3 Of the Top Biotech Stocks to Buy
During the past two years, it became extremely clear why some investors love biotech stocks. In 2020, Moderna was a little-known company trying to use mRNA to fight diseases. In a matter of weeks, the COVID-19 pandemic thrust Moderna into the national spotlight. It rose to the occasion and was one of just three companies to develop a vaccine. In three quarters, Moderna’s revenue skyrocketed from $570 million (Q4 2020) to nearly $5 billion (Q3 2021). Its stock price quickly followed suit. From the start of 2020 to its peak in 2021, Moderna’s stock rose by over 2,200%. This shows just how quickly biotech stocks can gain momentum.
Biotechnology is defined as using cellular processes to create new technologies or products. Technically, humans have been using biotechnology for over 6,000 years. For example, we use the biological processes of microorganisms every day. These microorganisms help us make food like bread, cheese and dairy. In more recent years, humans have started taking things to the next level. These days, biotechnology companies are pushing the boundaries of modern medicine.
In this article, we’ll take a look at three biotech stocks that are leading the way. Since it was just one of my top six stocks to buy now back in December, I’ll leave Moderna off this list. Let’s jump into it!
Top Biotech Stocks to Buy Now
GreenLight Biosciences (Nasdaq: GRNA)
GreenLight Biosciences claims that they are harnessing the power of biology to meet the needs of the human race. Similar to Moderna, GreenLight Biosciences mainly focuses on ribonucleic acid (RNA). Specifically, it wants to make RNA products more widely available. RNA products have applications for human health and agriculture. So does that mean it’ll be one of the next biotech stocks to take off?
As mentioned, GreenLight mainly works on RNA solutions for human health and agriculture. For human health, it develops RNA vaccines and therapies. It is actually working on a COVID-19 vaccine, similar to Moderna. As far as its agricultural solutions, GreenLight has a lot of projects in the works:
- Colorado potato beetle: This beetle causes about $500 million worth of damage to crops each year. It is also very resistant to most pesticides. GreenLight has developed a much more effective alternative for eliminating this beetle. GreenLight’s solution is also safe for non-target insects and dissolves easily into the watershed. GreenLight expects FDA approval in 2022.
- Commercial honeybee: One of the biggest risks to commercial honeybee farms is the Varroa mite. GreenLight created a syrup that can control mite populations without hurting the honeybees. This has huge implications for just about every major commercial honeybee farm.
- Vegetable and produce mold: GreenLight is working on solutions to reduce mold that collects on produce. This will help fresh produce last longer. It will also reduce the need to spray them down with chemical fungicides.
Making RNA Accessible To Everyone?
Moderna’s vaccine was one of the first commercial uses of RNA vaccines. So far, it seems to be doing an effective job against COVID-19 and its variants. In the short term, investors are excited that RNA technology is helping to end the pandemic. However, Moderna’s success has much broader implications.
Now that RNA solutions were approved once, it could open the flood gates. RNA vaccines can now be created to address other major diseases. They can even be used for new diseases as they emerge. RNA technology could also play a massive role in protecting the world’s food resources. GreenLight isn’t interested in developing just one RNA solution. Instead, it is focused on making RNA solutions available to everyone.
I actually came across GreenLight Biosciences while writing about top stocks that insiders are buying. In early 2022, two Board members (Matthew Walker and Eric O’Brien) invested millions of dollars into GreenLight stock. This is a great sign that insiders have faith in the company. As Peter Lynch says, “insiders might sell for any number of reasons, but they buy them for only one: they think the price will rise.”
Intellia Therapeutics (Nasdaq: NTLA)
Intellia Therapeutics uses genome editing to help treat diseases in humans. In particular, it focuses on CRISPR genome editing to treat a wide array of diseases. One major advantage that Intellia has is its management.
Regardless of the industry, there is one common factor in every successful business. The ultimate predictor of success in business is the leadership team. This is because the management team is responsible for solving problems, making decisions, and hiring talented employees. This is especially true in the biotech industry. These companies are pushing scientific boundaries to solve the world’s biggest problems. Doing so requires some of the world’s brightest minds. This is one major reason that Intellia Therapeutics is one of the top biotech stocks.
Intellia was co-founded by Jennifer Doudna. Before starting Intellia, Jennifer won a Nobel Prize in chemistry. She received this award for “the development of a method for genome editing.” This is the CRISPR method that became the backing ideology for Intellia.
Additionally, CEO John Leonard has 30 years of experience in pharmaceutical research and development. He mainly worked at Abbvie, serving as the Global Head of Pharmaceutical R&D. He brings tons of experience in bringing new products to market.
Intellia’s management team is loaded with talented individuals. In general, this is one of the best indicators of long-term success.
Top Biotech Stocks: Exact Sciences (Nasdaq: EXAS)
Exact Sciences focuses on identifying cancer in its earliest stages. Right now, cancer still kills about 600,000 American’s annually. However, oftentimes doctors don’t identify these cases until it’s too late. The sooner doctors can identify cancerous cells, the sooner they can treat them. Earlier diagnosis could drastically reduce the number of cancer-related deaths each year. Exact Sciences is in the business of early-stage cancer detection.
To achieve this, Exact Sciences employs 450 scientists. It also has 10 research centers globally. Its two flagship detection tests are called Colorguard and Oncotype. In particular, Colorguard has a 94% pre-cancer detection rate. There is a ton of testing that goes into making sure this percentage is accurate. Due to this, Exact Sciences’ business moves forward very slowly. However, in the next 18 months, it could enter a crucial turning point.
It’s interesting that pre-cancer tests need to be at least 85% effective. If they aren’t, doctors won’t order them. Colorguard, it appears, has crossed this threshold. As Colorguard becomes the preferred choice for doctors, Exact Sciences could experience exponential revenue growth.
Since 2018, Exact Sciences revenue has grown at a 55% CAGR. In 2021, it posted FY annual revenue of $1.76 billion. This has put it on a path to profitability in 2024.
Exact Sciences is also one of Cathie Wood’s top holdings. Cathie Wood’s is best known for investing in “disruptive innovative.” This is basically any product or service that could change the way the world works. Cathie believes that Exact Sciences is working on world-changing technology. Exact Sciences currently sits in her fund’s top 10 holdings.
I hope that you’ve found this article valuable when it comes to learning about three of the top biotech stocks to buy!