Given the current risk-on sentiment, it is perhaps an ideal time for investors to scoop up some of the top biotech stocks. The stock market is booming, and with investors looking to take on more risk, a potential surge in biotech stocks seems likely.
Regardless of the market conditions, though, the massive long-term growth runway for the biotech industry is tough to deny. The demand for better healthcare outcomes is growing, and with strengthening product pipelines, it’s best to increase your exposure to biotech stocks. Furthermore, in addressing patent expirations, the giants in biopharma are on the lookout for budding companies with innovative drugs in development. Hence, it’s safe to say that the sector is buzzing with potential, with Grandview Research predicting the biotech market to surge to $3.08 trillion by 2030, with a 14% CAGR between 2024 and 2030.
Biotech Stocks: Vertex Pharmaceuticals (VRTX)
Unlike the other stocks discussed in the article, Vertex Pharmaceuticals (NASDAQ:VRTX) is arguably more compelling to a risk-tolerant investor. It boasts a storied history, with multiple approved products, mainly in treating cystic fibrosis. Consequently, with a fortified balance sheet, marked by a 5-year average free-cash-flow margin (FCF) at 30%, it remains committed to offering incredible shareholder value.
Recently, the company has been focusing on revenue diversification, expanding its portfolio beyond cystic fibrosis. The company has partnered with CRISPR Therapeutics to get its novel gene-editing therapy in Casgevy approved for sickle cell disease and beta-thalassemia. Moreover, Vertex is seeking FDA approval for VX-548, its treatment for acute neuropathic pain. If it can commercialize its robust product pipeline, it could potentially take its revenue growth near its 5-year average of 30% or even higher.
Vir Biotechnology (VIR)
Vir Biotechnology (NASDAQ:VIR) is one of the most promising biotech players in the market, developing treatments across multiple fronts, including Hepatitis B and delta. Moreover, VIR stock forms a sizeable 17.5% of the Bill and Melinda Gates Foundation portfolio.
From 2021 to 2022, the company experienced a rapid surge in top-line growth, with several quarters showcasing double, triple, and even quintuple-digit growth margins in sales. However, the substantial ‘collaboration revenues’ it earned during these quarters have dried up significantly, leading to its stock shedding more than 54% in value last year.
Nonetheless, Vertex is focusing on cutting costs and its promising clinical programs related to hepatitis. It reported notable progress in its SOLSTICE trial for hepatitis delta virus (HDV), showcasing encouraging results with its combination therapy. Roughly 300 million people globally live with Hepatitis B, and approximately 900,000 deaths each year are linked to the disease.
Pyxis Oncology (PYXS)
Pyxis Oncology (NASDAQ:PYXS) is another promising biotech business developing antibody-drug conjugate (ADC) drugs for targeted cancer therapy. An ADC essentially combines an antibody (specifically targeting cancer cells) with an effective anti-cancer drug. It directly delivers the drug to cancer cells, marginalizing the damage to healthy cells.
The company announced this year that ADC, PYX-201, received an Orphan Drug Designation (ODD) from the FDA in pancreatic cancer. Moreover, the company is actively investigating its effectiveness in treating relapsed or refractory solid tumors. Like Vir Biotechnology, Pyxis has been employing belt-tightening measures to continue investing in its game-changing projects. Also, it acquired Apexigen last year, developing a potential cancer drug called sotigalimab, which is adding to its portfolio.
On the date of publication, Muslim Farooque 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.
