No person knows for sure what the future will hold for stocks in the new year. However, it can be fun to attempt to predict what might happen.
Three Fool.com contributors have done just that. Here's why they think that Axsome Therapeutics (AXSM 0.27%), Novo Nordisk (NVO 0.84%), and Vertex Pharmaceuticals (VRTX -0.06%) will soar in 2024.
A potential breakout year for this biotech
Prosper Junior Bakiny (Axsome Therapeutics): The past two years have been transformative for Axsome Therapeutics. The company finally became a commercial-stage biotech by marketing two therapies, from which it is generating some sales. That was an important milestone, but Axsome's revenue remains modest while it is still chronically unprofitable.
The biotech failed to keep up with the broader market in 2023, but 2024 could be very different. Axsome's late-stage pipeline includes several programs that could land brand-new approvals or, at the very least, important clinical trial results. Let's consider two examples.
First, there is the company's approved depression medicine, Auvelity. It is currently being investigated as a potential therapy for Alzheimer's disease (AD) agitation (or aggressive and restless symptoms). The biotech should complete a second phase 3 study for Auvelity along these lines in the first half of next year. Note: Auvelity did ace the first clinical trial in treating AD agitation, so things are looking pretty good.
Then there is AXS-07, a potential migraine therapy. This medicine failed to earn approval once -- but entirely because of manufacturing issues. Axsome is planning to resubmit an application to regulatory authorities next year. With some luck, an approval could come down too.
Several more clinical and regulatory catalysts could send Axsome's shares soaring next year, and by the end of 2024, the company's lineup could look different. That's why the company could be in for a great 12 months.
More importantly, Axsome Therapeutics' pipeline should allow it to set a strong foundation for the medium term.
This is a relatively cheap weight-loss stock
David Jagielski (Novo Nordisk): This year has been a great one for diabetes and weight-loss company Novo Nordisk as its shares are up more than 45%. But even despite achieving such impressive gains, there can still be much more upside for the stock next year and beyond.
The company has one of the best weight-loss drugs on the market right now in Wegovy. While the public may be more familiar with Ozempic, the diabetes drug consumers have been using off-label to lose weight, it's Wegovy that could ultimately end up being Novo Nordisk's top-selling product.
A lot of the hype these days appears to be behind rival Eli Lilly, which looks to have the more promising weight-loss treatment in Zepbound -- it has helped people achieve greater weight loss in clinical trials. But the reality is that within a promising antiobesity drug market, which can be worth $100 billion (according to estimates from Goldman Sachs), there's plenty of room for more than one weight-loss treatment. And investors are paying a steep premium for Eli Lilly's stock -- 105 times earnings, versus a price-to-earnings (P/E) ratio of 42 for Novo Nordisk.
While a P/E multiple of 42 isn't normally cheap, it can be in the context of the potential growth ahead for the business. Over the past three quarters, Wegovy's revenue has soared 481%. Novo Nordisk is still in the early stages of rolling the product out internationally.
What could work to Novo Nordisk's advantage is its focus on diabetes and weight loss, two areas where there is an ongoing need for treatment now and for years to come. By not diversifying into other areas, it can focus on two high-growth opportunities, which can lead to more focused results and better returns for investors.
Novo Nordisk looks like a solid stock to buy for next year and beyond, as it still has plenty of room to rise further in value.
Plenty of fireworks on the way from this big biotech
Keith Speights (Vertex Pharmaceuticals): Few stocks perform well during both up and down markets; Vertex is one of them. While the S&P 500 plunged more than 19% in 2022, Vertex's shares jumped nearly 32%. The stock also soared more than 40% in 2023, with the S&P 500 vaulting close to 25% higher. I think that there will be plenty of more fireworks on the way from this big biotech.
Vertex is likely to soon bolster its already lucrative cystic fibrosis (CF) franchise. The company plans to announce results from late-stage clinical studies of its vanzacaftor triple-drug combo in early 2024. I predict positive results followed by multiple regulatory approvals. I also look for the vanzacaftor triple-drug combo to become Vertex's most profitable CF therapy of all because of its lower royalty burden.
The company also expects to soon report results from three late-stage studies of VX-548 in treating acute pain. This non-opioid drug could be another huge winner for Vertex due to the significant unmet need, complicated by the side effects and addictive potential of opioids.
We can't leave out Casgevy (exa-cel). Vertex recently won U.S. approval for the gene-editing therapy in treating sickle cell disease. It awaits another approval decision in treating transfusion-dependent beta-thalassemia. Casgevy's launch will likely be a slow one, but the therapy has excellent commercial prospects as a one-time functional cure for these two rare blood disorders.
Finally, Vertex plans to advance inaxaplin into phase 3 testing in the first quarter of 2024. The experimental drug targets APOL1-mediated kidney disease, an indication that affects more patients than CF.
All of these should provide nice catalysts for Vertex in 2024. I won't go out on a limb and predict another gain of 40% or more, but I wouldn't rule it out, either.
