Investing in biotech can be pretty unpredictable. Biotech stocks are highly volatile, and picking carefully can be the difference between losing all your capital and making unimaginable profits.
However, many investors have a hard time choosing the right biotech company to invest in, especially if they don’t understand the industry.
Fortunately, many analysts have taken an interest in biotech and noted a few key indicators that could signal future success. Some of the things to look out for are acquisitions and mergers with big pharma, FDA approvals, scientific breakthroughs and new technologies.
FDA approvals are especially important as they can solely determine the success or failure of a biotech company. So, if you’re planning on investing in biotech in July 2024, you should consider the following companies that show impressive promise.
Vertex Pharmaceuticals (VRTX)
Vertex Pharmaceuticals (NASDAQ:VRTX), a leader in cystic fibrosis treatment, has one of the largest volume shares in the biotech industry. It currently has several FDA-approved therapies in different testing stages and might eventually be adopted for the treatment of sickle cell disease, cystic fibrosis, diabetes and other diseases.
Vertex has had an impressive earnings per share (EPS) growth trajectory, with an average 29.8% increase annually for the past five years. However, analysts expect the growth to slow down to an average annual growth of 12.9% for the next half a decade.
Nevertheless, Vertex Pharmaceuticals is expected to have increased sales, especially with the new FDA-approved therapies. The company completely dominates cystic fibrosis treatment and has slowly crept into the treatment of new diseases like diabetes.
Vertex and CRISPR Therapeutics are also waiting for approvals on a new type of gene editing therapy that could help with the treatment of blood disorders like sickle-cell disease, which affects more than 20 million people worldwide.
The company is already profitable, so it has the resources to popularize all its new treatments. It’s a great investment for new investors trying to get into biotech.
Axsome Therapeutics (AXSM)
Axsome Therapeutics (NASDAQ:AXSM) is one of the most undervalued biotech stocks in 2024. Although it launched its best-selling drug, Auvelity, less than 2 years ago, it has seen success as a treatment for major depressive disorder.
Axsome Therapeutics also has Auvelity also known as AXS-05) in late-stage clinical trials for the treatment of Alzheimer’s disease. Its pipeline also includes three other groundbreaking drugs.
AXS-14 is in late-stage trials for the treatment of fibromyalgia, while AXS-12 aims to treat narcolepsy, a sleeping disorder. AXS-07, on the other hand, targets migraines.
Axsome Therapeutics has had a great run with Auvelity and made $130.1 million in sales in 2023, its first full year on the market. These sales figures are only expected to increase as the company rolls out the three new drugs.
The company also reported a 160% year-over-year (YOY) increase in earnings in the 2024 Q1 earnings report. Although it made a net loss of $68.4 million in the quarter, we can attribute that to the high research and development costs for the new drugs.
Therefore, while some investors might hesitate to buy AXSM stock when they see the EPS dip, it’s the perfect time to invest as AXS-07, AXS-14, and AX-12 draw closer to the end of clinic trials.
Intellia Therapeutics (NTLA)
Intellia Therapeutics (NASDAQ:NTLA) is a gene editing powerhouse that might change healthcare with some of the treatments it has in the pipeline. The company crosses the line between AI and biotech, and with both industries being on a steady rise, it has a good chance of success.
Intellia Therapeutics stock has been declining steadily since the initial crash in 2021 and 2022, discouraging investors. Having a $1.95 billion market cap and no products or profits has also kept many investors at bay.
Although these factors make Intellia a risky investment, they also offer you the chance of getting in on the ground floor, right when the company’s growth is about to begin.
Intellia and its partner Regeneron Pharmaceuticals (NASDAQ:REGN) released the first clinical data on the use of in vivo CRISPR-Cas9 gene editing in humans. Its stock also saw a huge spike in 2022 when it released solid long-term data on gene therapy as a treatment for hereditary angioedema.
Additionally, the rise in the use of AI in biotech has accelerated Intellia’s research and development processes, and analysts expect clinical trials to begin on new NTLA products soon.
It’s important to remember that it’s still testing its products but is likely to see major success if it hits the market.
On the date of publication, Joel Lim 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
