Investing in stocks that aren't performing well can be a good move, but only if there are good reasons to think they will recover. That isn't the case for many companies that have lagged broader equities.
While it can be hard to separate the wheat from the chaff, let's consider three companies, all in the biotech industry, that were market losers last year but could recover given enough time: CRISPR Therapeutics (CRSP 4.48%), Amgen (AMGN 3.10%), and Regeneron (REGN 2.85%).
If you have $1,000 to spare (don't dip into money earmarked for important things or a rainy day!), here's why it might be worth investing in these drugmakers.
NASDAQ: CRSP
Key Data Points
1. CRISPR Therapeutics
CRISPR Therapeutics is the gene-editing specialist that created Casgevy, a treatment for sickle cell disease (SCD) and transfusion-dependent beta-thalassemia (TDT), which it developed with Vertex Pharmaceuticals. Though it has now been a commercial-stage company for more than a year, CRISPR isn't generating much revenue yet from its first approved product, since gene-editing therapies take time to administer.
The minimal revenue, combined with the fact that CRISPR Therapeutics is still unprofitable, makes the stock a bit risky. That's why investors are skeptical of the biotech's prospects. However, Casgevy's potential is enormous. There are few competing therapies for SCD or TDT, especially in the Middle East, a market that CRISPR Therapeutics and Vertex are targeting. The two partners estimate a patient population of at least 58,000 people in the region.
It might take some time, but Casgevy should make headway and help improve CRISPR Therapeutics' financial results. Furthermore, the mid-cap drugmaker has several other exciting candidates.
Last year, the U.S. Food and Drug Administration (FDA) granted the regenerative medicine advanced therapy (RMAT) designation to CRISPR's CTX112, an investigational treatment for certain B-cell malignancies. This designation is reserved for therapies that meet specific criteria, including targeting areas with high unmet needs and producing encouraging early data in clinical trials. It's no guarantee of approval, but it's a good start.
More importantly, CRISPR Therapeutics' gene-editing platform has the potential to unlock more medicines for other difficult-to-treat conditions, as it's already proven with Casgevy. The company might be down right now, but solid clinical and regulatory progress in the next few years, coupled with increasing revenue from Casgevy, could allow it to bounce back.
That's why it might be worth it to consider this stock at current levels.
NASDAQ: AMGN
Key Data Points
2. Amgen
Amgen's shares fell late last year after it released phase 2 data for its weight loss candidate, MariTide. Though the stock has rebounded somewhat, it's still down over the past year. MariTide's phase 2 results weren't bad, but evidently weren't good enough for investors already factoring the medicine's success into Amgen's share price.
Despite this setback, the biotech giant remains an excellent pick for long-term investors. Here are three reasons why. First, Amgen's lineup is deep and still features several medicines capable of driving top-line growth. These include the company's therapy for thyroid eye disease, Tepezza, which is still the only medicine for this condition approved by the FDA.
Second, the pipeline should produce more gems down the road. MariTide is not out of the running to be one of them, but the drugmaker also boasts over 50 ongoing clinical trials for brand-new medicines and others seeking label expansions. Third, Amgen is an excellent dividend stock. The company has increased its payouts by 201% in the past decade and currently offers a yield of about 3.3%.
Amgen has faced headwinds before, including patent cliffs and stiff competition in some of its markets. Given the strength of its underlying business and innovative capabilities, it's likely to overcome challenges over the long run. So investors, especially income-seeking ones, can safely add this stock to their portfolios.
NASDAQ: REGN
Key Data Points
3. Regeneron Pharmaceuticals
Regeneron has relied on two main products to drive revenue growth for years: eczema treatment Dupixent, and Eylea, a medicine for wet age-related macular degeneration. It shares the rights to the former with Sanofi and the latter with Bayer.
However, the company is facing challenges with Eylea. Though it earned approval for a high-dose (HD) formulation of this medicine in 2023, HD Eylea still competes fiercely with Roche Holding's Vabysmo. Moreover, the original formulation of the drug is facing biosimilar competition from Amgen's Pavblu, although the two companies are battling the legality of that in the courtroom. Eylea's medium-term prospects look somewhat uncertain, which is why Regeneron's shares have substantially lagged the market over the past six months.
The good news is that Dupixent is still going strong. Last year, it earned a key indication in chronic obstructive pulmonary disease (COPD) that should add several billion dollars in annual revenue. Regeneron's total revenue was $3.79 billion, climbing a solid 10% compared to the year-ago period.
HD Eylea has also been making progress. Patients will continue to switch to this version of the medicine because it offers the perks of fewer doses per year without compromising efficacy. In fact, combined U.S. sales of Eylea and Eylea HD grew by 2% year over year in the fourth quarter.
Elsewhere, Regeneron has been looking to ramp up its oncology business. Libtayo, a medicine for certain skin and lung cancers, is one of Regeneron's most important products not named Eylea or Dupixent. The pipeline also features well over a dozen clinical trials in this field.
Look for Regeneron to fill the gap that the old formulation of Eylea will leave through innovation and its existing medicines like Dupixent, HD Eylea, and others. The stock could still deliver strong returns to long-term investors.
How to spend $1,000 between these stocks
In my view, Amgen, with its shares trading for just under $308 each, is the most attractive of these three companies. Regeneron comes in a close second; its current stock price is about $717. With $1,000, you could get three shares of the former or one of the latter. Either might be the safer option, since these two are well-established biotechs that generate strong revenue and profits.
For investors with a little more appetite for risk, buying one share of Regeneron or three of Amgen would leave plenty of room to add in CRISPR Therapeutics, with a per-share price of about $43. That would be my choice: Despite the above-average risk, CRISPR Therapeutics has an innovative platform that could deliver monster returns to shareholders down the road.
