Biotech stocks are incredibly risky but can provide investors with huge returns since insurers in the U.S. will pay tremendous amounts for successful treatments. In the last few months in particular, the potential risks of biotech stocks have increased only a bit while their possible returns have increased tremendously. While higher interest rates have increased bankruptcy risks slightly, many very promising biotech stocks have been pushed way down due to Wall Street’s overdone fears of higher rates.
However, as another InvestorPlace columnist John Blankenhorn recently pointed out, clinical trials take a very long time to conduct and are quite expensive and the Food and Drug Administration‘s standards for approving treatments are onerous.
Consequently, only risk-tolerant, patient investors should buy these biotech moonshot stocks. With that said, here are three firms that can create tremendous, positive changes for both humanity and your bank account.
ImmunityBio (IBRX)
As I mentioned in a column this April, ImmunityBio’s (NASDAQ:IBRX) protein, Anktiva, prevented “91.4% of (bladder cancer) patients (from) having their bladder removed and…none of the patients (who were given Anktiva) died.”
Moreover, Seeking Alpha columnist Terry Chrisomalis thinks that the value of “the ‘global bladder cancer market could reach $11.5 billion by 2032.’”
Another noteworthy detail: Anktiva “‘more than doubled median overall survival for patients’ in Phase 2 trials.”
But the FDA rejected IBRX’s effort to get the protein approved as a treatment for some bladder cancer patients citing issues at its partners’ factories.
On Oct. 26, however, IBRX announced that the FDA had accepted the company’s resubmission of the latter application. The agency will seek to respond to the submission by April 23, 2024.
If Anktiva becomes standard-of-care for all or most bladder cancer and pancreatic cancer patients, it will be one of the most lucrative drugs in history.
Eisai (ESAIY)
Eisai (OTCMKTS:ESAIY), a Japanese pharmaceutical firm, is slated to receive 50% of the overall profits from an Alzheimer’s treatment, Leqembi, which it developed in partnership with American pharmaceutical company Biogen (NASDAQ:BIIB).
And the drug has already been approved by the FDA.
A survey of 30 doctors in July carried out by investment bank Baird suggests that the treatment will be a gigantic blockbuster. It’s the first treatment to show a substantial slowing of cognitive decline in “early stage” Alzheimer’s patients.
Specifically, Baird reported that 20 of them were prepared to start administering the drug and an additional eight planned to be ready to do so by early next year.
In my view, Eisai’s market capitalization of only $15 billion does not come close to capturing the gigantic global potential of Leqembi.
Neurocrine Biosciences (NBIX)
In a Phase III trial, Neurocrine’s (NASDAQ:NBIX) drug for hyperplasia, Crinecerfont, meaningfully lowered the amount of glucocorticoid that hyperplasia patients had to take during treatment. Despite their status as the current standard for hyperplasia care, glucocorticoids cause negative side effects after long courses of treatment. The treatment also enabled men to retain constant levels of a type of sex hormone called androgens. Moreover, there were no major safety issues caused by Crinecerfont.
Hyperplasia refers to multiple “genetic conditions that result in an enzyme deficiency that alters the production of adrenal hormones,” Fierce Pharma explained. Multiple analysts believe that the drug can become a blockbuster if it continues to perform well in clinical trials.
With NBIX already trading at a low price-earnings ratio of 21, the shares should explode higher if the drug is approved.
On the date of publication, Larry Ramer 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.
