In 2024, the iShares Biotechnology ETF (NASDAQ:IBB) is up just over 1.5%. If you’re looking for steady, dividend-paying stocks, you can find a number of biotech stocks to buy from the holdings in this fund.
However, if you’re looking for the chance to turn a modest investment into, perhaps, generational wealth, the list becomes narrower and carries a lot more risk. But it’s exactly that risk/reward relationship that makes it an attractive sector for speculative investors.
Investing in biotech stocks that can take you from rags to riches requires patience. Even when a company successfully advances a drug into clinical trials, it can take years for that drug to become commercially available. And, there’s no guarantee that the candidate will successfully complete the trial.
But the silver lining of that process is you have time to accumulate a position. And, by not going all in, there’s time to evaluate your thesis for owning the stock as time goes by. Here are three biotech stocks to buy while they’re still in their early stages of growth.
CRISPR Therapeutics (CRSP)
CRISPR Therapeutics (NASDAQ:CRSP) is a good example of biotech stocks to buy that allow you to scale into your position. The company is a pioneer in the field of gene editing and uses its proprietary CRISPR-Cas9 technology in pursuit of treatments for a range of genetic diseases.
Recently, CRISP received Food and Drug Administration (FDA) approval for CASGEVY, its lead candidate for treatment of sickle cell disease and beta-thalassemia. This treatment is now available in 25 authorized centers around the world.
But, investors will have to wait until August to get their first read on what this may mean for the company’s future revenue and earnings. However, what comes next is what really intrigues me.
CRISP has several gene therapies in its pipeline including treatments for diseases such as diabetes and certain forms of cancer. CASGEVY may be to gene therapy what the Covid-19 vaccines were to mRNA technology.
To be clear, early investors who bought CRSP stock when it IPO’d in 2016 have already made a nice pile. The stock price is up approximately 210%. But despite the progress the company continues to make, it’s not yet profitable. That leaves more upside ahead.
Cassava Sciences (SAVA)
Next on this list of biotech stocks to buy for life-changing gains is Cassava Sciences (NASDAQ:SAVA). Be forewarned, you may have to act quickly to grab the gains of more than 500% predicted by analysts. But you also may need a cast-iron stomach before getting involved.
Here’s the situation. Cassava Sciences has simufilam, a potential treatment for Alzheimer’s Disease, in Phase 3 trials. The bad news is that the trials are being conducted under a cloud of suspicion regarding data integrity and trial conduct.
SAVA stock is down 15% in 2024 with all the losses coming since April. That’s when the questions about the company’s clinical trials arose. To be clear, it’s risk of failing the trial is significant. However, this could be a case where the proof is in the results.
In February, the initial results of its Phase 3 trials showed impressive results for patients with mild progression of the disease. But they were less optimistic for patients with moderate symptoms. Even if treatment of mild symptoms is as good as it gets, it could represent progress against a disease that so far has proven to be a formidable challenge.
Gingko Bioworks (DNA)
Gingko Bioworks (NYSE:DNA) may require the most patience. Whereas investing in Cassava Sciences looks like a pretty binary decision (i.e., it will clear clinical trials or it won’t) the future for Gingko Bioworks isn’t so cut and dried. Recently, the company laid off 158 employees in an effort to cut head count by 25%. Also, it received a delisting warning.
However, if you can look past those headlines, there’s an intriguing case to be made. The company is a foundry that cost-effectively mass produces things such as biomolecules based on a company’s blueprint. Hence the ticker symbol DNA.
To be effective, Gingko Bioworks needs to generate significant amounts of data. However, the company acknowledged in its recent investor presentation that it takes time to generate that kind of data. Therefore, the company is experiencing a loss of revenue as a result.
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.
