What's small today could become huge in the future. That's especially true in the high-stakes world of biopharmaceutical companies. Three Fool.com contributors identified what they believe could be monster stocks in the making. Here's why these chose Axsome Therapeutics (AXSM 0.27%), CRISPR Therapeutics (CRSP 0.34%), and Intellia Therapeutics (NTLA 3.70%).
Multiple arrows in its quiver
Keith Speights (Axsome Therapeutics): Right now, Axsome Therapeutics' market capitalization stands below $4 billion. But the company has multiple arrows in its quiver. I expect that Axsome will grow much larger if only a few of them hit their mark.
Axsome already has two approved products. Auvelity won U.S. Food and Drug Administration (FDA) approval in August 2022 as a treatment for major depressive disorder (MDD). Axsome also acquired sleep-disorder drug Sunosi from Jazz Pharmaceuticals last year.
GlobalData projects that Auvelity could generate peak annual sales of $1.7 billion. Sunosi could add up to $500 million in peak sales.
Axsome hopes to expand Auvelity (AXS-05) into new indications beyond MDD. It's evaluating the drug in a late-stage clinical study for treating Alzheimer's disease agitation and in a phase 2 study for smoking cessation.
The company expects to file for FDA approval of AXS-14 in treating fibromyalgia this year. It also intends to resubmit for FDA approval of AXS-07 in treating migraine in the second half of 2023. Both drugs hold the potential to become blockbusters.
By some estimates, Axsome's total market opportunity could be in the ballpark of $11.5 billion. Axsome doesn't need all of its programs to be successful for its stock to move significantly higher.
Innovation pays off
Prosper Junior Bakiny (CRISPR Therapeutics): Some of the most prominent companies on the market were once small- or mid-cap corporations, but many relatively small companies never become hugely successful. Though identifying the next big thing isn't easy, investors should take a hard look at CRISPR Therapeutics.
The mid-cap biotech (currently $4.5 billion in size) is seeking to build a culture of innovation where it goes after difficult-to-treat illnesses with its gene-editing technology. Many are trying this approach with mixed success.
However, CRISPR is on the verge of its first major approval with exa-cel, which it developed in collaboration with Vertex Pharmaceuticals. Exa-cel is a potential gene-editing medicine for beta-thalassemia and sickle cell disease. It could earn the green light in the U.S. and Europe by early next year and eventually go on to generate billions in sales
That could only be the beginning for CRISPR Therapeutics. The company boasts over a dozen other programs although most are very early in their developmental stages.
CRISPR is targeting type 1 diabetes, several forms of cancer, hemophilia, and more. The biotech should succeed in making steady progress, especially once revenue from exa-cel starts coming in. That will help it solve a problem smaller drugmakers often run into: funding their pipeline programs without resorting to dilutive financing methods.
And in the next five years, CRISPR Therapeutics could register significant clinical and regulatory wins, thereby setting a solid foundation for long-term success. Investors should strongly consider buying shares of the company now before all that happens.
A gene-editing company with tons of upside
David Jagielski (Intellia Therapeutics): Intellia Therapeutics is another gene-editing stock with a lot of potential. At a market cap of $4 billion, there's plenty of room for the stock to rise in value should it obtain approval for one of its promising gene-editing therapies.
This is a clinical-stage company with no approved products, so there is risk with Intellia. But Intellia has two programs in early-stage trials that could make this a monster stock in the future. NTLA-2001 is an in vivo gene-editing treatment for transthyretin amyloidosis, a condition that involves the buildup of faulty proteins that can potentially be life threatening. NTLA-2001 has the potential to reverse the disease's progression.
Another early-stage program, NTLA-2002, is a gene-editing therapy that has the potential to prevent future episodes of hereditary angioedema, which involves severe swelling. The therapy can be a game changer for people with the condition as there currently is no cure, and treatment involves lifelong therapies. Extended phase 1 data shows that NTLA-2002 has the potential to be a functional cure for the disease.
As of the end of March, the company had $1.2 billion in cash and marketable securities, providing Intellia with some strong resources to continue working on its clinical trials. Over the trailing 12 months, it has burned through $333 million from its day-to-day operations, which suggests the level of cash and investments on its books right now should provide some decent stability for the businesses for the foreseeable future.
Gene-editing therapies could present big growth opportunities in healthcare in the future. Investing in an up-and-coming company such as Intellia with a couple of promising treatments in its pipeline can be a great way for investors to potentially earn a great return in the future -- provided that they're willing to take on some risk.
