If you're looking for stocks that can deliver better-than-average returns in the long run, you might want to consider these two biotechs: Exact Sciences (EXAS 0.10%) and Vertex Pharmaceuticals (VRTX -0.06%). Both companies have innovative products that address sizable markets, along with robust pipelines that offer shareholders exceptional deep value. Here's why they could make you richer in 2023 and beyond.
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Exact Sciences: A leader in cancer screening and diagnostics
Exact Sciences is the company behind Cologuard, a noninvasive test that can detect colorectal cancer and a fair amount of pre-cancerous polyps from a stool sample. Colorectal cancer is the second-leading cause of cancer deaths in the U.S., but it can be prevented or cured if detected early.
Cologuard is the only test of its kind approved by the Food and Drug Administration (FDA), and it has steadily gained in popularity as an alternative to colonoscopies since its commercial launch in 2014. As a result, Exact's sales have risen at a blistering pace over the past nine years.
EXAS revenue (annual) data by YCharts.
Cologuard is not the only growth driver for Exact. The cancer diagnostics company has a portfolio of other cancer screening and diagnostic tests, such as Oncotype DX, which can predict the recurrence risk and treatment benefit for breast cancer.
And Exact is developing a blood-based early detection test for multiple cancers that could prove to be a game-changer for patients and investors alike.
With a large and growing addressable market, a diversified product pipeline, and only a small handful of viable competitors, Exact has the potential to become a dominant player in cancer screening and diagnostics. That's an intriguing value proposition, as the march toward personalized medicine is widely expected to center around novel diagnostic tools like Cologuard, as well as blood-based biopsies like its experimental cancer test.
In short, this mid-cap biotech stock could have a lot more room to run in the years ahead.
Vertex Pharmaceuticals: A pioneer in cystic fibrosis treatment
Vertex Pharmaceuticals is the undisputed leader in the treatment of cystic fibrosis (CF), a rare genetic disease that causes thick mucus to build up in the lungs and other organs, leading to chronic infections, respiratory failure, and reduced life expectancy.
Vertex has four approved drugs for CF: Kalydeco, Orkambi, Symdeko, and Trikafta. Collectively, it is currently treating two-thirds of CF patients in North America, Europe, and Australia with these therapies.
Vertex has been enjoying strong sales growth from its CF franchise, especially from Trikafta, which was approved by the FDA in 2019 and by the European Commission in 2020. Trikafta is a triple-combination therapy that can treat CF patients who have at least one copy of the most common genetic mutation. In the second quarter of 2023, Vertex reported a 14% year-over-year increase in revenue to $2.4 billion, driven by an 18.3% increase in Trikafta sales to $2.24 billion for the three-month period.
But the company is not resting on its laurels. It is also developing groundbreaking new therapies for CF and other diseases, such as alpha-1 antitrypsin deficiency (a cause of lung and liver damage), diabetes, sickle cell disease (SCD), beta-thalassemia (BT), and kidney ailments.
These pipeline efforts could lead to multiple blockbuster therapies and drugs. For instance, Vertex and partner CRISPR Therapeutics are currently waiting to hear back from regulators about their novel gene-edited therapy, exa-cel, for BT and SCD. If approved, Wall Street analysts expect exa-cel to achieve blockbuster status by the end of the decade.
With a dominant position in CF treatment, a robust pipeline of new drugs and therapies, and a solid balance sheet with $12.6 billion in cash and equivalents as of June 30, Vertex is well positioned to continue delivering innovative treatments for patients with serious diseases and to reward its investors with long-term growth.
