Among the growth-heavy stocks of the Nasdaq Composite, a few companies stand out as being especially promising. At the moment, two enterprising biopharma players -- Vertex Pharmaceuticals (VRTX -0.06%) and CRISPR Therapeutics (CRSP 0.34%) -- are particularly appealing. That's thanks to their combination of relative security and near-term catalysts.
What's more, their fates are intertwined, so an investment in one could benefit from the positive developments of the other. Here's why it's worth buying at least one of the pair.
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1. Vertex Pharmaceuticals
Vertex is likely on the verge of realizing its strategic plan to diversify its portfolio of medicines.
If you're not familiar with Vertex, its claim to fame over the last decade has been its cystic fibrosis (CF) therapies. Sales of its four medicines for CF led to net income of more than $3.2 billion in 2022. Given that CF is a rare genetic pulmonary disease that only affects 88,000 people in the Western world, and that the company already treats all but around 25,000 of them, its mastery of the market is hard to overstate.
It's reasonable to expect its CF business to continue yielding significant income for the foreseeable future as the people living with CF will continue to need its medicines. And soon, if all goes well, it's set to advance into two markets outside CF for the first time, which should pave the way for further top- and bottom-line growth.
In collaboration with CRISPR, Vertex announced on April 3 that it had submitted its regulatory approval packet to the Food and Drug Administration (FDA) for its gene therapy, called exa-cel, which is designed to treat a pair of rare genetic diseases called beta thalassemia and sickle cell disease (SCD). If regulators find the application to meets their standards, they could approve the drug in as few as eight months.
The market for SCD medicines is expected to reach $8.7 billion by 2029, according to Fortune Business Insights, and the market for beta thalassemia therapies could be as large as $823 million by 2030 per a report by Spherical Insights. Capturing a share of both of those markets with exa-cel would position Vertex to potentially grow its 2022 revenue of $8.9 billion significantly more by the end of the decade. And that's before taking the prospects of sales from any of its other late-stage pipeline programs into account.
Of course, there's always the chance of failure in securing approvals and running clinical trials. But given Vertex's dominance in the CF market, this de-risks the potential consequences of falling short by providing a strong base of revenue -- making this a good time to buy the stock now.
2. CRISPR Therapeutics
CRISPR Therapeutics stands to benefit even more than Vertex does from getting exa-cel approved, assuming that happens.
Unlike Vertex, CRISPR doesn't have any products on the market, which means that exa-cel will be its first chance to generate revenue. Wall Street analysts are guesstimating that if exa-cel gets the go-ahead from the FDA, the company could bring in $297 million in 2024. That would be an enormous rate of revenue growth, to say the least. More importantly, it should position the biotech to self-fund its further pipeline development without the help of debt or collaborators like Vertex.
On that note, CRISPR has a trio of clinical-stage oncology programs that could ultimately treat lymphoma, among other cancers. It's also working on a pair of clinical-stage gene therapies to treat diabetes. There's no guarantee it'll get any of those programs out the door, even if it wins with exa-cel. The point for investors to appreciate is that in early 2024 it could become self-sustaining, which will dramatically increase its stock's price.
Typically, biotech stocks like CRISPR would be quite risky even when they're likely to commercialize a new medicine. But with more than $1.8 billion in cash and equivalents on hand, and 2022 operating expenses of only $563 million, even a setback with exa-cel shouldn't bring CRISPR down by much. And if it succeeds, it'll be adding to its cash hoard -- giving it greater room to maneuver and potentially even acquire promising smaller competitors. And that's just one more reason it's an outstanding buy.
