Could you get a twofold return in 2022? Some stocks just might give you a good chance at achieving that goal.
We asked three Motley Fool contributors which biotech stocks they think could double in the new year. Here's why they picked Adicet Bio (ACET 0.51%), ChemoCentryx (CCXI), and NRx Pharmaceuticals (NRXP -0.37%).
Turning off-the-shelf CAR-T therapy hype into reality
Keith Speights (Adicet Bio): Current chimeric antigen receptor T-cell (CAR-T) therapies require the patient's own T cells to be genetically engineered then infused back into their bodies. It's an expensive and time-consuming process.
There's been a lot of hype in recent years, though, about the potential for allogeneic CAR-T therapies. These are often referred to as "off-the-shelf" CAR-T therapies. The T cells of individuals other than the patient are modified to fight specific types of cancer in advance. As a result, the costs and time involved are much lower than current CAR-T therapies.
Adicet Bio is well on its way to turning the hype about off-the-shelf CAR-T therapies into reality. The company reported overwhelmingly positive results in early December from a phase 1 study of ADI-001 in treating non-Hodgkin's lymphoma. Two patients had complete responses (full remission). Another patient had a near-complete response.
Granted, this was only interim data from a phase 1 study. It's still really early, and there are plenty of hurdles left to jump. However, Adicet's prospects look good at this point.
Even after its huge gain following this announcement, Adicet's market cap remains below $650 million. The biotech plans to report additional data for ADI-001 in the first half of 2022. If those results confirm Adicet's interim data, I suspect this stock could double or more in the new year.
A new drug could be a big winner in 2022
David Jagielski (ChemoCentryx): A promising mid-cap company that has strong sales potential can bring investors the right mix of a stock that may double in value. With ChemoCentryx, its $2.6 billion market cap isn't terribly large, and there's plenty of room for its valuation to rise. Its current price-to-sales multiple of 77 suggests that it is wildly overpriced, but that number is going to come down in the future.
That's because the U.S. Food and Drug Administration (FDA) approved Tavneos (avacopan) in October. The drug, which treats people with severe active anti-neutrophil cytoplasmic autoantibody-associated vasculitis (an autoimmune disease that can inflame small blood vessels), could generate close to $2 billion in annual revenue at its peak, according to analyst estimates. Although ChemoCentryx likely won't get close to that figure for years, it's on the right path, and the approval should at least bolster the company's top line in 2022.
ChemoCentryx launched the drug shortly after receiving approval in the U.S. Tavneos is also approved for use in Japan. The payment it earned for that milestone from its partner Vifor for $20 million was the key reason the company's sales grew to $17.7 million for the period ending Sept. 30, representing a year-over-year increase of 249%.
Once ChemoCentryx provides numbers as to how many patients are being prescribed Tavneos in the U.S., the stock could get a boost, assuming those figures are encouraging. Although ChemoCentryx stock initially jumped on news of its U.S. approval on Oct. 8 from less than $20 a share to more than $38, it's still nowhere near the more than $60 it was at a year ago. And that was before there was an approval to rally around.
With ChemoCentryx now likely to start generating sales from Tavneos in 2022, plus the company pursuing indications for it, there's plenty of reason to be bullish on the stock in the near term. Multiple analysts have set price targets of over $100 for the stock, more than double from where it is today. ChemoCentryx looks like a promising stock to hold entering the new year, and doubling in value appears to be a very realistic prospect for investors.
A high-risk, high-reward play
Prosper Junior Bakiny (NRx Pharmaceuticals): Things have been tough for NRx Pharmaceuticals in the past couple of months. While the company hoped to carve out a niche in the market for drugs that treat COVID-19, it ran into regulatory troubles. The FDA declined to grant emergency use authorization (EUA) to the company's experimental coronavirus medicine, Zyesami.
The agency decided against authorizing the medicine because of insufficient data regarding its potential benefits and risks. Naturally, that was a big blow to NRx Pharmaceuticals, a small-cap biotech that currently has no products on the market. But things aren't over for Zyesami just yet. Since the FDA's thumbs-down, the medicine has produced more encouraging results.
On Nov. 29, NRx Pharmaceuticals reported data purporting to show that Zyesami led to substantial improvements in severe COVID-19 patients compared to existing therapies, including Gilead Sciences' remdesivir. NRx Pharmaceuticals also reported more positive safety data for Zyesami in mid-December.
The company is now moving ahead in its attempt to get Zyesami on the market. On Dec. 29, NRx Pharmaceuticals applied for a breakthrough designation therapy for Zyesami in COVID-19 patients with respiratory failure who have been previously treated with other treatments such as remdesivir, but to no avail. The biotech hopes to earn authorization for its medicine relatively soon, and if that happens, it could send its stock soaring through the roof. NRx Pharmaceuticals currently sports a minuscule market cap of just $290 million.
The coronavirus pandemic isn't over. With the advent of new variants of the virus that causes the diseases, such as the omicron variant, thousands are still testing positive each week, with many of them dying. Current therapy options exist, but there will be a need for more effective ones. If NRx Pharmaceuticals' Zyesami earns the green light, its stock could easily double its current levels.
With that said, risks abound for this biotech. Perhaps the FDA will decline to approve Zyesami once again. NRx Pharmaceuticals is also facing a lawsuit related to the medicine. The biotech does have other pipeline candidates, but at this point, a bet on NRx Pharmaceuticals is largely a bet on the future of Zyesami. That makes the biotech very risky, but the rewards could be huge. Invest accordingly.