3 up-and-coming monster stocks to buy right now
Most investors like the idea of getting into a promising stock early. But this is not always easy. Sometimes what appears to be a rising star can crash and burn.
We asked three Motley Fool contributors to pick up-and-coming monster stocks to buy right now. Here’s why they chose CRISPR therapeutics (CRSP -4.92%), Ginkgo Bioworks (DNA -12.31%)and Novocure (NVCR -0.96%).
Unlock innovative therapies
Prosper Junior Bakiny (CRISPR Therapeutics): Despite the considerable advances in medicine over the past decades, there is still a lot of work to be done. Drugmakers are in a race to discover breakthrough treatments for hard-to-treat diseases. CRISPR Therapeutics, a leader in gene editing, is one of them. This mid-cap biotech looks set to score its first major regulatory victory.
CRISPR Therapeutics is developing exa-cel as a potential treatment for sickle cell disease (SCD) and transfusion-dependent beta-thalassemia (TDT), two rare blood disorders. Biotech is working on these projects with an industry veteran, Vertex Pharmaceuticals (VRTX 1.61%).
What makes exa-cel so promising? SCD and TDT are not diseases that can generally be cured. Treatment options for both, such as regular blood transfusions, are expensive and plentiful with potential side effects. Enter exa-cel: a potential one-time cure for TDT and SCD.
The drug has achieved strong results in clinical trials. For example, it has so far been able to eliminate vaso-occlusive crises – painful side effects of SCD – in all 31 patients treated in a late-stage study.
Vertex and CRISPR Therapeutics expect regulatory submissions in Europe and potentially the United States by the end of 2022. Commercialization efforts could begin late next year if all goes according to plan. CRISPR Therapeutics will have to share exa-cel’s profits with Vertex, but it gets much of the credit for being the company that originally developed the therapy.
Creating and commercializing new treatments (or cures) for rare diseases is difficult and expensive. CRISPR Therapeutics could soon claim to have done just that. And it shows no signs of slowing down with several more programs to come.
Gene-editing stock is lagging the market this year. However, long-term investors should seriously consider CRISPR Therapeutics as it could join the ranks of biotech giants within a decade.
A promising business that requires patience
David Jagelsky (Ginkgo Bioworks): Ginkgo Bioworks is a stock with boatloads of potential in the future. It’s a biotech company that helps companies program cells to create efficiencies in their day-to-day operations, and it helps them develop new products.
Ginkgo has exciting opportunities on the horizon. He has partnered with several notable companies, including an animal health company Elancodrug manufacturers Bayer and Novo Nordiskand cannabis producer Chronos Group. These collaborations are a testament to the growth potential and diverse revenue streams that Ginkgo can tap into.
There are other catalysts that could push its activity even further in the near term. In July, Ginkgo announced its intention to acquire a biotechnology company Zymergen in an all-stock deal that will allow it to diversify its business and leverage Zymergen’s machine learning capabilities and automation software. The company has also deepened its relationship with Bayer as it plans to acquire the company’s West Sacramento Biologics research and development site. The agreement will result in a three-year partnership in which Ginkgo will provide research services (focusing on agricultural biologics) to Bayer.
There is huge potential for Ginkgo to grow much larger in the future. It is already experiencing significant growth. The deals and partnerships it secures pave the way for even more revenue in the years to come. With $1.4 billion in cash on its books (and operating cash burn of just $119 million over the last six months), the company is in a strong position to take advantage of opportunities as they show up.
Ginkgo sees potential applications for its services in the fields of health, food and agriculture, consumption, materials and energy. Reaching this potential will take time – potentially several years, as the business is still unprofitable and burns cash. But Ginkgo seems to be on a promising track. It could be a monster growth stock in the future.
Keith Speights (Novocure): Many companies are leading the way in disrupting the way cancer is treated. I think Novocure ranks among the best of the bunch. The company’s Tumor Treating Fields (TTFields) therapy, marketed under the Optune brand, is already a highly effective way to treat glioblastoma multiforme (GBM), an aggressive type of brain cancer, as well as mesothelioma.
Novocure still has growth opportunities in these indications, particularly in combination therapies targeting GBM. For example, it is in partnership with Merck to evaluate TTFields in combination with the successful immunotherapy Keytruda in the treatment of newly diagnosed GBM.
But that’s just the tip of the iceberg. Novocure is currently conducting four late-stage clinical studies of TTFields in the treatment of other types of cancer. If these trials are successful, the company’s addressable patient population could explode by a factor of 14.
The first of these studies to be concluded targets non-small cell lung cancer. Novocure was originally expected to announce results later this year. However, executive chairman Bill Doyle said on the second-quarter conference call that the company was delaying the announcement until early 2023 rather than releasing data in the last week of the year. This slight delay in no way diminishes the excitement surrounding the clinical study.
Novocure expects to publish results from its Phase 3 studies targeting recurrent ovarian cancer and brain metastases later next year. Data from a late-stage study in pancreatic cancer is expected to arrive in 2024.
Unlike many biotech stocks, Novocure has posted positive gains so far this year. I think the momentum will likely build through 2023 and beyond.
David Jagielski has no position in any of the stocks mentioned. Keith Speights holds positions at Vertex Pharmaceuticals. Prosper Junior Bakiny holds positions at Vertex Pharmaceuticals. The Motley Fool holds positions and recommends CRISPR Therapeutics, Merck & Co., Novocure, Vertex Pharmaceuticals, and Zymergen Inc. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.