Investing in the biotech sector is mostly about risk and reward. When a company achieves FDA approval on a drug or therapeutic, it frequently has a source of revenue and profit that can last for years. And investors who buy and hold these stocks are typically rewarded with handsome total returns. Even penny stocks can become triple-digit return biotech stocks.
However, that payoff can take a long time. Just getting a drug through the clinical trial stage can take several years. And some candidates never make it to market at all. That’s the risk.
So I was curious to see what stocks an artificial intelligence (AI) chatbot might recommend when prompted. My prompt was:
“Hi Bing, I’m looking for Biotech Stocks That Will Deliver Triple-Digit Returns in 2025. Can you help me with some ideas?”
What stood out to me was that the Ai chatbot, in this case Microsoft’s Bing, played it safe. The names it suggested were mostly large-cap stocks that have a proven track record of success.
That’s a good reminder to investors. While speculating on penny stocks in the biotech sector can lead to a big payoff, it can also derail your portfolio, particularly if you’re not familiar with the science behind the drug candidate.
On the other hand, investing in some of the proven large-cap biotech companies may not be as exciting in the short term, but over time, these can still deliver the outsized gains that investors crave.
CRISPR Therapeutics (CRSP)
Gene editing is likely to be one of the most important stories of the coming decade. The idea that diseases could be cured by editing the human genome is the stuff that triple-digit return biotech stocks are made of. And that’s the science behind CRISPR Therapeutics (NASDAQ:CRSP).
In fairness, the real payoff may be years away, but CRISPR is the unquestioned leader in this sector. The company has a proprietary CRISPR/Cas9 gene editing platform.
CRISPR has its own pipeline that includes treatments for cancer, diabetes, and blood disorders. It also has numerous partnerships with other leading biotech companies. These partnerships should give investors the assurance that the company will have enough cash to get one of more of its pipeline candidates to market. That’s when the real growth will happen.
And while there are no guarantees in this sector, now may be a good time to invest in CRSP stock. While the stock is down approximately 20% in the last year, it’s up 38% in 2023. The stock is covered by 27 analysts and has a consensus price target of $83.78 which would be a 48% gain from the stock’s price as of this writing.
Vertex Pharmaceuticals (VRTX)
Vertex Pharmaceuticals (NASDAQ:VRTX) is next on this list of potential triple-digit return biotech stocks. And one of the bullish reasons for that is the company’s partnership with the previously mentioned CRISPR Therapeutics.
Specifically, Vertex has a licensing deal with CRISPR to advance the latter’s Exa-Cel platform for transfusion-dependent beta thalassemia and severe sickle cell disease. The companies could have approval of Exa-Cel as soon as 2024 with sales forecast to be over $1 billion in 2028.
However, prospective investors should take note that Vertex is a powerhouse biotech company in its own right. The company is the industry leader in cystic fibrosis (CF) treatments. In April, Vertex received an expanded use authorization (EUA) for its flagship CF drug, Trikafta. This expands the label for the drug to children ages 2 through 5 who meet certain conditions.
And beyond all of that, Vertex has its own pipeline that gives the company several opportunities to develop additional revenue streams.
Amgen (AMGN)
I was a little surprised to see Bing toss in Amgen (NASDAQ:AMGN) as one of the triple-digit return biotech stocks for 2025. However, the company will still be generating revenue from Enbrel, its flagship oncology drug.
And earlier this year, the company made its already robust pipeline even more expansive by acquiring Horizon Therapeutics (NASDAQ:HZNP). This will give Amgen access to Horizon’s own portfolio of drugs, which includes its own oncology platform.
Unlike the other stocks on this list, Amgen is underperforming the sector. AMGN stock is down 14% in 2023 and 8.8% in the last 12 months. Still, the company is expected to grow earnings in 2023. And even with the acquisition of Horizon, the company will continue to generate significant amounts of cash.
Plus, Amgen is the only company on this list that pays a dividend. Currently, that dividend has a 3.79% yield with an annualized payout of $8.52 per share.
On the date of publication, Chris Markoch 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.
