Investors looking for stocks that could explode higher in 2021 have at least three options in the biotech space to consider right now.

Clinical trial data and decisions from the FDA could send shares of argenx (NASDAQ:ARGX), Axsome Therapeutics (NASDAQ:AXSM), and CRISPR Therapeutics (NASDAQ:CRSP) through the roof in 2021. Read on to find out how they can make it happen.

High-tech laboratory work.

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1. argenx

This clinical-stage biotech doesn't have a reliable source of revenue yet, but that could change in 2021. That's because an application for the company's lead candidate, efgartigimod should be on its way to the FDA any day now. 

The first new drug application argenx intends to send the FDA will be supported by compelling evidence that says it can make a difference for patients with generalized myasthenia gravis (gMG). Patients with this rare disorder have immune systems that attack the connection between their muscles and nerves that tell them to contract.

During the Adapt study, 67.7% of patients given efgartigimod achieved a 2-point improvement on the 24-point myasthenia gravis-specific activities of daily living (MG-ADL) test, compared with just 29.7% of patients in the placebo group. 

If approved to treat gMG, argenx will compete with Soliris from Alexion Pharmaceuticals (NASDAQ:ALXN). In a study supporting its approval to treat gMG, patients treated with Soliris reported an average improvement of 4.2 points on the same MG-ADL test. That was significantly higher than the 2.3-point improvement reported among patients given a placebo.

2. Axsome Therapeutics

This clinical-stage drugmaker doesn't have any approved products to sell, but it could launch one by the end of 2021. In January this company will submit its first new drug application for AXS-05, a proprietary combination of bupropion and dextromethorphan for the treatment of major depressive disorder (MDD).

Bupropion's already a popular treatment option for MDD, a debilitating condition that hits about 6.7% of American adults at least once in an average year. Only about 8 million people seek treatment for MDD annually, and most of them need new options. The first antidepressants patients try don't get the job done a majority of the time.

Compelling clinical trial data show AXS-05 is more effective than bupropion on its own. First drug launches are a difficult step for biotech companies, but physicians are already comfortable treating MDD patients with the main ingredients in AXS-05. 

An approval of AXS-05 to treat MDD will probably be the biggest event in 2020 for Axsome Therapeutics, but investors will be glad to know there's more to look forward to. In the first quarter of 2021, the company also expects to submit an application for AXS-07 as an acute treatment for migraine headaches.

Medical laboratory.

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CRISPR Therapeutics

Earlier this month, we saw successful long-term results from a study with this company's lead candidate, CTX001 for hemoglobin-related disorders. CRISPR' Therapeutics is developing CTX001 in partnership with Vertex Pharmaceuticals (NASDAQ:VRTX), plus some wholly owned experimental cancer therapy candidates. 

Further success from CRISPR Therapeutics' partnership with Vertex Pharmaceuticals could give this stock more lift in 2021, but there's a lot more to look forward to next year. In October, CRISPR released encouraging results from its first attempt at an off-the-shelf stem-cell transplant treatment for lymphoma patients. 

In 2021, we should see further results from CTX110, a treatment that helped two out of four advanced-stage lymphoma patients achieve complete remission. Next year we'll see results from more patients treated with CTX110, plus we'll see proof-of-concept trial results from multiple myeloma patients treated with CTX120, and patients with solid tumors treated with CTX130.

Potential pitfalls

Some good news in 2021 could push all three of these biotech stocks into the clouds, but there's still a lot that can go wrong. CRISPR Therapeutics sports a $10.6 billion market cap, but it doesn't have any approved products to sell. Its market value could collapse if investors find any reasons to worry about the company's ability to deliver successful new drugs.  

The improvements that argenx reported appear clinically significant, but investors might want to temper their expectations for efgartigimod. The company hasn't been eager to share average improvement scores from efgartigimod's trial that could shine a light on its ability to compete directly against Soliris.

Approval for Axsome's lead candidate seems likely in 2021, but we can't be certain about success. If approved, investors need to realize that independent new drug launches are highly unpredictable. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.