Risky. Speculative. Volatile. Take your pick of adjectives to describe investing in biotechs. Each of these descriptors can be applicable much of the time.
But not every biotech company fits that mold. Some are relatively stable, generating consistent and growing profits. Here are three biotech stocks that you can buy and hold for the next decade without losing any sleep.
1. Vertex Pharmaceuticals
Vertex Pharmaceuticals (NASDAQ:VRTX) should have it made in the shade for at least the first half of this decade. The big biotech enjoys a monopoly in treating the underlying cause of cystic fibrosis (CF). Its nearest rival is at least several years away from even having a shot at winning regulatory approval for a CF candidate. And if a new contender does come to market, overcoming Vertex's head start won't be an easy task.
In the meantime, Vertex has secured key reimbursement deals that have opened up new markets for its CF drugs. Its latest entrant, Trikafta, has been a huge commercial success in the U.S., and appears to be headed for approval in Europe.
What about the second half of the decade? Vertex's CF franchise should still generate strong cash flow, and its pipeline also includes four non-CF programs currently in phase 2 testing that could win approval and be fueling further growth within a few years.
The company's two candidates targeting alpha-1 antitrypsin deficiency (AATD) rank at the top of the list. AATD, like CF, is a rare genetic disease caused by protein misfolding. And there are more patients in the U.S. alone with AATD than there are worldwide with CF.
2. Bristol Myers Squibb
Should Bristol Myers Squibb (NYSE:BMY) be on a list of biotech stocks? Sure, the company is typically lumped into the big pharma category. However, given that most of its top-selling products are biologic drugs, it's arguably much more of a biotech than it is a traditional pharmaceutical company.
The company's product lineup ranks as one of the most impressive you'll find. Its acquisition of Celgene last year brought megablockbuster blood cancer drugs Revlimid and Pomalyst into its fold, along with solid tumor drug Abraxane. These added to the company's own big winners, including cancer immunotherapy Opdivo, arthritis drug Orencia, and blood thinner Eliquis.
Thanks to the Celgene deal, Bristol Myers Squibb also now has several new drugs with strong growth prospects. Zeposia is the most promising among them. The company recently launched the drug as a treatment for multiple sclerosis, and is evaluating it in late-stage studies as a potential treatment for Crohn's disease and ulcerative colitis.
Wall Street analysts project that Bristol Myers Squibb will deliver average annual earnings growth of more than 18% over the next five years. With its current lineup gaining momentum and a pipeline loaded with potential winners, its solid growth should be sustainable through 2030 and beyond.
3. Regeneron Pharmaceuticals
Regeneron Pharmaceuticals (NASDAQ:REGN) is probably best known for its tremendously successful eye-disease drug Eylea. While sales growth for the treatment has slowed, that could change if it gets approved for other indications.
Meanwhile, Regeneron has several other growth drivers. Dupixent, which the biotech co-markets with Sanofi, is now a blockbuster with sales that soared 70% year over year in the second quarter. The two companies have also partnered on the commercialization of two other fast-rising stars, cancer immunotherapy Libtayo and arthritis drug Kevzara.
The biotech's pipeline includes late-stage programs targeting additional indications for all of its top-selling products, including those already mentioned plus cholesterol drug Praluent. Regeneron also has promising new late-stage candidates including Ebola antibody therapy REGN-EB3 and osteoarthritis pain drug fasinumab.
Perhaps the most highly anticipated pipeline candidate for Regeneron, though, is its COVID-19 antibody therapy cocktail. Roche recently teamed up with the company to market that outside the U.S. if it wins regulatory approvals.