Companies in the biotechnology business create medications and diagnostic technologies to treat diseases and medical conditions. These items must undergo extensive, costly, and time-consuming trials before receiving approval from the United States Food and Drug Administration (FDA). This implies that investors may have to wait years to see whether a medicine under research will be profitable. The sector is made up of small startups and major, well-established firms that attempt to create a variety of pharmaceuticals and technology. Numerous biotech companies have altered their emphasis or expanded their product pipeline to include COVID-19 vaccines and therapies.
Early-stage biotech businesses are prone to substantial revenue swings as they transition from almost no revenue to a significant revenue stream following the approval of medicine or forming a partnership with another company. That means that growth metrics should be interpreted differently than you would ordinarily conceive of growth. They should be construed as indicative of the company's breakthrough in research, corporate partnerships, or other events in its corporate lifecycle.
It's not difficult to choose the top biotech stocks to trade or monitor. However, you need to be aware of the characteristics of the top biotech stocks and take risks into account. Biotechnology equities may have a mix of early-stage, preclinical, and clinical-stage enterprises compared to other industries.
Why Should We Choose Biotech Stocks?
Each stage and milestone along the road has the potential to act as a catalyst for biotech stocks. A positive outcome or update can result in a share price increase, and however, a poor result or update can devastate biotech stocks. In light of this, there are instances when positive results precede a decline in biotech stocks and vice versa. This can occur due to a variety of factors, including trials with numerous endpoints.
However, like mining, technology, and other industrial stocks, biotech companies can gain even in their early phases. A robust mergers and acquisitions market can result in billion-dollar acquisitions of even the smallest biotech stocks. It's critical to remember that this is not always the case. However, investors view biotechnology as a sector that can provide more – albeit riskier – chances than consumer equities or financials. The following are ten of the best biotech stocks that will do well in 2022. Traders interested in biotech stocks may want to consider them.
1. Axsome Therapeutics
Axsome's primary medication candidate, designated AXS-05, is being developed to treat depression, Alzheimer's disease-related agitation, and smoking cessation. The company filed for regulatory approval in the United States in early 2021 for the medicine to treat depression. The Food and Drug Administration (FDA) of the United States noted two manufacturing defects in Axsome's regulatory application. However, Axsome thinks the issues are manageable and works with the FDA to remedy them.
Two further late-stage candidates are in the company's pipeline. AXS-07 is being developed to treat migraines, and the FDA is expected to decide on its clearance in 2022. Axsome anticipates filing for regulatory approval of AXS-14 in the United States in 2023 for the treatment of fibromyalgia.
If approved for depression treatment, AXS-05 might be a blockbuster medicine, with peak annual sales estimated at $2.6 billion. AXS-07's peak yearly sales prediction in the United States alone is more than $500 million. Analysts estimate that AXS-14 might produce peak sales of between $500 million and $1 billion if approved. Axsome Therapeutics' revenue potential from these three medication candidates is an exciting biotech stock to purchase in 2022.
2. Intercept Pharmaceuticals Inc.
Intercept Pharmaceuticals is a biopharmaceutical firm specializing in developing and commercializing therapies for chronic liver diseases. On Dec. 9, 2021, the business stated that it had formally notified the European Medicines Agency (EMA) of its decision to withdraw obeticholic acid's (OCA) Marketing Authorization Application (MAA) for the treatment of certain kinds of liver fibrosis. The company stated that it would evaluate the option of submitting a new application pending the completion of additional analyses.
3. Novavax (NASDAQ: NVAX)
While many in the biotechnology business view Novavax as a coronavirus pandemic play, the company is much more. To address the elephant in the room, the company is indeed working on a vaccine for COVID-19.
That has some worth if the company succeeds, which appears to be a possibility in light of recent good data from a Phase 3 pivotal clinical trial showing 100 percent efficacy against severe COVID-19 infections.
However, the stock is far from a coronavirus play. Even if the COVID-19 pandemic never occurred, Novavax would be an exciting stock to monitor.
The company is best known for its product NanoFlu, a seasonal influenza vaccination aimed at older persons.
Recently, Novavax presented Phase III clinical data demonstrating that NanoFlu is not only safe but also efficacious, outperforming the current standard of therapy. As a result, the corporation is pursuing approval from the US Food and Drug Administration (FDA), following it aggressively.
Indeed, Novavax has declared its intention to pursue the Accelerated Clearance option, which would expedite the process of FDA approval and commercialization. While the Accelerated Approval pathway is limited to confident therapeutic choices, the FDA has already stated that the business qualifies to use it to expedite the approval process for its NanoFlu vaccine candidate.
