The biotech industry can be risky and volatile, but there are advantages to investing in companies in this field. Many of them develop lifesaving drugs, the kinds we'll need until we can completely eradicate diseases, which doesn't seem likely to happen in the next decade.
Of course, investing in just any biotech stock won't do. It's important to decide whether a company has the innovative capabilities to stay relevant and continuously deliver strong returns. Let's consider three biotech stocks that have what it takes: CRISPR Therapeutics (CRSP 0.34%), Axsome Therapeutics (AXSM 0.27%), and Amgen (AMGN 0.22%).
1. CRISPR Therapeutics
CRISPR Therapeutics is on a roll. The company recently earned approval for its first product, Casgevy, a gene-editing therapy for a couple of rare blood diseases. Developed in collaboration with biotech giant Vertex Pharmaceuticals, Casgevy should have massive commercial success. CRISPR and Vertex estimate a total patient population of at least 35,000, and the treatment costs $2.2 million per patient in the U.S. Even grabbing just 30% of that target market would mean billions of dollars in revenue. There aren't many competitors to contend with, either, so things are looking good for CRISPR and Vertex.
CRISPR Therapeutics gained substantial prominence thanks to this regulatory nod, because the biotech focuses on developing CRISPR-based therapies. Despite landing its creators a Nobel prize in chemistry, this gene-editing technique had never before produced an approved medicine. Casgevy changed that, giving more credence to CRISPR Therapeutics' entire platform.
In the next few years, investors should expect significant clinical progress from the biotech's several pipeline candidates, helping to expand its future lineup. CRISPR Therapeutics has delivered solid returns since its 2016 initial public offering, and the biotech isn't about to stop now.
2. Axsome Therapeutics
Axsome Therapeutics has experienced significant clinical and regulatory progress over the past three years, culminating in the approval of Auvelity, a treatment for depression, in 2022. Axsome's lineup also features narcolepsy therapy Sunosi, acquired in 2022 from Jazz Pharmaceuticals.
These two medicines are generating growing sales. Last year, Axsome Therapeutics' revenue came in at about $270 million, much better than the roughly $50 million reported in 2022.
Meanwhile, Auvelity is being tested in Alzheimer's disease agitation (aggressive and restless symptoms) and should soon start a pivotal study in smoking cessation. Sunosi will soon kick off late-stage studies in depression, binge eating disorder, and shift work sleep disorder (disruptions in sleep rhythms caused by unconventional working hours); it has an ongoing late-stage study targeting ADHD.
And there's more good news: Axsome has a rich late-stage pipeline that should yield more clinical and regulatory wins in the next few years. It's running a phase 3 study for AXS-12 targeting narcolepsy, while it plans to submit regulatory applications for AXS-07 for migraine and AXS-14 for fibromyalgia (a chronic disease that causes pain and trouble sleeping).
The company's lineup should be transformed in the next three years, setting up a solid foundation for consistent revenue growth and stock-market performance through 2034.
3. Amgen
Amgen is a well-established biotech company with a long list of marketed products. However, the drugmaker has been dealing with slow or nonexistent revenue growth due to competition.
The biotech has a plan to turn things around. It's developing new therapies, and this includes the highly promising weight-loss area. Sales of anti-obesity drugs are projected to skyrocket in the coming years, and Amgen hopes to capture a piece of this market. Amgen also acquired Horizon Therapeutics for $28 billion last year, a move that significantly expanded its lineup and pipeline.
Furthermore, the drugmaker has been making a push in the biosimilars market, another promising industry considering that most people think prescription drugs are too expensive. Amgen is working on biosimilar versions of several blockbusters, from Regeneron Pharmaceuticals' Eylea, a treatment for wet age-related macular degeneration (an eye disease), to Bristol Myers Squibb's cancer drug Opdivo.
Amgen has a deep pipeline and a long history of developing newer and better medicines, so it should do just fine. Then there's the fact that it boasts a solid dividend program. Whether it's to boost returns over the next decade or for passive income, Amgen is an excellent pick for income-seeking investors.
