Technology stocks have led general market gains, with chip companies and software giants soaring amid excitement about the new bull market. This sort of environment favors growth stocks, so it's not surprising to see these sorts of players stand out. But if you're looking for growth, you can find it in another industry as well. I'm talking about biotech, an area bursting with innovation and potentially game-changing products.
Today many of these players are trading at reasonable levels, and thanks to solid pipelines and catalysts ahead, they offer great long-term prospects. So it's worth taking a closer look at some of these stocks, as they may represent exciting additions to your growth portfolio.
Wall Street is particularly optimistic about two of them, predicting triple-digit gains over the coming 12 months. Should they be on your buy list? Let's find out.
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1. Iovance Biotherapeutics
Iovance Biotherapeutics (IOVA 5.82%) recently won accelerated approval for its first product, one that harnesses the body's own ability to fight cancer. The technique involves reinvigorating a person's own tumor infiltrating lymphocytes (TILs) and then administering them back to the patient. These personalized TILs then go on to fight various cancer cells.
The new product, Amtagvi, is the first personalized T-cell therapy approved by the U.S. Food and Drug Administration for a solid-tumor cancer -- in this case, advanced melanoma, the deadliest skin cancer. This is a huge milestone for the company, and could represent a game-changer for patients, too. Iovance already has manufacturing capacity to treat several thousand patients annually but is working to increase that.
Amtagvi's approval means that Iovance should soon start reporting its first product revenue. That key step, along with $485 million in cash, should help the company fund other pipeline candidates.
And speaking of its pipeline, Iovance has two candidates in pivotal trials right now, for non-small cell lung cancer and cervical cancer. If all goes well, Iovance could become a multiproduct company within just a few years.
Iovance shares already have climbed more than 40% this year, but Wall Street analysts think this share performance story is just getting started. The average 12-month price forecast calls for a 120% increase from here. That could happen if Amtagvi sales truly take off, showing the potential of TIL technology. But even if Iovance stock doesn't soar that quickly, it still represents a solid long-term buy.
2. Novavax
Novavax (NVAX 4.67%) was once a top-performing vaccine stock, soaring more than 2,000% in 2020 on optimism about its investigational vaccine. That product made it to market -- but later than those of the company's rivals. And that spurred the stock's progressive decline. The shares now are down about 98% from their high back in 2021.
Investors are disappointed because Novavax missed out on the biggest vaccine revenue opportunity in the early stages of the pandemic -- and even in the most recent vaccine season, sales performance stagnated.
But there are reasons to be optimistic about a turnaround: Novavax is in the middle of a major cost-cutting effort, it's progressing with a combined coronavirus-influenza candidate in clinical trials, and it already knows how it will carve out more market share during the upcoming vaccination season. The company aims to bring its vaccine to market in early September, make it available in a convenient prefilled syringe format, and make the product broadly available in retail pharmacies where most vaccinations take place.
Most recently, activist investor Shah Capital, which owns 6.7% of Novavax, wrote a letter to the board and "strongly recommended" the appointment of two new members. It's too early to say whether potential Shah action will accelerate recovery at Novavax, but it's a situation to watch.
The average Wall Street estimate is that Novavax shares may soar 295% over the coming year. But will that happen? The shares have been volatile in the past, surging on a bit of good news and plummeting on less favorable news. So, if the company clearly starts heading in the right direction and makes progress, the stock could advance significantly. But right now, Novavax is best left to aggressive investors who don't mind risk.