NanoFlu will almost certainly become a blockbuster immunization alternative if all goes according to plan. The vaccine candidate has shown in late-stage clinical studies that it outperforms the current standard of care in the most at-risk group for seasonal influenza.
As a result, if the FDA approves the company's application to proceed to commercialization, NanoFlu could swiftly become the gold standard for seasonal influenza vaccines in older adults.
4. Exelixis
Exelixis currently has four medications on the market. Cabometyx is by far the most successful candidate, having been licensed to treat renal cell carcinoma (RCC) and hepatocellular carcinoma (HC) — the most frequent kinds of kidney and liver cancer, respectively – and thyroid cancer.
Exelixis and biopharmaceutical company Bristol Myers Squibb (NYSE: BMY) received approval from the US Food and Medicine Administration in early 2021 to use Cabometyx in combination with Bristol Myers' immunotherapy drug Opdivo. Additionally, Exelixis collaborates with Roche (OTC: RHHBY) to explore a combination therapy utilizing Cabometyx and Roche's cancer immunotherapy Tecentriq. These medication combinations are intended to be used in patients with untreated RCC.
Exelixis is very suitable, enabling it to use its rapidly rising financial reserves to enter into new licensing agreements and expand its medical offerings in other ways. It acquires the right to develop further a promising early-stage cancer treatment named XL102 from Aurigene, and it licenses a panel of monoclonal antibodies from WuXi Biologics. Exelixis purchased the anti-Müllerian hormone receptor 2 (AMHR2) antibody programs from GamaMabs Pharma.
5. Regeneron Pharmaceuticals
Regeneron's most profitable product is Eylea, an eye disease medication developed with Bayer (OTC: BAYRY). Regeneron receives 100% of Eylea's net sales in the United States, and the business distributes money collected outside the United States with Bayer.
Regeneron also has a lucrative agreement with another life sciences and pharmaceutical business, Sanofi (NASDAQ: SNY). The two firms jointly market and commercialize the autoimmune disease medications Dupixent and Kevzara, the cancer medications Libtayo and Zaltrap, and the cholesterol medication Praluent.
REGEN-COV, Regeneron's monoclonal antibody therapy for COVID-19, has been a tremendous commercial success thus far. Regeneron distributes the medicine in the United States, while Roche distributes it internationally. REGEN-COV appears to be less efficient against the coronavirus subtype omicron. On the other hand, Regeneron is developing novel antibody therapy that will specifically target the highly transmissible strain.
Several of Regeneron's medical development efforts are focused on obtaining approvals for already approved medications in new indications. Regeneron is also developing novel medication candidates, most notably the experimental gene-editing therapy NTLA-2001, developed in collaboration with Intellia Therapeutics (NASDAQ: NTLA).
6. Vertex Pharmaceuticals (NASDAQ: VRTX)
Vertex Pharmaceuticals is well-known for its efforts in cystic fibrosis medication. The illness is a deadly lung disease that is persistent. This is a significant business; Grand View Research estimates that the Cystic Fibrosis market will reach $13.9 billion by 2025.
Perhaps Vertex Pharmaceuticals has had an annual profit increase of 43.15 percent because of its ownership of this high-value sector.
What is effective for one cystic fibrosis sufferer is frequently ineffective for another. Vertex Pharmaceuticals has responded by bringing four different medications to market for this patient population.
Trikafta is the most impressive of the company's therapy choices. The strategic advantage of this medication over others in the sector is that it has the potential to improve the quality of life and prolong the lives of 90 percent of cystic fibrosis patients.
For a time, the company was a cystic fibrosis pure play. Vertex Pharmaceuticals recently decided to broaden its horizons. The company has teamed with Crispr Therapeutics and purchased Exonics Therapeutics, a privately held startup.
The company is entering the field of gene editing, a novel technology that has shown remarkable promise in treating muscular dystrophy. Additionally, the company has initiated clinical trials to treat pain, sickle cell disease, beta-thalassemia, alpha-1 antitrypsin deficiency (AATD), APOL-1-mediated kidney illness, Duchenne's muscular dystrophy (DMD), and diabetes.
With phenomenal progress in the cystic fibrosis domain and several active clinical trials across multiple therapeutic indications, VRTX is a biotech stock worth considering for your portfolio.
7. Alexion Pharmaceuticals (NASDAQ: ALXN)
Alexion Pharmaceuticals is a market leader in treating a variety of uncommon disorders. Soliris, a drug that has been approved for use in patients with four rare diseases, is manufactured by this company.
