Last year, the Nasdaq Composite fell into a bear market and lagged behind the other two major U.S. market indexes. But things could be radically different in 2023. Downturns rarely happen two years in a row, and the tech-heavy index has impressed so far this year.
So there are good reasons to think there could be a bull market on the way for the Nasdaq, although it is not a certainty. Even if it's not this year, a bull run will eventually come for the index. Let's consider two revolutionary companies to invest in before that happens: Moderna (MRNA 0.89%) and Exact Sciences (EXAS -0.46%).
1. Moderna
Moderna became widely known during the pandemic for being one of the leaders in the coronavirus vaccine market. But what makes this biotech revolutionary? It is the company's mRNA platform. mRNA vaccines have been studied for years, but until late 2021, there had not been a single one approved by the U.S. Food and Drug Administration (FDA).
Moderna's vaccine earned full approval in January 2022 and was one of the first of the mRNA variety to get that nod from regulators in the U.S. Moderna chose to focus on this method because of its advantages. Traditionally, vaccines work by inserting a harmless virus (or a piece thereof) into the immune system so that it can learn to recognize it and fight it off once it encounters the real thing.
But this process, which requires scientists to grow large amounts of the virus before inactivating it, is time-consuming. mRNA vaccines skip this part and instead use a genetic code to teach the immune system how to fight off pathogens. They are quicker to develop, produce, and modify. For a company like Moderna, this could have meaningful consequences.
It would allow it to bring its products to market faster than many competitors in the biotech industry, which translates to higher revenue.
Moderna has had other major successes in the clinic lately, too.
In January, the company reported that its respiratory syncytial virus vaccine candidate had produced positive results in a phase 3 clinical trial. This product could earn approval by this time next year. In December, Moderna's personalized cancer vaccine, in combination with Merck's cancer drug Keytruda, reduced the risk of recurrence or death in melanoma patients compared to only Keytruda in a phase 2 study.
Moderna's pipeline features more than a dozen other non-COVID candidates. The company generated $19.3 billion in revenue and $8.4 billion in net income in 2022, along with a cash and equivalents balance of $18.2 billion as of the end of the year. That gives the company plenty of funds to advance its key pipeline programs. And the coronavirus vaccine market should remain somewhat lucrative, too.
Moderna has outperformed the Nasdaq over the past 12 months. Expect the company to do the same as it earns key approvals for important candidates and expands its lineup.
2. Exact Sciences
Exact Sciences' mission is to help the world make meaningful progress in the fight against cancer. The company has developed several products to that effect. Undoubtedly, the most popular is Cologuard, a non-invasive stool-based test for colorectal cancer and the first of its kind to be approved by the FDA. Exact Sciences has been aggressively marketing Cologuard with good reason.
Colorectal cancer is highly treatable when caught early, which is why it is recommended that those aged 45 and up who are at average risk of developing it undergo regular screening. Colorectal cancer remains the third-leading cause of death because most cases are caught relatively late when the five-year survival rate is low. Cologuard is helping change that. More than 10 million patients (and growing) have been screened with it.
But Exact Sciences also has other products. It recently launched OncoExTra, a test that helps provide the molecular profile of a patient's cancer to help physicians determine the best treatment options. Exact Sciences' Oncotype Dx helps predict the risk of recurrence and the potential benefits of chemotherapy for patients with breast cancer. The benefits of these products are obvious.
Exact Sciences is developing others, including a potential multi-cancer screening test and a 2.0 version of Cologuard. As the company argues, cancer is the leading cause of death for people under 85, so there is a dire need for a range of products to help doctors detect and treat this illness. Exact Sciences will continue developing innovative diagnostic tests just as it has in the past. Of note, the company isn't profitable yet.
In 2022, Exact Sciences' revenue of $2.1 billion increased by about 18% year over year. The company's net loss of $623.5 million was slightly worse than the $595.6 million reported in 2021. But with 60 million eligible patients for Cologuard remaining unscreened and many more across the range of the company's other products, there is a long runway for growth for Exact Sciences.
The company is well positioned to ride the next bull market.
