Investors looking for stocks that can make swift and dramatic gains need to take a look at these biopharmaceutical stocks. The average Wall Street analyst following them thinks they could climb by 70% and 72%, respectively, over the next 12 months.
When it comes to price targets, it's important to remember that the analysts who set them can simply readjust those targets downward if things don't work out as hoped. Before risking any of your own money on these stocks, let's take a quick look at what could drive them higher.
Image source: Getty Images.
1. CRISPR Therapeutics
Shares of CRISPR Therapeutics (CRSP 0.34%) are down by about 25% from the high point they reached this May. Analysts up and down Wall Street expect a big rebound soon. The consensus price target on the stock points to a 70% gain from the current price over the next 12 months.
It has been nearly seven years since CRISPR Therapeutics completed its initial public offering, and it still has no approved products to sell. This could change soon. The Food and Drug Administration (FDA) is currently reviewing its lead candidate, exa-cel -- a single-dose gene therapy designed to provide a functional cure for the blood-based disorders sickle cell disease and transfusion-dependent beta-thalassemia.
If all goes well, exa-cel could earn approval as a treatment option for patients with severe sickle cell disease on or before Dec. 8. The FDA expects to issue its decision regarding exa-cel and patients with transfusion-dependent beta-thalassemia on or before March 30, 2024.
A new bespoke batch of exa-cel has to be produced for each patient, which is inefficient, to say the least. Analysts are also interested in another candidate in CRISPR's pipeline -- an off-the-shelf type 1 diabetes treatment called VCTX211 that is currently in a phase 1/2 clinical trial.
2. Recursion Pharmaceuticals
Recursion Pharmaceuticals' (RXRX 3.57%) stock spiked in July after Nvidia announced that it would invest $50 million in the company. The chipmaker is more than a little interested in Recursion's efforts to apply artificial intelligence (AI) to the drug-discovery process.
Since its price peaked in July, Recursion stock has fallen by around 43%, but Wall Street analysts anticipate better times ahead. The consensus price target suggests it can climb by 72% over the next 12 months.
If you're a start-up biotech trying to raise capital, suggesting your company has found a better way to discover potential new drug candidates is a strategy that never seems to get old. Recursion is taking that technique a step further than usual by marketing its drug-discovery platform to companies that aren't satisfied with their own platforms. It earned just $11 million in revenue in the second quarter, which suggests that most of the industry is waiting for evidence Recursion's platform works.
It has been more than two years since Recursion raised $462 million in its initial public offering, but human proof-of-concept results for its most advanced candidate, REC-994 might still be more than a year away. REC-994 is an experimental treatment for an ultra-rare condition called cerebral cavernous malformation.
Recursion finished enrolling patients in a phase 2 trial of the treatment in June, and results are expected in the second half of next year. There's still a lot that can go wrong for the company and the stock, but there's also a chance that successful trial results for REC-994 could push it to new heights in 2024.
Good stocks to buy now?
While CRISPR Therapeutics is barrelling toward its first treatment approval, there are no guarantees that it and its collaboration partner, Vertex Pharmaceuticals will realize significant revenues from exa-cel. Healthcare companies generally need to charge high up-front prices for once-and-done treatments to recoup their development costs and book profits. But insurers and government payers usually respond to those high up-front costs by restricting access to the treatments. If your tolerance for risk isn't high, it might be best to play wait-and-see with this stock.
As you can imagine, Recursion Pharmaceuticals' attempts to market a discovery platform without proof-of-concept results have been an uphill climb. In part as a result, the early-stage drugmaker lost $142 million in the first half of the year. Even if you have a high tolerance for risk, it's probably best to wait for some clinical evidence that Recursion's AI-driven approach actually works before taking a chance on its stock.
