A stock that runs up 1,000% can really increase your net worth.
Suppose you invest in all three of these healthcare companies, and two of them go belly up. But one of them increases 1,000%. Even though your accuracy is horrible (you're wrong about 66% of them), that one winner means that your overall portfolio has tripled in value. One big winner can make up for a lot of bad picks.
Here are our selections for biotech stocks that can run up 1,000% by 2027. We're bullish on Intellia Therapeutics (NTLA +1.08%), Doximity (DOCS +7.42%), and TransMedics (TMDX +0.37%).
A sleeping giant
George Budwell (Intellia Therapeutics): If you're on the hunt for a stock that can produce life-changing gains over the next five years, the beaten-down biotech industry is definitely a good place to start your search. In particular, the cadre of next-generation gene-editing companies -- a field that has only recently started to yield significant amounts of human clinical trial data -- could be set to go on an explosive run in the not-so-distant future. That being said, there will almost certainly be a major disparity in share price appreciation between the best-in-class gene-editing companies and the second-tier players in the space.
Which gene-editing company could be the biggest winner? While it is still far too early to make any concrete predictions on this front, Intellia Therapeutics, a CRISPR-based genome editing company, appears to have a leg up on the rest of the field right now. What's particularly impressive about this company is its early-stage data for a rare liver disorder known as transthyretin amyloidosis (ATTR).
NASDAQ: NTLA
Key Data Points
ATTR is an inherited disease characterized by a misfolded protein (transthyretin) being deposited across various tissue types. Although there are a handful of therapies approved for ATTR by the Food and Drug Administration, none of these commercial-stage products represent an effective cure for this deadly disorder. Intellia's lead product candidate, NTLA-2001, might be the closest thing to a cure for at least some patients with specific forms of ATTR.
Turning to the details, Intellia gave the investing world an early look at the therapy's preliminary data last year, which suggested that even a single dose of NTLA-2001 could produce a best-in-class reduction in the disease-causing protein. Further updates provided earlier this year showed that these deep response levels to treatment with NTLA-2001 also appear to be durable. NTLA-2001, in effect, could represent a one-and-done functional cure for some forms of ATTR.
What's the key takeaway? Intellia still has a long way to go to prove that its novel platform is the creme de la creme of genome editing. But if this best-case scenario does indeed play out, Intellia's stock ought to easily appreciate in value by 1,000% from current levels. The company's current market cap of $3.42 billion, after all, is a drop in the bucket compared to the vast commercial opportunities built into its diverse clinical pipeline.
This internet company is transforming the practice of medicine
Taylor Carmichael (Doximity): A lot of biotech stocks are highly risky moonshots. Doximity is the opposite of this. For many biotechs, the Food and Drug Administration (FDA) is this huge obstacle that has to be surmounted before you can make any revenues (or profits). Drug companies have to prove their pharmaceuticals are safe and effective. They have to spend millions of dollars before they can make one cent.
Doximity is not like that. It's an internet company providing information. So government regulation is far lighter. That's why Doximity's profit margins are at 45% and why the company has almost zero debt. It's a beautiful asset-light business.
NYSE: DOCS
Key Data Points
To put it simply, Doximity is the internet portal for the healthcare industry. A doctor or nurse looking for a new job wouldn't bother with LinkedIn or Facebook. She would find her next position on Doximity. And the job market for healthcare professionals is only one of the company's verticals. The other two are Dialer -- the company's telehealth solution that links patients with their own doctors -- and advertising revenues. 80% of American doctors are on Doximity's platform, and 90% of med students. This is an incredibly valuable group of eyeballs, and pharmaceutical companies will spend a lot of money to reach them.
Doximity reports that its return on investment (ROI) is 10 to 1 for pharmaceutical companies and 13 to 1 for hospitals. The top 20 pharmaceutical companies are all Doximity clients, as are the 20 largest hospitals in the U.S. The company estimates that it's achieved about 3% of its total addressable market (TAM) in advertising revenues.
For Doximity, however, the really big upside is in telehealth. While Teladoc Health (NASDAQ:TDOC) is trying to become a hospital in the cloud, Doximity is going the more pragmatic route of being the telehealth provider for existing doctor-patient relationships. So far, that's an extremely lucrative gig. I believe this highly profitable company will be the primary beneficiary as more and more of the healthcare industry shifts its business to the internet. Can this $8 billion company pass the $100 billion mark? Absolutely.
The feel-good healthcare choice
Patrick Bafuma (TransMedics): When it comes to looking for 10x potential over the next five years, TransMedics makes the shortlist. The organ transplantation company is filling a much-needed void in organ transplant transportation, sales growth is strong, and there is optionality into adjacent markets. Put it together, and this $800 million healthcare company is a strong candidate to become a 10-bagger.
NASDAQ: TMDX
Key Data Points
TransMedics makes an Organ Care System (OCS) that can transport a variety of organs for transplant, such as the heart, lungs, and liver. Whereas the other systems on the market are specialized to an individual organ, with the TransMedics solution, one machine can transport different types of organs. This makes it the only FDA-approved multi-organ platform. Not only that, but this healthcare company's OCS device roughly triples the number of organs that can be appropriately transplanted while reducing complication rates by roughly half.
Since its first FDA approval in 2018 for lung transplant transportation, TransMedics has racked up positive data across multiple organs. It recently raised fiscal year 2022 revenue guidance from $49 million to $55 million to $59 million to $65 million. This represents an impressive 95% to 115% growth compared to the company's prior-year net revenue. The good times may continue, as TransMedics believes the total addressable market to be over $8 billion combined for OCS for heart, lung, and liver combined. Add in the possibility of bringing in its own surgeons to perform organ retrieval, as well as actual transportation and logistics from one hospital to the next, and there is significant optionality for this small-cap healthcare company.
