Investors seeking stocks with explosive growth potential should consider the biotech industry. Drugmakers can experience significant gains, sometimes in a short period, with strong clinical or regulatory progress. The flip side is that many of these companies are risky.
But what if you could buy shares of biotechs Wall Street thinks have significant upside potential? That's the case with CRISPR Therapeutics (CRSP 2.23%) and Iovance Biotherapeutics (IOVA +0.00%). Based on their respective price targets of $81 and $8 (according to Yahoo! Finance), CRISPR Therapeutics could potentially soar by 52% and Iovance Biotherapeutics by 282%. Let's look closer at both businesses before jumping on board.
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1. CRISPR Therapeutics
As its name suggests, CRISPR Therapeutics focuses on developing gene-editing medicines using the Nobel Prize-winning CRISPR technique. The biotech company proved that its platform could lead to regulatory approvals. It earned the nod for Casgevy, a medicine for a pair of blood-related disorders it developed with Vertex Pharmaceuticals, two years ago. Although Casgevy doesn't generate much revenue yet, there could be important clinical catalysts ahead for the stock.
One of CRISPR Therapeutics' most promising candidates is CTX310. This therapy may help lower LDL cholesterol (the "bad" kind) and triglycerides (TG), both of which, at high levels, are associated with a range of cardiovascular problems. There are plenty of lifestyle changes people can make to control LDL or TG. There are even approved prescription medications along those lines.
They all have drawbacks, though: These methods require time and consistency to be effective -- taking pills every day, watching what you eat, and so on. For certain patients at high risk, having access to a one-time infusion that could help achieve the same goal would be ideal.
NASDAQ: CRSP
Key Data Points
That's what CTX310 aims to be, and it's already making tremendous progress. In early-stage studies, it has shown signs of reducing LDL and TG in patients. But what are the commercial opportunities here? CRISPR Therapeutics estimates that in the U.S. alone, there are 40 million patients with elevated levels of either. Even targeting a small fraction -- say 1% -- of this market could be an incredible opportunity for the company.
But would CTX310 face the same commercial issues as Casgevy? Probably not. The latter is an ex vivo gene-editing therapy; that means administering it involves a complex cell-collection process, manufacturing the medicine for each patient, and infusing it after chemotherapy. CTX310 is an in vivo medicine that bypasses most of that.
Progress with this program would jolt CRISPR Therapeutics' shares. Additionally, it has several other exciting candidates in the pipeline.
2. Iovance Biotherapeutics
Iovance Biotherapeutics already has an approved therapy, Amtagvi, which treats advanced melanoma (a dangerous type of skin cancer) and generates decent sales. In the third quarter, the biotech reported revenue of $67.5 million, a 13% year-over-year increase. Amtagvi was only approved last year and still appears to have considerable upside potential. Here are three reasons why.
First, there's a significant need. The company estimates that about 8,000 patients die from melanoma in the U.S. every year. Yet there are few treatment options for patients who don't respond to some first-line therapies, which is the indication for which Amtagvi was granted approval -- becoming the first approved by the U.S. Food and Drug Administration in its niche.
Second, Iovance is seeking approval for the therapy in other countries. It has already succeeded in Canada and is targeting several other regions, including Australia, the United Kingdom, and the European Union.
NASDAQ: IOVA
Key Data Points
Third, Amtagvi could receive plenty of label expansions, as it's being investigated for use across several other forms of cancer.
Despite all that, the stock has significantly lagged the broader market since Amtagvi was approved. One significant drawback is that it also has a complex administration process that involves cell collection and an infusion, following a manufacturing process that takes approximately 34 days.
This severely limits its potential. Unlike CRISPR Therapeutics, Iovance Biotherapeutics has no partner with deep pockets and a significant commercial footprint in the healthcare industry to help cover the expenses required to keep Amtagvi on the market. Even as the therapy makes progress, Iovance seems unlikely to turn a profit.
Read the fine print
Neither of these stocks is for risk-averse investors. However, CRISPR Therapeutics is the better option of the two. Casgevy should eventually generate decent revenue -- given its meaningful addressable market of about 60,000 patients, its high price tag of $2.2 million in the U.S., and the fact that there are hardly any competing alternatives of note.
Additionally, the company's CTX310 and other programs could be breakthroughs in their fields. So CRISPR Therapeutics could see its shares soar in the next year -- although in my view, it's unlikely to match Wall Street's estimates. That said, investors comfortable with a bit of risk should consider holding on to this promising gene-editing specialist as it seeks to establish itself as a leader in the biotech industry.
Iovance Biotherapeutics, on the other hand, is far too risky even for most of those investors. Its stock is unlikely to reach anywhere close to Wall Street's price target within 12 months, and could be a wealth destroyer over the next five years. It's best to stay on the sidelines with this one.
