As any biotech investor will tell you freely, investing in biopharma is rife with risks. Clinical trials can miss the mark, and successful medicines on the market can get outcompeted by newer entrants.
But there are a few biopharma companies that offer scrumptious rewards for shareholders, and without a high chance of catastrophic failure along the way. To do that, they tend to have a mix of reliable sales alongside a bunch of ambitious projects to provide upside.
Let's take a look at a trio of those businesses right now to see if you might be interested in using them as wealth-building investments.
1. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX 1.43%) is one of the most attractive biopharma players out there for two reasons. First, it's the undisputed leader in the market for cystic fibrosis (CF) therapies, a segment in which it has four medicines approved for sale already.
CF is a rare pulmonary disease, and by focusing on CF as its niche, the company grew its trailing 12-month revenue by 514% in the last 10 years, reaching $8.7 billion. As there's currently no cure for the condition, Vertex can and will continue to develop new therapies for it by creating combinations and refinements of its already-marketed medicines, which should ensure that its base of revenue continues to grow without taking any major chances with drug development.
The second reason Vertex is so appealing is that it's on the verge of realizing its plans to diversify its products by competing in massive markets like acute pain, where it has a program in phase 3 clinical trials. It also has a pair of even more advanced projects that are awaiting regulatory approval and that attempt to treat sickle cell disease and beta thalassemia, both of which were developed in conjunction with CRISPR Therapeutics.
There's no guarantee that regulators will assent to commercializing those two, but for the long-term investing thesis for Vertex, it doesn't matter. As long as it can continue to profitably sell its CF medicines without any real competition, it'll have more than enough money to keep funding new programs outside of CF until it has multiple successes in hand. And that's why it could help make investors a fortune in the coming years.
2. Moderna
Much like Vertex, Moderna (MRNA 3.01%) has significant recurring revenue -- in this case from its coronavirus vaccine -- and it's also making headway toward commercialization in other areas. In 2022, its jab brought in $18.4 billion, and management expects at least $5 billion for 2023 despite a flooded global market and powerful competitors like Pfizer. And it could soon have another cash cow program to pad the top line for years to come.
Its phase 3 program for treating respiratory syncytial virus (RSV) provides substantial near-term upside exposure for investors, particularly because 2022 saw the virus' debut in the public consciousness as a result of soaring caseloads. If that program doesn't get commercialized, there are other promising ones that might. That includes its "personalized cancer vaccine" developed in partnership with Merck, which will start its phase 3 trials this year. The company is also working on dozens of other projects.
In the short term, expect Moderna's stock to move based on reports from its clinical trials as that's where the biotech's future value lies. Right now, it has $8.3 billion in cash and equivalents at the ready, and its trailing-12-month expenses are only around $7.4 billion. In other words, it could easily fail quite a few of its clinical trials and still have more than enough resources to go on to succeed, which is one more reason it makes sense to bet on its success in the long run.
3. Maravai LifeSciences
Maravai LifeSciences (MRVI 0.96%) is a stock with plenty of fortune-building potential, but it doesn't develop drugs or vaccines directly. Instead, it manufactures chemicals called nucleic acids that companies like Pfizer, Moderna, and BioNTech use to research, develop, and manufacture their nucleic acid-based medicines, including the coronavirus jabs those competitors are known for.
With trailing-12-month revenue of $906.7 million, its business model is clearly well-positioned to tap into the boom in the mRNA field that started in 2020, not to mention other biopharma development trends like biologics.
After 2024, it expects to bring in around $100 million per year from sales of its nucleic acids for coronavirus vaccine shot-making purposes alone. Since third-quarter 2021, it grew its base of customers for its nucleic acids for discovery-phase work by 29%. But it has other long-lived income streams, too. Maravai also makes money by selling safety, quality, and purity testing solutions for biopharma research and development, which is something that drug developers will likely need indefinitely.
What's more, Maravai is investing in scaling up its nucleic acid manufacturing facilities so that it can serve the demand it expects in the future. The best thing about this stock is that it wins whenever one of its customers manages to commercialize a new cutting-edge medicine, so investors don't need to shoulder the risks of investing in drug development businesses to get some exposure to their upside for the long term.
