Many investors look for growth opportunities wherever they can find them. If that describes you, then there are some high-growth biotech stocks that could present an opportunity.
Biotech (short for biotechnology) companies research how to use living organisms to make drugs.
However, like pharmaceutical companies, biotech companies present substantial risks for investors. Many small biotech companies are not yet profitable and may even be pre-revenue.
This means they rely on money from partnerships with other companies or grants. In the worst-case scenario, they may have to issue new stock offerings, which dilutes the value of existing shares. Some may never deliver a product to market.
One way that investors can decide the level of risk presented by a stock is to look at the company’s pipeline. The pipeline tells investors where a company is bringing a drug to market. If the company has a drug in clinical trials, how far along it is and what is the likelihood of approval.
Another way to mitigate the risk in biotech stocks is to look at their market cap. You can find potentially high-growth biotech stocks among large cap, mid-cap, and small-cap stocks. For this article, I picked one from each of those market caps to show you the opportunities available to you.
Vertex Pharmaceuticals (VRTX)
The large cap biotech company on this list is Vertex Pharmaceuticals (NASDAQ:VRTX). Vertex is the world’s leader in cystic fibrosis treatments with four drugs that are commercially available.
That’s a key advantage of investing in large-cap stocks. These drugs delivered over $9 billion in revenue for the company. That revenue goes along with positive earnings per share of $12.83 in 2022. And the forecast is that Vertex will grow earnings in 2023.
What makes Vertex a potential high-growth biotech stock in 2023 is its long-time partnership with CRISPR Therapeutics (NASDAQ:CRSP), a leader in gene editing technology.
In early April 2023, the two companies announced they had completed their rolling application for a phase 3 trial involving two rare blood disorders. As the company noted in the press release that went with the announcement, these are the “first regulatory filings for a CRISPR-based therapy.”
Analysts have yet to weigh in on the new announcement. More information may come when the company reports earnings on May 1. But the potential from this announcement should put VRTX on your watchlist.
Intellia Therapeutics (NTLA)
The mid-cap stock on this list is Intellia Therapeutics (NASDAQ:NTLA). Like Vertex, Intellia is trying to bring a drug to market based on the CRISPR platform. And they may succeed.
The company recently received a Regenerative Medicine Advanced Therapy designation from the U.S. FDA. This is for the company’s lead candidate NTLA-2022, which is being developed to treat hereditary angioedema.
Analysts are bullish on NTLA stock. It currently has a mean price target of $97.19 which would be a gain of over 154% from the current price and institutional investors own approximately 85% of the stock.
There hasn’t been large buying since 2021, but there has been no selling either.
But this is a company that is not yet profitable and likely won’t be showing a profit until 2027. But if the company can get approval of NTLA-2022 earlier than expected, it’s easy to ses why this could be one of the high-growth biotech stocks in 2023.
Precigen (PGEN)
The small-cap stock on my list is Precigen (NASDAQ:PGEN).
The company is developing its UltraCAR-T platform.
According to the company this “has the potential to disrupt the CAR-T treatment landscape by increasing patient access through rapid manufacturing, lower manufacturing-related costs, and improved outcomes using advanced technologies for precise tumor targeting and control of the immune system.”
Precigen has an impressive pipeline of clinical-stage and pre-clinical drugs. That said, the company is not yet profitable. But what it lacks in earnings makes up for, right now, with commitment from executives inside the company.
In January 2023, four company executives bought PGEN stock. The largest of those buys was from executive chairman (and former CEO) Randall Kirk. Kirk purchased 11,428,571 shares of PGEN stock for $1.75.
It’s fair to note that the company’s stock is now down to $1.05. So the executives aren’t profiting from their trades yet. But it’s important to note that there are many reasons that executives may sell a stock. But they generally buy for only one. That is, that they believe the stock is undervalued. That may not be good enough for most investors, but priced as a penny stock, it may be enough for risk-tolerant investors.
— Chris Markoch
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Source: Investor Place