pretty undeniable growth trends. First and foremost is the aging global population. A more senior population brings higher health risks, which means the discovery and distribution of new drugs to combat long-term illnesses and improve quality of life are of the utmost importance. Once the therapies have been created, biotech firms invest heavily in making sure they’re protected by a patent to limit competition and increase market share and profitability.
The drug industry sees a great deal of merger and acquisition activity. Larger companies frequently swallow up smaller ones with success in a specialized, specific therapy in order to grow their portfolios. As a result, undervalued biotech stocks have a strong appeal for investors looking to maximize their capital. These are three biotech stocks that I think are both undervalued and worth considering for investors due to their promising project pipelines.
Intellia (NTLA)
Intellia (NASDAQ:NTLA) is one of the highest risk picks on this risk because the company doesn’t have any treatments on the market, but this uncertainty also makes it one of the most undervalued biotech stocks. The group’s partnered with Regeneron (NASDAQ:REGN) on a treatment for a rare genetic heart disease. So far, clinical trial results have been promising, though it’s important to remember the process is long and arduous. There are no guarantees.
The potential treatment itself is appealing, but it’s the underlying technology that makes Intellia look like one of the best biotech stocks to buy. The group uses CRISPR technology, which is basically slicing up and correcting DNA in order to treat genetic diseases. The applications for this type of treatment are far-reaching and could be groundbreaking for condition that currently lack viable treatment options. This suggests that Intellia could really take-off after gaining experience moving treatments from pipeline to shelf, whether on its own or as a takeover target for big-name acquisition.
Moderna (MRNA)
Moderna (NASDAQ:MRNA) is best known for its role in developing a Covid-19 vaccine, but it’s also a strong pick among undervalued biotech stocks as it moves on from the pandemic. Moderna was able to quickly ramp up its vaccine candidate thanks to its expertise with mRNA technology. Now, the group’s looking to use its mRNA platform as a springboard for new growth opportunities.
Moderna says it can deliver solutions to all kinds of diseases, from influenza to cancer, via mRNA. It says the method is a faster and more efficient way to develop and launch medicine. If Moderna is able to pivot its business toward other diseases using the same principle, the growth potential could be enormous. Of course this kind of pivot comes with a great deal of spending and no guarantee of a return. But the idea is promising and makes Moderna a strong pick among biotech stocks.
Vertex Pharmaceuticals (VRTX)
It may be surprising to see Vertex Pharmaceuticals (NASDAQ:VRTX) on a list of undervalued biotech stocks given its share price is up almost 30% so far this year. But the group is at the start of what looks like a very promising growth trajectory, so the optimism is well deserved.
Vertex’s bread and butter is Cystic Fibrosis drugs. The group’s carved out a strong position as a leader in the market here, and is expecting to remain top dog through at least the late 2030s. The existing treatments plus some up-and-coming potential blockbusters offer even further confidence to investors.
But Vertex isn’t resting on its laurels as a leader in Cystic Fibrosis. The company’s now looking at ways to push its portfolio into new corners of the market. One of the most exciting ventures is its CRISPR gene editing program. Vertex is looking to put the technology to work on type 1 diabetes, which could be a game changer for this group of patients.
On the date of publication, Marie Brodbeck did not hold (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.
