Biotech stocks have put plenty of investors on the road to riches in recent years. We can look at the performance of big players like Amgen or Biogen that, respectively, have delivered triple-digit and double-digit share-price growth over the past decade. Or we can refer to a smaller player like Novavax, which soared 2,700% in one year on optimism about its coronavirus vaccine program.
How do you choose the players that could bring in big returns? It's important to look for companies that already have a strong product portfolio, a solid pipeline, and/or are working on a game-changing program. Let's have a look at three biotech companies that fit the bill.
Investors already know Moderna (MRNA 1.06%) for its blockbuster coronavirus vaccine, and that's why it might be overlooked right now. Some may think the whole Moderna story will be over when the pandemic ends, but there's actually a lot ahead for this dynamic player.
First, coronavirus vaccine revenue isn't likely to drop off a cliff. The company expects $21 billion this year, according to orders so far. And it's likely to serve at least the most vulnerable individuals with an annual coronavirus shot well into the future.
Beyond the coronavirus program, Moderna has a lot going on. It recently started pivotal trials for two vaccine candidates that also could bring in blockbuster revenue. These candidates are for cytomegalovirus (CMV) and respiratory syncytial virus (RSV). CMV and RSV are common viruses that can be devastating for certain individuals -- and right now, a vaccine doesn't exist for either of them.
Moderna also has 31 active development programs, and 19 of these are involved in clinical trials. If even a small handful of these make it to commercialization, Moderna could be looking at billions of dollars in revenue down the road. This could result in more gains for shareholders over the long term.
Vertex Pharmaceuticals (VRTX 1.14%), like Moderna, also is delivering billion-dollar revenue. But here, we have visibility regarding how long growth may last.
The company is the leader in the cystic fibrosis (CF) treatment market and predicts that should continue through at least the late-2030s. Vertex's star seller -- Trikafta -- can treat about 90% of the CF population. And the only treatment that might unseat it is a candidate in development by Vertex.
The company also is showing its strengths in areas outside of CF. Vertex aims to file for regulatory approval of its one-time curative treatment for blood disorders by the end of the year. This could be big because treatment options are limited for these illnesses. Vertex also recently announced positive clinical data from a trial for its non-opioid pain-treatment candidate.
The company plans to advance this candidate into a pivotal trial for acute pain in the second half of the year. This could be another major product since non-opioid options are limited today. And many patients prefer avoiding opioids, due to the risk of addiction. Vertex's shares already have gained 28% so far this year and ongoing CF revenue and progress in these clinical programs could keep them moving higher.
Vaxart (VXRT -1.13%) is the riskiest bet of these three biotech stocks because it hasn't yet commercialized a product. But if Vaxart does bring one of its candidates to market in the coming years, the shares could soar. So it's a reasonable option for aggressive investors.
What's to like about Vaxart? Its game-changing technology. The company is developing vaccine candidates in the form of a pill. This sort of vaccine would be popular among patients and healthcare providers.
Patients would be thrilled to avoid a jab, and healthcare providers would like the fact that these products are easy to transport and store. So far, Vaxart has completed 15 clinical trials involving seven different viruses. Right now, the closest candidates to market are those for coronavirus, norovirus, and seasonal flu. They're all in phase 2 studies.
The company has put a big focus on the coronavirus candidate in recent times. Initial data from its coronavirus trial are expected in the first half of this year. Even if Vaxart enters the coronavirus market late, its vaccine still could be successful -- thanks to its pill form.
As mentioned above, Vaxart is high risk. But if it can produce an effective oral vaccine, the shares could help early investors make a fortune.