Even though broader equities have been highly volatile this year, it's still a good idea to invest in stocks for a straightforward reason. Holding shares of top companies for five years and beyond will usually allow anyone to earn superior returns. That's not a secret, but it's easy to forget when dealing with an uncertain near term. Even turbulent times don't change this fact.
For investors still seeking companiies with attractive long-term prospects, let's consider two in the biotech industry: CRISPR Therapeutics (CRSP 3.00%) and Regeneron Pharmaceuticals (REGN -0.59%). These drugmakers have faced issues recently, and their shares have declined significantly over the trailing-12-month period. However, there may be considerable upside here for patient investors.
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1. CRISPR Therapeutics
Skepticism about CRISPR Therapeutics' prospects may be warranted. Though it has a product on the market, a gene editing therapy called Casgevy it developed with Vertex Pharmaceuticals, it is not yet generating much revenue despite first being approved in late 2023.
Administering Casgevy to patients with sickle cell disease (SCD) or transfusion-dependent beta-thalassemia (TDT) -- two rare blood-related disorders -- is a complex and lengthy process. That's one of the issues with the company's gene-editing medicines.
CRISPR also remains unprofitable, a significant concern for many investors given the challenging and uncertain economy we face. Even so, the company might be worth serious consideration.
Though it is taking time to ramp up sales, Casgevy's potential is vast even without potential label expansions. There is also very little competition to speak of for the medicine. There were no one-time curative treatments for SCD and TDT before the advent of gene-editing therapies. Casgevy should eventually generate well over $1 billion in annual sales.
Furthermore, despite its disadvantages, the field of gene-editing has the potential to lead to major breakthroughs. Casgevy was an example. CRISPR's pipeline features other potential gems. CTX-112 is being tested in B-cell malignancies, CTX-131 in solid tumors, and CTX-211 in type 1 diabetes. Also, CTX-310 and CTX-320 target high levels of cholesterol.
Of these, CTX-112 earned the Regenerative Medicine Advanced Therapy designation from the U.S. Food and Drug Administration, which means it has demonstrated promising signs of efficacy for treatment of a serious condition for which there is an unmet clinical need.
CRISPR Therapeutics is somewhat on the riskier side, but the biotech company could soar in the next five years as it continues to make substantial clinical and regulatory progress. Shares have declined by 32% over the past year. Now may be a good time to initiate a small position on the dip.
2. Regeneron Pharmaceuticals
Regeneron is facing biosimilar competition for Eylea, one of its biggest growth drivers. In the first quarter, the company's revenue decreased by 4% year over year to $3 billion.
But there is some good news. Regeneron has long been planning for the Eylea patent cliff, and if not for the approval of a new high-dose (HD) formulation of the medicine in late 2023, it would be in a much worse position.
U.S. sales of Eylea HD increased by 54% year over year to $307 million in the period. This version of Eylea should continue to steal some patients away from the old formulation due to the former's better dosing schedule. Furthermore, Eylea HD could potentially earn label expansions, helping to mitigate Eylea-related losses.
Meanwhile, Regeneron's other main growth driver, eczema treatment Dupixent, is still performing well. Regeneron co-markets Dupixent with Sanofi. The medicine's total sales in the first quarter grew 19% year over year to $3.67 billion. Dupixent hasn't peaked yet. Recent label expansions, including in treating chronic obstructive pulmonary disease (COPD), which it earned in the U.S. in October, should allow it to continue growing its revenue for a while.
Elsewhere, Regeneron is developing newer medicines. It has been making strides in its oncology business lately. Within the next year, it could earn several brand-new approvals or label expansions in this field. These will also help it overcome the Eylea-related troubles.
Lastly, Regeneron has a robust share-buyback program and offers a dividend it initiated this year. The sell-off it experienced over the last 12 months might have been justified. The company tried to fend off Eylea biosimilars in court, but that didn't work, leading to a significant drop in its share price, which was justifiable. But at current levels -- down by 38% over the trailing-12-month period -- Regeneron's shares look attractive.
