Effective Investment Strategies For Biotechnology
What exciting choices are available to investors who are eager to learn more about the fascinating world of biotechnology? There are numerous options available, such as equities and ETFs, which provide great investment opportunities. They are dedicated to discovering solutions for diseases and ensuring food security for future generations. Expert estimates indicate that the industry has a promising future. However, investors can easily become acquainted with biotechnology. Notably, the article highlights the potential for growth in biotech stocks despite their lower revenues compared to pharmaceutical businesses.
How Can I Successfully Invest In Biotechnology Stocks
ETFs are a great way to minimize risks in stock investing, and although buying biotech equities is commonly preferred, ETFs provide an excellent opportunity to participate in the industry. ETFs trade close to their net asset value and hold a diverse range of assets such as equities, commodities, and bonds. ETFs commonly track an index. There are several indexes for biotechnology that can be followed, such as the NASDAQ Biotechnology Index (INDEXNASDAQ: NBI), the NYSE Arca Biotechnology Index (INDEXNYSEGIS: BTK), and the S&P Biotech Select Industry Index (INDEXSP: SPSIBI).
This ETF, which has been successfully operating since February 5, 2001, currently holds an impressive portfolio of 370 securities. Among its top holdings are renowned companies such as Amgen (NASDAQ: AMGN), Gilead Sciences (NASDAQ: GILD), and Vertex Pharmaceuticals (NASDAQ: VRTX), each contributing significantly with a weighted average of over 7%.
The SPDR S&P Biotech ETF (ARCA: XBI), which debuted on February 6, 2006, and follows 155 stocks in its portfolio, is a highly popular biotech ETF. Chemocentryx (NASDAQ: CCXI), Global Blood Therapeutics (NASDAQ: GBT), and Biohaven Pharmaceuticals (NYSE: BHVN) are three of its top weighted firms. Investors should definitely consider small biotech ETFs as well.
Gains in the biotech market have the potential to materialize over time as businesses work towards obtaining FDA approvals and feedback. According to a recent analysis by Global Market Insights, the market for biotechnology as a whole is expected to exceed US$950 billion by the year 2027, fueled by the growing awareness and investment in addressing chronic diseases and their associated treatment costs. The biotechnology industry’s revenue will be positively influenced by novel goods. These exciting advancements involve the development of plants, meat, and human organs in labs.
The Future Of Biotechnology Is Full Of Exciting Possibilities
In light of the increasing demand for organic food items, there is a rising opportunity for biotechnology innovation in the agriculture industry. In October 2022, Axsome proudly introduced Auvelity as an innovative treatment for major depressive disorder. The medication, also known as AXS-05, is being assessed in a phase 2/3 study for use as a smoking cessation therapy and in a late-stage clinical trial targeting agitation associated with Alzheimer’s disease, which shows promising potential for helping patients in these areas.
The company’s pipeline includes three additional late-stage candidates. AXS-07 is designed to effectively alleviate migraines. AXS-12 is a promising treatment that targets narcolepsy disorder, helping people feel more energized during the day. AXS-14 is a promising treatment that targets the persistent pain condition fibromyalgia. Two of these three medications will definitely be available in the near future.
In the second half of 2023, Axsome has exciting plans to reapply for FDA approval of AXS-07 in the United States. Furthermore, the business has plans to seek FDA approval for AXS-14 in 2023. With peak annual sales estimated at $2.6 billion, quality has the potential to be a blockbuster medication for treating depression. AXS-07 is projected to achieve remarkable annual sales of over $500 million in the United States alone. If AXS-14 is approved, analysts predict that peak sales could potentially reach an impressive range of $500 million to $1 billion. The three medication concepts’ revenue potential makes Axsome Therapeutics an exciting type of biotech stock to consider investing in 2023.
Exelixis has successfully launched four medications on the market. The drug Cabometyx, which is approved to treat thyroid cancer as well as renal cell carcinoma (RCC) and hepatocellular carcinoma (HC), the most prevalent forms of kidney cancer and liver cancer, respectively, has been incredibly successful. In early 2021, Exelixis and the biopharma firm Bristol Myers Squibb (BMY 0.26%) achieved U.S. regulatory approval for the combination of Cabometyx and Bristol Myers’ immunotherapy medication Opdivo, which is a positive development. Another collaboration has had some challenges for the corporation. In March 2023, Exelixis and Roche (RHHBY 1.53%) released findings from late-stage research comparing Cabometyx and Roche’s Tecentriq for the treatment of RCC.