Because Soliris is a therapy option for various illnesses with limited therapeutic choices, demand for the drug is robust. Because it was created to treat a rare condition, it isn't prevalent on the market. It is highly pricey in comparison to other medications, earning significant revenue. According to Stat News, patients pay approximately $500,000 per year for the medicine.
Due to the treatment's high price and great demand, the business expects to generate more than $4 billion in revenue from the sale of the treatment by 2020.
Alexion has just begun encouraging patients to utilize its next-generation version of Soliris, Ultomiris, which the FDA recently approved to treat some illnesses. This effort is not being taken to broaden the company's portfolio; it is being made to seize market share ahead of competitor Amgen's 2025 launch of a similar medicine.
Alexion Pharmaceuticals also has a sizable clinical candidate pipeline. The company is now conducting clinical trials on 21 candidates and is conducting preclinical studies on four additional prospects that it intends to bring to market.
Alexion Pharmaceuticals has the potential to see significant growth in the years ahead. The company already has a blockbuster drug on the market, and a pipeline that promises many more is on the way.
8. Vir Biotechnology Inc.
Vir Biotechnology Inc. is a clinical-stage immunology startup focused on infectious disease treatment. The company's current development pipeline includes pharmaceutical candidates for the treatment of hepatitis B virus, COVID-19, influenza A, HIV, or human immunodeficiency virus. On Feb. 24, 2022, the company announced its fourth-quarter and full-year 2021 financial results ending Dec. 31. Revenues totaled $1.1 billion in 2021, up from $76.4 million in 2020. The great majority of income was earned in the fourth quarter of 2021, owing mainly to the profit-sharing deal with GSK for the sale of sotrovimab, a drug used to treat COVID-19.
9. Twist Bioscience
Twist Bioscience patented a method for "writing" DNA on a silicon chip. The synthetic DNA manufactured by the company is utilized in the synthesis of artificial genes, next-generation sequencing, and antibody libraries used by biopharmaceutical companies to find and develop new medications.
Twist had almost 3,000 customers in 2021, with customers in various areas, including academic research, agriculture, healthcare, and industrial chemicals. The business is not yet profitable. On the other hand, Twist's sales continue to rise significantly as the company introduces new products based on its synthetic DNA.
Twist estimates that its annual addressable market is currently $3 billion. However, the company may have a considerably larger opportunity with its DNA chips for data storage, and this market might be worth $35 billion each year. While Twist's DNA data storage efforts are still in their infancy, the business has already achieved significant milestones. It is in the process of developing an alpha version of a DNA data chip.
10. Beam Therapeutics Inc.
DNA base editing technologies for treating human disease are the focus of Beam Therapeutics Inc.'s biotechnology research and development. Its licensed platform offers a suite of gene editing and delivery technologies that significantly expand the breadth of base editing. Beam Therapeutics achieved significant breakthroughs across its platforms in 2021. A considerable business achievement was completing four-year research cooperation between Beam and Pfizer focused on rare genetic illnesses of the liver, muscle, and central nervous system. Bean earned an advance payment of $300 million in a deal valued at $1.35 billion.
Are Biotech Stocks Worth Investing In?
Investing in biotech companies can be dangerous, as a company's drug candidate may prove useless or even fatal during clinical testing. And even if testing is successful, there is no certainty that the FDA will approve the medicine.
The least risky biotech companies have commercially viable medications and numerous others in later stages of development. Additionally, the finest biotech companies produce therapeutic candidates with high-potential yearly sales.
You can mitigate investment risk by concentrating your efforts on biotech businesses with sound financial positions. Biotech businesses that have already commercialized one or more products are far more likely to be lucrative. They are far less likely to employ novel methods to raise the enormous sums required to fund drug research and development. Unprofitable biotech companies risk running out of money before they can successfully support clinical research and complete the regulatory files necessary to bring a novel medicine to market.
Final Thoughts
Investing in biotechnology is fraught with peril. Numerous firms with seemingly promising therapy and vaccine concepts or gadgets may fail clinical testing, resulting in millions of dollars in losses for investors.
However, if these ventures thrive, the potential profits might be staggering. Additionally, there is a sense of success in knowing that your investment dollars aided in developing a product that enhances the quality of life or extends the lives of patients throughout the United States and the world.
While the firms mentioned above are excellent places to start when seeking quality biotech investment prospects, there is no assurance that these companies will be long-term winners. Additionally, they are not the only equities that have the potential to be massive long-term winners.
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