Every investor wants to net a 10-bagger, and if you're like most of us, you're impatient to see your money grow. For an investment of $1,000 to reach $10,000 by a relatively close deadline like late 2030, eight years from now, a stock would need to rise by around 33% annually. Most companies can't do that since rapid growth years are often followed by underperforming years.
But when it comes to biotech businesses that don't yet have a medicine approved for sale, massive stock price movements in relatively short periods are not uncommon. This kind of growth is possible in biotech because there are major catalysts like clinical trial results and regulatory decisions that resolve significant uncertainty about a company's prospects of reaching financial success.
One way to find players with the greatest potential is to identify those that are exposed to the most (and highest-impact) catalysts ahead. Let's look at a pair of budding biotech growth stocks that have a solid chance of returning $10,000 from a humble investment of around $1,000.
OTC: ME
Key Data Points
1. 23andMe
You've probably heard of 23andMe (ME +0.00%) and its consumer genetic testing business, but that's only part of the reason why it has tremendous growth potential. By providing people with genetic testing kits and generating personalized reportage about their ancestry and risk of developing certain diseases, the company accrues a huge data set of genetic information. Per management's count, that set has more than 4 billion data points as a result of more than 13.1 million genotyped customers.
Those data points are of high value for anyone interested in doing drug development and looking for attractive targets, like GSK and other biopharma companies. As part of 23andMe's collaboration with GSK, it has the opportunity to earn royalties from its data-enabled pipeline programs, which number more than 50 in total, all of which are in pre-clinical development. Each of those projects could ultimately lead to years of collecting royalties that the company doesn't need to spend any more money to earn.
What's more, it also has a pair of immuno-oncology projects in phase 1 clinical trials, meaning that over the next eight years, it'll have an abundance of exposure to catalysts to drive returns for shareholders. And if management is right, the chances of each of its programs surviving the clinical trials process to reach commercialization are higher than average due to the data it can bring to bear and the machine learning techniques the company uses for pre-clinical screening.
Still, 23andMe isn't a slam-dunk investment, and it's actually quite risky, similar to all biotech and biotech-adjacent stocks. After all, clinical trials can fail, and the biotech isn't profitable. Plus, its consumer health segment, responsible for 87% of its $65 million in revenue for the first quarter of fiscal year 2023, only grew by 9% in the quarter, so it'll need its drug development efforts to pay off to succeed. If the risk of slow growth in the absence of clinical breakthroughs doesn't bother you, this is a stock that has the potential to provide a huge return as its programs mature and advance toward commercialization in the coming years.
2. CRISPR Therapeutics
CRISPR Therapeutics (CRSP 2.11%) is a biotech that could 10X your investment thanks to its bleeding-edge genetic editing expertise, which might lead to the development of curative medicines for otherwise intractable hereditary diseases. With the help of its collaborator, Vertex Pharmaceuticals, the company is pioneering revolutionary therapies for sickle cell disease and beta-thalassemia, and it's also developing other treatments for myelomas, solid tumors, and even diabetes.
But it doesn't have any products on the market yet, so its trailing-12-month revenue of around $14.8 million is non-recurring and subject to fits and starts that are dependent on the progress of its collaborations.
NASDAQ: CRSP
Key Data Points
Importantly, its cell therapy programs for cancer are designed so that they can get around many of the drawbacks typically associated with the class. Competitors' candidates require taking a sample of each patient's cells, shipping them to a central location to genetically modify the cells into becoming the therapy product, then shipping the therapy product back for infusion into the patient, thereby incurring significant logistical costs and execution risks.
In contrast to the above, CRISPR's cell therapies are "off the shelf." That means its therapies can be manufactured at one central location at a mass scale without needing any patients to send in their cells for modification, much like the manufacturing workflow for a normal drug. And that'd likely be far more profitable than what competitors can swing as a result, so the scaling potential of the therapies made using the company's off-the-shelf platform is one huge reason why it could be a great investment over the next eight years.
Of course, the risks associated with an investment in CRISPR are quite steep, as there's nothing safe about trying to develop advanced medicines -- but that's also why it could be a home run for your portfolio.
