Last year was no small challenge for many investors, but the tides appear to have shifted for the better so far in 2023. Some companies have even performed well throughout all these ups and downs.
Consider biotech giants Vertex Pharmaceuticals (VRTX -0.06%) and Eli Lilly (LLY 1.19%). It is no wonder these corporations have been performing so well; both have excellent long-term prospects that make their shares worth buying this month (or almost any month) and holding onto for a long time.
Let's see why investors might consider both stocks for their portfolios now.
1. Vertex Pharmaceuticals
Vertex Pharmaceuticals is best known for its dominance of the market for therapies that treat the underlying causes of cystic fibrosis (CF). These medicines continue to drive solid financial results for the company.
In the second quarter, the company's top line of $2.49 billion jumped by 14% year over year. Its net income of $915.7 million rose 13% from what it was in the year-ago period. That's been the trend with Vertex Pharmaceuticals over the past decade.
VRTX Revenue (Quarterly) data by YCharts.
But this isn't just about the past, as the company's excellent future depends partly on its stellar pipeline. Let's go through some of the highlights.
Although it earned approval for its first CF medicine more than 10 years ago, the drugmaker is still looking to innovate. It is currently working on a combination CF medicine that could confer greater clinical benefits to patients while also being taken just once daily. Vertex's current crown jewel, Trikafta, is typically taken twice daily.
The biotech is also seeking to develop ways to treat the roughly 10% of CF patients who aren't eligible for any of its existing drugs. Given Vertex's track record in this field, it's safe to bet on the company to develop newer and better CF therapies successfully. But the company is also branching out into other areas. It is currently testing VX-548, a potential pain medicine, in a phase 3 study.
It boasts several other promising candidates in earlier stages of development. But Vertex's most promising program is also its most advanced one. It is called exa-cel, a potential gene-editing treatment for transfusion-dependent beta-thalassemia (TDT) and sickle cell disease (SCD). Patients who have one of these rare blood-related illnesses have to deal with massive burdens. Those with TDT typically take blood transfusions regularly, a costly and inconvenient process.
Patients with SCD experience vaso-occlusive crises (VOCs), painful side effects of the disease. In clinical trials, exa-cel eliminated the need for blood transfusions in most TDT patients treated while substantially reducing their frequency in the remaining ones. It also stopped VOCs in most SCD patients. Vertex and its partner on these programs, CRISPR Therapeutics, have already completed regulatory submissions for exa-cel in the U.S. and Europe.
Approvals should start rolling in by the end of the year through early 2024. Exa-cel boasts blockbuster potential and should nicely supplement Vertex's portfolio of CF medicines. Further, the company should earn other key non-CF approvals in the next half-decade. That should allow Vertex Pharmaceuticals to continue outperforming the market for a long time to come.
2. Eli Lilly
Over the past year, Eli Lilly has shown again why it has been a leading biotech company in the market for diabetes drugs for a while. In May of 2023, it earned approval for Mounjaro, an innovative type 2 diabetes treatment. Mounjaro promises to be a highly lucrative therapy for Eli Lilly, provided it can continue earning new indications. And so far, things are looking good. On July 27, Eli Lilly reported that Mounjaro had knocked it out of the part in two weight-loss late-stage studies.
That comes about a month after another successful weight-loss phase 3 study announcement. Mounjaro seems to be racing toward approval as a weight-loss medicine, an area where drug sales could balloon in the coming years, according to some estimates. Eli Lilly should be one of the major beneficiaries. Still in the diabetes care area, Eli Lilly is developing a once-weekly insulin product called insulin efsitora alfa, which would be a breakthrough for diabetes patients who currently take insulin daily.
But Eli Lilly isn't just a diabetes company. It boasts lucrative and exciting drugs and programs across oncology, immunology, neurology, and more. In oncology, Eli Lilly's Verzenio is one of its best-selling and fastest-growing products. And in January, the company earned approval for Jaypirca, a treatment for mantle cell lymphoma. In immunology, Eli Lilly markets the blockbuster immunosuppressant Taltz while it is still seeking to earn approval for mirikizumab, a potential therapy for ulcerative colitis.
Mirikizumab failed to be given the green light earlier this year, but that was because of manufacturing issues Eli Lilly should be able to solve to eventually earn the thumbs up. Last but not least, Eli Lilly recently reported positive phase 3 results from its potential Alzheimer's disease treatment, donanemab. It should be yet another massive addition to the company's lineup.
Eli Lilly's financial results of late haven't been the best, but that's because its coronavirus portfolio is seeing dropping sales, a predictable outcome. In the first quarter, the company's revenue declined by 11% year over year to about $7 billion. Its revenue, excluding sales of COVID-19 products, actually increased by 10% year over year. Expect the company's growth momentum to pick up once the pandemic effects on its financial results fade.
The drugmaker has generally recorded growing revenue, profits, and dividends over the years:
LLY Revenue (Quarterly) data by YCharts.
Eli Lilly's excellent portfolio and pipeline promise a fantastic future for the company and its shareholders.
