Some experts say we’re in “the golden age of biotechnology.” Scientific advances are opening up possibilities for treating and preventing diseases that could only have been imagined in the past.
This golden age is also presenting tremendous opportunities for investors. Biotech stocks offer the potential for substantial long-term returns. The best biotech stocks to buy right now boast robust pipelines, and some already have winning drugs on the market.
Here are a few companies that look like good options to move significantly higher in 2023.
Vertex Pharmaceuticals (VRTX) is the undisputed leader in cystic fibrosis (CF) therapies. The company’s portfolio of approved CF drugs will deliver at least an estimated $8.4 billion this year, made possible by intense market penetration and decades-long devotion to research and development in the space.
So far, the company has remained strongly profitable and has continued to expand revenue within the CF market at a steady pace. Suppose management’s plans for expanded approvals for younger cohorts continue to come to fruition over the next few years. In that case, Vertex will eventually be treating as many as 90% of all people with CF.
The company is moving its pipeline beyond CF with a handful of mid-stage clinical programs for pain relief, kidney disease, and genetic hematologic disorders like sickle cell disease. In other words, even if it eventually corners the entire CF therapy market, there will still be other opportunities for growth.
One potential catalyst is its partnership with CRISPR Therapeutics (CRSP) in developing gene-editing treatments for two rare blood disorders, which is expected to begin regulatory studies in March 2023. This means investors can look forward to a steadily increasing flow of new revenue and expanded approvals, both of which should support the stock’s price significantly.
Of 26 analysts offering recommendations for VRTX, 18 give the stocks a Buy rating, and 9 rate it a Hold. There are no Sell ratings. It seems likely that Vertex will reward patient investors as the steadily growing biopharma company seems ripe for expansion for years to come. With company earnings due out on Nov. 1, investors should watch for upgrades to the stock.
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Global healthcare leader Eli Lilly And Company (LLY) has been creating high-quality medicines for over a century. The drug firm focuses on endocrinology, oncology, neuroscience, and immunology. Key products include Trulicity, Jardiance, Humalog, and Humulin for diabetes; Taltz and Olumiant for immunology; and Verzenio and Alimta for cancer.
The mega-cap pharmaceutical giant’s pipeline is locked and loaded with promising advancements, which means plenty of potential opportunities for investors to benefit. In the first half of 2022, Lilly received word that the FDA was fast-tracking its investigation of tirzepatide. A drug designed to treat adults who are overweight with weight-related comorbidities such as diabetes. Eli Lilly expects its rolling application to be completed by April 2023.
JPMorgan analyst Chris Schott recently summed up his bullish outlook on LLY. The analyst believes that Eli Lilly remains the best-positioned growth story in his coverage and one of his top picks following the stock’s pullback over the past month. The analyst sees “significant opportunity” for Tirzepadite in type 2 diabetes and obesity, which in his view, “warrants increased attention.” Schott currently gives the stock an Overweight rating and a $300 price target.
Lilly’s share price is up nearly 20% this year and seems likely to continue to gain steam into the new year. The stock sports a dividend of $0.98 or 1.21% annually. LLY’s dividend payout for the year is set for the low 40% range, which should allow for robust future dividend growth.
A strong pipeline and a stable dividend make Eli Lilly an attractive consideration. The pros on Wall Street also think so. Among 17 polled analysts, 14 say to Buy LLY, 2 call it a Hold, and only 1 rates the stock a Sell. A median 12-month price target of $351 represents a 9% increase from its current price.
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Biogen is a biopharmaceutical company focused on therapies for neurological and neurodegenerative diseases. The company is on the leading edge of creating drugs and therapeutics for some of the more perplexing chronic diseases like Alzheimer’s. Biogen has been working on drugs that can reduce the buildup of amyloid plaques which could be critical to stemming the advancement of the disease.
The neurological solutions pioneer has partnered with Eisai, a Japanese pharmaceutical company, to develop Lecanemab, one of its potential amyloid plaque-destroying drug candidates. The two companies will split the drug’s profits 50/50. Recent data from Lecanemab has proven “robust” as the drug saw a 27% reduction in patients’ clinical decline on cognitive and functional metrics, causing the entire industry to rethink the historically elusive answer to Alzheimer’s.
Following the “better than expected” Phase 3 data for Lecanemab, JPMorgan analyst Chris Schott raised the firm’s price target on Biogen to $275 from $221. The analyst foresees full FDA approval for Lecanemab and believes there is a high probability that the Centers for Medicare and Medicaid Services will cover the drug. Schott would not be surprised to see further upside for the shares into year-end as he expects Lecanemab to dominate the competition.
While Lecanemab takes center stage, Biogen has a pipeline that features several drugs in various clinical stages. The company’s Spinraza for treating spinal muscular atrophy has been a blockbuster drug. Multiple sclerosis drugs Avonex and Plegridy generate nearly $2 billion in annual sales. BIIB shares spiked on the positive Lecanemab results and have dwindled since. A better entry opportunity may come, but for long-term-minded investors focusing on growth, Biogen is an intriguing candidate even at its current level.
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