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Biotech investing is a thrill-a-minute ride. Biotech stocks can take investors soaring to new heights and fabulous wealth opportunities or send them into the pits of despair. The drug discovery process is fraught with risk but also tremendous possibilities.
That means an investor needs an iron will to enter the market. Don't go in expecting overnight riches, because the road to drug approval is long and arduous. Along the way will be many hills and valleys that can easily shake a veteran biotech investor.
Yet because of the promise biotech stocks bring to the market, it is an exciting one nonetheless and the following two biotechs are some of the best to consider buying before the end of the month.
Key Points About This Article:
- Biotech investing can be a risky pursuit as the drug approval process is a long and winding one with many pitfalls leading to failure.
- Yet biotech stocks also hold out hope for generating some of the best returns an investor can find, but it requires a long-term outlook and a steady hand.
- If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report . It features a software stock we’re confident has 10X potential.
CRISPR Therapeutics (CRSP)
Drops being placed into a vial labeled CRISPR
Gene-editing leader CRISPR Therapeutics ( NASDAQ:CRSP ) should be atop any biotech investors' buy list.
The Clustered Regularly Interspaced Short Palindromic Repeats (CRISPR) technology that CRISPR Therapeutics uses takes the programmable enzyme Cas9 and with extreme precision, cleaves DNA in virtually any organism.
The biotech is the industry leader and in partnership with Vertex Pharmaceuticals ( NASDAQ:VRTX ), produced the world's first approved gene editing therapy . Casgevy is a CRISPR/Cas9 treatment for sickle cell disease (SCD) and transfusion-dependent beta-thalassemia (TDT) and holds billion-dollar blockbuster potential.
TDT, for example, is a $3 billion market opportunity that could expand to $4 billion over the next decade. The National Institute of Health says the rare hereditary blood disorder affects approximately 2,000 individuals in the U.S.
As the drug can only be administered in authorized facilities after first collecting cells from the patient, CRISPR has activated 25 treatment centers globally to treat patients and begun collecting patient cells.
Yet CRSP stock is down 27% year-to-date and it has lost half its value from the highs it hit earlier this year. Part of that is because, after the euphoria of approval wore off, it was realized that CRISPR might not achieve a billion dollars in revenue for several years. Plus it has to split any sales with Vertex, which receives 60% of the total. In the meantime, CRISPR is still generating losses with negligible revenue coming in.
CRISPR Therapeutics, though, has plenty of liquidity to wait for the revenue to start rolling in. It ended the second quarter with over $2 billion in cash, equivalents, and short-term investments. It also has a well-financed partner in Vertex. There is little risk of CRISPR going under even though it is producing losses.
Because the biotech also has other treatments in clinical trials, it may soon have multiple potential revenue streams available to it making CRISPR Therapeutics a biotech to buy now.
Amgen (AMGN)
Amgen sign on company building
At the other end of the spectrum is biotech behemoth Amgen ( NASDAQ:AMGN ). It owns a large portfolio of billion-dollar drugs producing revenue of $8.4 billion in the second quarter, up 20% year-over-year, though GAAP earnings per share decreased 46%. That, however, was due to its $27.8 billion acquisition of Horizon Therapeutics last October.
Yet Amgen has a dozen products that delivered double-digit sales growth for the quarter, including osteoporosis treatment Prolia, which generated $1.2 billion in sales in the period. Its rare disease catalog also had substantial sales including for Tepezza, a thyroid eye disease, that generated $479 million in sales, and Krystexxa, a gout therapy, which had $294 million in sales. Both drugs are the first and only FDA-approved treatments for their respective diseases.
Amgen is also looking to break into the obesity market. Its AMG 133 drug had positive Phase 2 results (it expects to report the topline data later this year) and is preparing for Phase 3 trials.
The biotech giant's stock has been on a long climb higher over the past decade, but it has lagged behind the S&P 500 index. It has faced tough competition and periods of stagnant revenue growth that has held back greater advances. Now it is opting to bolster its pace of growth.
The Horizon acquisition is part of the turnaround plan as it brings with it an extensive marketed drug portfolio and a rich pipeline to add to Amgen's own. And while it is behind market leaders Novo Nordisk ( NYSE:NVO ) and Eli Lilly ( NYSE:LLY ) in the weight-loss market, it is one expected to explode in the coming years. Amgen is looking to gain at least a good slice of it.
The biosimilar market is another avenue for potential growth. As biosimilars can come to market faster since they don't undergo the same level of regulatory scrutiny, Amgen has invested over $2 billion across a portfolio of 11 biosimilar medicines approved or in development.
Having numerous irons in the fire, buying this biotech's stock is not a particularly risky investment. As it also pays a generous dividend yielding 2.8% annually, it makes the biotech stock one to buy now.
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