These companies are nearly in the sweet spot of risk versus reward in biotech.
Many investors rightfully identify biotech stocks as being riskier than average, and those stocks certainly have a habit of earning their reputation. Still, there are a few up-and-coming biotechs that have revenue and a clear path to generating even more in the near term, which makes them notably steadier than their earlier-stage peers that don’t yet have the certainty of selling anything at all.
With that in mind, let’s examine three monster biotechs that are worth buying before the close of this year.
1. Iovance Biotherapeutics
Buying Iovance Biotherapeutics (IOVA 2.46%) stock before the end of the year means getting exposure to a quickly growing business that’s lined up many more opportunities for further expansion.
Amtagvi, its cell therapy for advanced melanoma, is its first product, and will also likely be the main driver of growth through the end of the decade.
Since Amtagvi’s approval in the middle of the first quarter, the therapy’s rollout has proceeded swimmingly; the company brought in $31.1 million in total sales during the second quarter. That’s just the start; management expects as much as $475 million in revenue for its 2025 fiscal year. To accomplish that, it’s applying for approval in international jurisdictions right now, and should be hearing back in early 2025 from key regions like the E.U.
Beyond the next year, Iovance also has a pipeline full of programs investigating whether Amtagvi could be useful to treat other cancers, as a monotherapy or as a combination treatment with other oncology drugs. Most of those programs are in mid-stage clinical trials. So within the next three years, it’s feasible that the company could get approval for the additional indications under investigation, and its addressable market could expand.
And that’s why it’s worth buying the stock sooner rather than later. It may not get any cheaper in the long run than it is right now.
2. CRISPR Therapeutics
With its first cell therapy Casgevy successfully marketed for a pair of hereditary blood disorders, CRISPR Therapeutics (CRSP 0.36%) is in a state of maturity similar to Iovance.
So far, only 20 patients have been treated with the therapy, which is a functional cure for both sickle cell disease (SCD) and beta thalassemia. Wall Street analysts estimate on average that CRISPR Therapeutics will report revenue of $51 million this year — and around $288 million next year, once more of the company’s authorized treatment centers (ATCs) are set up around the globe.
Casgevy’s addressable market could be somewhat expanded with additional research and development (R&D), but fundamentally it targets a pair of rare diseases, so its total addressable market size is destined to be small. Therefore the biotech’s roadmap for growth will likely stem from its cell therapies for oncology indications, four of which are in clinical-stage development.
As those programs proceed toward their shot at approval and commercialization, favorable clinical data could drive the stock up in advance of any actual revenue — and at least one program will report data this year.
3. Zealand Pharma
Zealand Pharma (ZLDP.F -1.18%) collects royalties and milestone payments from its medicines by licensing them out to pharma companies rather than taking on the burden of commercializing products on its own. In Q2, that revenue totaled just $4.9 million, but it’s unlikely to remain that low for much longer. Its pipeline is focused on developing drugs in one potentially very profitable field: weight loss.
Zealand’s most advanced program is already in phase 3 trials, and it has a big pharma partner, Boehringer Ingelheim, ready to go in the event that the candidate gets approved. More than one of Zealand’s programs has reported favorable clinical trial data, which suggests that it might be able to find a slice of the market due to unique advantages compared to the leading products made by leaders like Eli Lilly and Novo Nordisk. That means it probably won’t matter too much that it will show up to the market a bit late.
One other thing that positions Zealand Pharma strongly is its massive amount of cash. As of its fiscal second quarter, it had more than $1.2 billion in cash, equivalents, and short-term investments, whereas its quarterly total operating costs were just $42.1 million. This biotech won’t need to take out debt or issue more shares to generate capital any time soon — so shareholders will get to retain more of its earnings when they start to trickle in once again.
Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CRISPR Therapeutics and Iovance Biotherapeutics. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
