Despite a possibe economic recession, the ongoing turmoil among regional banks, rumblings of a potential crisis in commercial real estate, stubbornly high inflation, ever-rising interest rates, and a fair amount of geopolitical tumult, growth stocks have been on the upswing in 2023. The tech-heavy Nasdaq Composite, for example, has clocked a remarkable 17.4% gain so far this year. The core reason is that bargain hunters have been snapping up growth stocks of late after their dramatic decline in value in 2022. Underscoring this point, the Nasdaq Composite lost a staggering 33.1% of its value last year.
Not all beaten-down growth stocks are table-pounding buys, however. The aforementioned macro-headwinds are more than likely to eventually tamp down this bargain buying bonanza among growth equities. As a result, investors will definitely want to take a measured approach when it comes to adding growth stocks to their portfolio in the back half of 2023. Fortunately, there are a handful of incredible growth stocks still worth buying right now.
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Amylyx Pharmaceuticals (AMLX -7.14%) and Sarepta Therapeutics (SRPT -0.36%) are prime examples. Both biopharmaceuticals companies recently announced major news that ought to propel their shares higher for the remainder of the year. Here's what investors need to know about these supercharged growth plays.
Amylx Pharmaceuticals
Amylyx stock is a potential hidden gem. The company's growth story centers on its Food and Drug Administration (FDA)-approved amyotrophic lateral sclerosis (ALS) medication, Relyvrio, known as Albrioza in Canada. Last week, Relyvrio sales came in at $71.4 million for the first-quarter of 2023. What's impressive about this sales figure is that it is nearly 20% higher than Wall Street's consensus estimate for the three-month period. The key takeaway is that Relyvrio is rapidly being adopted by ALS prescribers in the U.S., despite being launched by a relative newcomer to the world of commercial-stage biotechs.
Amylyx is angling to get its groundbreaking ALS medication approved in the EU later this year. If approved, Relyvrio could achieve blockbuster status (greater than $1 billion in annual sales) by 2025. That said, EU regulators might delay their decision until Relyvrio's ongoing phase 3 trial reads out in mid-2024. This forthcoming pivotal data readout, in fact, is probably the only reason Amylyx's shares are currently trading at well under 2 times Relyvrio's peak sales forecast. Investors, in effect, seem to be concerned that the drug's clinical profile might underwhelm in this large, global phase 3 trial.
What's the bottom line? Although ALS has historically been an enormously tough indication to drug, U.S. prescribers appear to be fairly comfortable with Relyvrio, based on its lightning-fast uptake since being approved in September. Now, this initial spike in prescriptions doesn't mean the drug is destined to ace its all-important phase 3 trial. But Relyvrio's faster-than-expected adoption rate does imply that prescribers are seeing a worthwhile benefit from the drug's use in this hard-to-treat patient population. As such, Amylyx stock appears to sport an overall favorable risk-to-reward ratio right now.
Sarepta Therapeutics
Sarepta Therapeutics stock could be on the verge of a major growth spurt. Last Friday, the rare disease specialist notched an 8-to-6 vote from a panel of experts in support of approving the Duchenne muscular dystrophy (DMD) gene therapy SRP-9001 on an accelerated basis for the treatment of ambulatory patients with a confirmed mutation in the DMD gene. The FDA's regulatory decision is due out by May 29. If approved, Wall Street analysts think SRP-9001 could hit nearly $2 billion in sales in 2024, and over $4 billion in annual sales before the end of the decade.
What's the big deal? Sarepta has built a virtual monopoly in DMD over the past seven years. An approval for SRP-9001 would thus cement the company's overwhelmingly dominant position in this high-value market. That's the kind of rock-solid fundamental story that attracts elite institutional investors, along with potential acquirers.
All that being said, there is the risk that the FDA simply won't approve SRP-9001 on an accelerated basis. Regulatory decisions, after all, are never a straightforward process, and SRP-9001 didn't exactly score a unanimous vote in its adcom.
Overall, though, this mid-cap biotech growth stock does have a decent chance of going on a healthy run over the next several months, based on the favorable odds of an approval for SRP-9001 later this month. Hence, it might be worth taking a flier on this high-risk, high-reward growth stock.
