COVID-19 has dominated the healthcare space for a couple of years now. Indeed, it's been the dominant concern for most of the world. It has also produced some exciting investing opportunities. But there are outstanding opportunities outside of COVID, too. Three Fool.com contributors have found biotech stocks that might make fantastic investments regardless of what happens with the pandemic.
Here's why they like 10x Genomics (TXG 1.94%), Pieris Pharmaceuticals (PIRS 1.98%), and Sana Biotechnology (SANA 1.96%).
Image source: Getty Images.
Scientists love this company and for very good reasons
Patrick Bafuma (10x Genomics): The pandemic has been a not-so-subtle reminder of the importance of providing life science teams the tools they need to advance modern medicine. It is imperative to continue both public and private funding to advance research and discovery. And there is no better way to invest in this trend than with the leader of the "century of biology" -- 10x Genomics.
The scientific community loves this visionary company. It sells the instruments and the associated accessories and reagents that provide an unparalleled ability to see what is going on inside a single cell. This high degree of resolution was essentially unheard of until 10x came along. Plus, the company's devices are installed in all of the top 100 research institutions worldwide. Scientists need to be using 10x's products or risk getting lapped by competitors.
But how am I so sure the company will continue to thrive? Its annual Xperience event helps generate and maintain buzz about its products. At this conference, attendees hear about how others are using tools from this research-enabling company and participate in live question-and-answer sessions with the experts. This allows 10x to have its finger on the pulse of its customers and to work toward providing them with what they need to continue to push science forward. The inaugural Xperience in 2021 had over 3,000 attendees during the first two days, over a third of whom were new to the company's products. Does the concept sound familiar? This is a page out of the playbooks of Salesforce.com (Dreamforce event), Zoom Video Communications (Zoomtopia), and MongoDB (MongoDB World).
When 10x reports its fourth-quarter 2021 earnings on Feb. 16, it expects 2021 full-year revenue to reach over $500 million, 60% higher than in 2020. Between Xperience and the company's 13 new launches since 2020, this life science research company is setting itself up nicely for continued growth regardless of what COVID-19 has in store for our future.
A new class of drugs that might be more effective than antibodies
Taylor Carmichael (Pieris Pharmaceuticals): A tiny company, Pieris Pharmaceuticals owns the rights to Anticalin proteins, a new class of pharmaceuticals. These are proteins that can exploit the biology validated by mAbs (monoclonal antibodies) yet have superior characteristics. Specifically, Anticalins are eight times smaller than antibodies.
In biotechnology -- like many forms of technology -- small is huge. Because Anticalins are so tiny, these drugs can do things that antibodies cannot do. For instance, Anticalins provide direct access to the lung. So if you're looking for an asthma medication, a drug that can go right into the lung is probably going to be superior to a drug that is too big to make the trip.
This is why AstraZeneca has licensed Anticalin molecules from Pieris -- to develop asthma drugs that can go directly to the lung. Other biotechs that have signed up to collaborate with Pieris include Genentech -- now a part of Roche -- and Seagen. As the Seagen agreement makes clear, it's not just respiratory drugs that might be helped by Anticalins but cancer drugs as well.
Under its existing collaboration agreements, Pieris can make up to $9 billion in milestone payments (plus royalties). Not bad for a micro cap valued at $237 million!
What's truly mind-boggling is that its existing collaboration deals are just the beginning. After all, the antibody market was valued at $146 billion in 2020. If Pieris is actually successful in establishing its new class of proteins as a miniaturized version of antibodies, the sky's the limit. The biotech's asthma medication is in phase 2 trials now. Positive news should send this tiny stock through the roof.
A next-generation cell therapy play
George Budwell (Sana Biotechnology): Engineered cellular therapies have shown tremendous promise as treatments for various forms of liquid tumors, and there are even some recent clinical wins in the solid tumor setting. Even so, this groundbreaking modality has been hampered by major logistical headaches, scores of safety issues, and a general inability to adequately target some of the most pressing indications, especially outside of the realm of oncology. Pre-clinical company Sana Biotechnology has designs for addressing all of these issues by bringing together a suite of cutting-edge technologies.
Although it is still early days for the company, its fusogen technology could prove to be an important breakthrough in terms of being able to successfully target a wide variety of cell surface receptors. Moreover, Sana's lab-produced hypoimmune cells might open the door to treating a galaxy of underserved medical conditions with cellular therapies.
Where do things stand now? Sana plans on approaching the Food and Drug Administration later this year about conducting its first human clinical trial. And over the next few years, the biotech hopes to have its novel therapies in the clinic for a range of high-value indications in the realms of oncology, diabetes, central nervous system disorders, cardiovascular diseases, and various genetic disorders. What's important to understand from an investing standpoint is that several of these therapies could be potential blockbuster-level products. All that being said, Sana is still in the pre-clinical trial phase of its existence, meaning that it has a long way to go before becoming a commercially viable operation.