Exelixis is thriving, enabling it to utilize its rapidly growing financial reserves to secure new licensing deals and expand its therapeutic portfolio. It is fortunate to have obtained a research license from the esteemed biotech company Aurigene to work on the promising early-stage cancer medication XL102. The business has the opportunity to license a selection of monoclonal antibodies from WuXi Biologics. Exelixis has also acquired GamaMabs Pharma’s anti-Müllerian hormone receptor 2 (AMHR2) antibody programs.
Intellia Therapeutics Is A Fantastic Company!
Its pipeline, indeed, appears very promising. One of the most promising candidates in Intellia’s pipeline is NTLA-2001. Exciting interim findings from a phase 1/2 research study evaluating a medication for the treatment of transthyretin amyloidosis with cardiomyopathy (ATTR-CM), a rare genetic heart condition, were announced by Intellia and its partner Regeneron in November 2022. NTLA-2001 has the potential to be the subject of a pivotal clinical trial by the end of 2023, pending regulatory approval.
A phase 1/2 trial evaluating NTLA-2002 for the treatment of hereditary angioedema (HAE), a rare genetic disorder that causes swelling in the linings of the lung and intestine, also had promising interim results reported by Intellia in November 2022. The company is making progress by moving into phase 2 testing in the United States, following the successful advancement of the medicine into phase 2 testing in Hong Kong.
There will definitely be a new clinical program from Intellia soon. The business is making great progress towards starting an early-stage clinical trial for NTLA-3001, a potential treatment for alpha-1 antitrypsin deficiency (AATD), a rare genetic liver condition. They are optimistic about filing for regulatory approval in the second half of 2023.
Excited To Start Investing? Here’s Where To Begin!
The medicine Eylea, which Regeneron produces in conjunction with Bayer (BAYR.Y 0.24%), is a significant source of revenue for the company. Regeneron receives the full amount of Eylea’s net sales in the United States, and the company collaborates with Bayer to share the profits generated in international markets.
Sanofi (SNY 1.05%) and Regeneron have a highly successful working relationship in the pharmaceutical and life sciences industry. The two businesses market and sell a range of medications, including Dupixent and Kevzara for autoimmune diseases, Library and Zaltrap for cancer, and Praluent for cholesterol management.
Twist Bioscience Is An Amazing Company.
Twist Bioscience has developed an innovative proprietary technique for “writing” DNA on a silicon chip. Synthetic genes, preparation for next-generation sequencing, and antibody libraries are all valuable tools utilized by biopharma businesses to discover and advance new medications. The company in Hong Kong plays a crucial role in producing the synthetic DNA required for these innovative applications.
Customers of Twist come from a diverse range of sectors, including academic research, agriculture, healthcare, and industrial chemicals. The business has the potential to become profitable. Moreover, Twist’s sales continue to soar rapidly as the company consistently unveils innovative products built upon its synthetic DNA technology.
According to Twist, the total addressable market it currently serves is an impressive $6 billion annually. The corporation has a great opportunity to store data on its DNA chips, which is estimated to be worth around $35 billion yearly. Twist’s DNA data storage efforts are making great progress in their early phases, achieving significant milestones. They are aiming to provide early access to their technology by the end of 2023.
Embracing The Biotechnology Sector
A biotechnology company utilizes live organisms such as bacteria or enzymes to develop life-saving medicines. Biotechnology firms are unique compared to pharmaceutical firms because they focus on utilizing living organisms in their research and development processes. Investors are encouraged to closely monitor a biotech company’s medication candidates at every stage. Later-stage drugs have an increased likelihood of success, making the investment in that firm more promising and less risky. Biotech companies employ four essential steps and three crucial phases when developing new medications.
- Drug discovery: A biotech business successfully identifies a promising drug candidate and the potential ailments it could potentially combat.
- Preclinical testing: The business conducts in vitro (in test tubes) and/or in vivo (in live mice) testing on the drug prospects to ensure their safety and effectiveness.
- Clinical trials: People have the opportunity to participate in the examination of a potential medication. Clinical trials typically go through three exciting stages! Phase 1: Exciting small studies are conducted to determine the drug candidate’s safe dose and explore its positive effects on people. Phase 2: Exciting progress is made as larger trials with 100 or more patients are conducted, prioritizing safety, short-term side effects, and determining the optimal dosage for the medication. Phase 3: Excitingly, even larger studies, involving hundreds or even thousands of patients, are carried out to demonstrate the experimental medication’s remarkable efficacy and safety in treating the disease.
- Regulatory approval: Biotech businesses diligently seek regulatory permission before selling their medicines. Based on the promising results from its clinical testing, the biotech company confidently seeks FDA regulatory permission. The majority of biotech companies have the opportunity to develop numerous medications at once, which can generate multiple revenue streams. One of the great aspects of biotech investments is the opportunity to diversify across a wide range of novel medications.