Even the best stocks can fall on hard times. This has certainly been the case with many biotech stocks over the past 12 months. However, some who floundered could still be huge winners in the long run.
We asked three Motley Fool contributors to pick beat stocks they think could deliver 5x gains by 2030. Here’s why they picked CRISPR therapeutics (CRSP -3.87%), Ginkgo Bioworks Holdings (DNA -7.05%)and Novocure (NVCR -0.78%).
An excellent entry point for investors
Prosper Junior Bakiny (CRISPR Therapeutics): “Down” doesn’t begin to describe what happened to CRISPR Therapeutics in the last year on the market. Shares of the gene-editing specialist have fallen more than 60% in the past 12 months, a horrific performance by any measure.
It is not difficult to understand what is happening here. Biotech currently has no products on the market. Prior to its recent plunge, stocks were on fire. A correction was probably overdue.
But it could be a great entry point for opportunistic investors willing to be patient. CRISPR Therapeutics has several promising candidates. These include several candidates in immuno-oncology: CTX110, CTX120 and CTX130. However, the most exciting program from CRISPR Therapeutics is CTX001. Biotech is developing this potential therapy for sickle cell disease and transfusion beta-thalassemia in collaboration with Vertex Pharmaceuticals (VRTX 1.70%).
CRISPR Therapeutics and Vertex have already achieved excellent results in a phase 1/2 clinical trial. Regulatory submissions are expected to drop by the end of the year.
There are few safe and effective treatment options for these two rare blood diseases. If CTX001 gets regulatory approval, that could be a game-changer.
And that highlights the potential of the CRISPR Therapeutics platform. Like other gene-editing specialists, the company is aiming for difficult targets, including some for which there are few (if any) cures.
Another example of this is the company’s VCTX210, an investigational gene-editing treatment for type 1 diabetes. CRISPR Therapeutics could see major clinical gains over the next five years, helping its stock price to to skyrocket.
Of course, none of this is guaranteed. CRISPR Therapeutics candidates may face clinical or regulatory hurdles. It is essential to keep these risks (and others) in mind when making investment decisions.
But if enough things go well for CRISPR Therapeutics, the company’s stock could skyrocket by 2030. That’s why it’s worth considering taking a position now, especially after the beatings CRISPR Therapeutics has endured. over the past year.
A potential growth machine in the making
David Jagelsky (Ginkgo Bioworks): A collapsing growth stock with a lot of potential is one that investors should pay close attention to, as it can generate significant returns in the near future. Ginkgo Bioworks is one such stock. The lower it drops, the more likely it is to be at least a five-bag investment by 2030.
To reach that level, the stock wouldn’t even need to climb much higher than where it started trading. Last September, the biotech stock went public through a merger with a special purpose acquisition company (SPAC). It quickly spiked to a high of over $14. This is already around four times the value of where it trades today.
The sale of Ginkgo shares since going public is a bit of a mystery. He follows a path relatively similar to that of Cathie Wood Ark Innovation ETF , which owns shares of Ginkgo. Since November, the listed index fund has fallen nearly 60% while Ginkgo has fared slightly worse, cratering 70%.
But that could prove to be a short-term problem for investors. One of the most attractive features of Ginkgo’s activity is its versatility. It can help multiple industries through cell programming. Consumer and technology, food and agriculture, industry and environment, biotechnology and pharmaceuticals are the different areas in which the company has identified opportunities.
The total addressable market for bio-engineered products could well hit the trillions by 2040. Ginkgo only has to scratch the surface of all this potential to rise to the valuation of approximately $32 billion. ‘it should achieve to generate 5x returns.
Ginkgo has already worked out deals to tap into some of this growth. In April alone, he announced multiple collaborations and partnerships. One involved working with an animal health company Elanco to start a new business focused on improving animal health and protein production. Another was to partner with a water company to develop biosensors that can detect toxins in water.
In 2022, Ginkgo expects its revenue to be between $325 million and $340 million. While that’s a potentially modest increase from the $314 million it reported in 2021 (when its revenue soared 309%), Ginkgo is still in the early stages of growth. There is significant potential here for investors to earn a fantastic return. The key is to remain patient with the business as it grows.
5x might be too pessimistic for this stock
Keith Speights (Novocure): One action immediately came to mind when I started thinking of candidates who could offer a 5x payout by 2030 – Novocure. In fact, I think 5x might even be too pessimistic.
Novocure’s Tumor Treatment Fields (TTFields) therapy, which uses electrical fields to disrupt cancer cell replication, is currently approved for the treatment of glioblastoma multiforme (GBM) and mesothelioma. Novocure CEO Bill Doyle noted on the company’s first quarter conference call that the GBM business “remains a key driver of our long-term success.” The company hopes to develop soon on the French GBM market. It is also expanding its infrastructure to reach more North American and EMEA (Europe, Middle East and Africa) markets.
But Novocure’s potential to deliver 5x or greater returns largely hinges on securing regulatory approvals for TTFields in additional indications. The company is currently evaluating the therapy in four late-stage pivotal studies with results expected to be available in the short term.
Data from the Lunar study of TTFields in the treatment of non-small cell lung cancer should be read this year. In 2023, Novocure expects to announce the results of two late-stage studies targeting ovarian cancer and brain metastases. And in 2024, the company plans to report data from its Phase 3 study targeting pancreatic cancer.
Novocure has currently only penetrated about 35% of the GBM market. However, the indications it is looking for in the four late-stage studies represent a market size 14 times larger than its current market.
Certainly, Novocure needs its clinical studies to succeed to have a chance of becoming the big winner, I think it can be. But I like the business odds.