Some of today's best-known biotech players may add to your stock market winnings in the coming year. No need to turn your back on shares of companies like coronavirus vaccine giant Moderna, for instance, just because it's soared and has a spot in many investment portfolios.
Still, there's probably even more opportunity to be found in certain under-the-radar biotech stocks. Of course, it's impossible to guarantee that a particular stock will rise in a certain time period. Investing always involves a certain degree of risk. But the following three biotech players have elements that clearly could push them much higher -- making them smart stocks to buy in 2022.
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1. ImmunoGen
ImmunoGen (IMGN) has been around for a while -- 40 years to be exact. But the company's hard work finally may be about to pay off. The biotech recently reported positive phase 3 trial results for its ovarian cancer treatment candidate. This is particularly significant because the candidate showed a much higher objective response rate (ORR) than current treatments -- 32% versus ORRs in the single digits. The company plans on requesting regulatory approval in the first quarter of next year. So, product revenue may be on the horizon.
ImmunoGen focuses on antibody-drug conjugates (ADCs). The idea is to pair toxins that can kill cancer cells with a specific antibody. They're connected with specially developed linkers that are stable outside cancer cells but break down to deliver the toxin once inside. Besides the ovarian cancer candidate, ImmunoGen is studying three other ADCs in several cancers. They are in preclinical through phase 2 development.
ImmunoGen shares have climbed about 13% this year. But if Wall Street is right, they could rise more than 50% in the coming 12 months. This may be an easy goal to reach if the U.S. Food and Drug Administration OKs ImmunoGen's ovarian cancer treatment candidate.
2. Alnylam
Alnylam Pharmaceuticals (ALNY -0.80%) focuses on the process of RNA interference (RNAi). The goal is to turn off the production of disease-causing genes. To do this, Alnylam designs small interfering RNAs that target and destroy messenger RNA known to cause disease. The company is working in the following disease areas: genetic, cardio-metabolic, infectious diseases, central nervous system and ocular.
Right now, Alnylam commercializes three products for rare diseases. And revenue is on the rise.
ALNY Revenue (Annual) data by YCharts
In fact, net product revenue climbed 68% in the most recent quarter. The company reiterated its forecast for $640 million to $665 million in product revenue this year.
Importantly, Alnylam has nearly a dozen candidates in the pipeline -- and four of them are in late-stage development. So, if all goes well in clinical trials, we could imagine additional sources of revenue in the next few years. And if Alnylam's RNAi approach works in more and more disease areas, it could be a game-changer.
Alnylam shares are heading for an increase of more than 30% this year. But I expect any good news from clinical trials -- or future news of product approvals -- to keep the gains going.
3. Gritstone
I like Gritstone Bio (GRTS 10.06%) for its potential coronavirus vaccine and its oncology work. Let's start with COVID-19. The company is developing a second-generation mRNA vaccine candidate. How is it different from those of giants Moderna and Pfizer?
First, it uses self-amplifying mRNA -- that means lower doses can produce high efficacy. Second, Gritstone's candidate prepares the body to recognize the spike protein and other viral genes. This means it may be more effective against variants. Gritstone is working on a new candidate to specifically target the latest variant -- omicron. But it expects its original vaccine candidate to do the job too. All of this means that if Gritstone's trials are successful, it may carve out a share of the vaccine market down the road. And even a small share would be a big win for this clinical stage company.
Gritstone's oncology work also is promising. The company has two oncology programs in the pipeline -- aiming for six indications. All of them are in phase 2 studies. Gritstone takes a personalized approach to cancer treatment. The idea is to detect mutated antigens specific to a particular patient's tumor -- then design an appropriate immunotherapy based on that information.
Gritstone shares have doubled this year. But any positive news from the coronavirus or oncology programs is likely to offer another boost. And farther down the road, a commercialized product in either of these areas could drive the shares significantly higher.
