It's been a tough past three years for biotech stocks. Although the COVID-19 pandemic sparked bullish interest in the industry, this interest has waned since the contagion began winding down. Between late 2021 and now, the Nasdaq Biotechnology Index is down on the order of 25% versus roughly a breakeven for the board market.
As veteran investors can attest, however, the time to go shopping is when quality stocks are discounted. With that as the backdrop, here's a rundown on three biotech stocks you may want to consider scooping up while they're still on sale. Each of them could help you become a millionaire, given enough time and a big-enough up-front investment.
Just keep in mind that the biotech industry's above-average potential is matched by its above-average risk. Invest in them accordingly.
1. Iovance Biotherapeutics
Cancer treatments aren't exactly a new idea, but the approach Iovance Biotherapeutics (IOVA 5.82%) is taking to treat this highly varied disease is still relatively unique -- and promising.
Iovance's core science is the development of tumor-infiltrating, or TILs. The are just the white blood cells that routinely fight lymphocytes off bodily infections. They also kill faulty cells before they can reproduce and turn into full-blown cancer. Sometimes, though, lymphocytes cells can't quite figure out how to do their job. They need a little help.
Enter Iovance Biotherapeutics. Its technology custom-builds white blood cells for each and every cancer patient taking its treatment, which can be used alone or in conjunction with other oncology drugs. To date, this tech has only brought a single therapy called Amtagvi -- or lifileucil -- to the market, finally winning its first approval in February of this year.
Although it's only FDA-approved to treat a very narrow sliver of metastatic melanoma patients, it's a start that can be expanded. And it will be. The therapy is in five other clinical trials.
This isn't the only drug in Iovance's portfolio. Early last year, the company acquired the rights to a treatment called Proleukin, or aldesleukin, which is an interleukin that's already been approved and even commercialized. Iovance wants it for more than its current and prospective revenue, though. Proleukin also promotes a better response to TIL treatments like Amtagvi's.
It's not always been smooth sailing, for the record. Another drug in Iovance's developmental pipeline called LN-145 hit a regulatory snag late last year, temporarily halting one of its trials. It's a reminder that the biotechnology business can often be an all-or-nothing proposition.
Given investment research outfit GlobalData's expectation that Amtagvi's annual revenue alone will eventually exceed $800 million, however, the drama and the volatility it creates may well be worth it.
2. Recursion Pharmaceuticals
Recursion Pharmaceuticals (RXRX 0.57%) is categorized as a biotech company, but the label doesn't do it justice. It would be just as fair to suggest Recursion is a technology company that just so happens to develop drugs. In its own words, "Our integrated Recursion Operating System creates a closed-loop system combining proprietary in-house data generation and advanced computational tools to generate novel insights to initiate or accelerate therapeutic programs."
In other words, now that the technology is ready for this sort of work, Recursion is using artificial intelligence (AI) to figure out how new drugs can be created and how they might perform. This approach is certainly cheaper, easier, and faster than performing clinical trials based on nothing more than mere hope.
And this isn't merely theoretical stuff. Although the bulk of the company's revenue to date stems from collaboration and consultation with more conventional pharmaceutical outfits, it's also got seven clinical trials of its own underway. Three of them are in phase 2 testing, or roughly halfway through the R&D process that leads to -- hopefully -- an eventual approval. Selling access to its drug-discovery platform, as well as selling its own therapies, are both part of the company's future.
Like Iovance, Recursion is still in the red, and will likely remain so for the foreseeable future. Don't let that deter you too much, though. Research performed by Global Market Insights suggest the AI-powered drug-discovery industry is set to grow at an annualized pace of 30% through 2032.
In this vein, Recursion's top line is expected to improve 26% this year before accelerating to a growth pace of nearly 58% next year. This revenue outlook has the analyst community collectively suggesting Recursion Pharmaceuticals shares are already worth $13.00 even without any net profits yet. That's nearly twice the stock's present price.
3. Viking Therapeutics
Last but not least, add Viking Therapeutics (VKTX 1.60%) to your list of potential millionaire-maker biotech stocks.
As is the case with Recursion and Iovance, Viking isn't yet profitable. Also like Iovance and Recursion, though, it doesn't seem to matter. Analysts are taking a decidedly strong bullish stance anyway, with 10 out of the 11 analysts following the company rating it a strong buy (while the eleventh just rates it an ordinary buy.) And like Recursion, the current consensus target of $112.26 is nearly twice Viking stock's current price.
What's making these professionals so bullish on a seemingly mundane outfit that isn't working on a cure for cancer or finding brand-new ways to develop drugs? That's just it: There's money to be made in the mundane, which are often underserved and underaddressed pharmacological markets. It just takes the right drug.
Viking'a specialty is rare metabolic and endocrine disorders. There's no revenue yet. But there's a great deal of promise. Two of its four clinical trials underway are of obesity treatments based on the same GLP-1/GIP-agonist science behind the wildly popular weight-loss drugs Zepbound (from Eli Lilly) and Wegovy (from Novo Nordisk).
While it remains to be seen how Viking can meaningfully differentiate VK2735 from market-leading options like Wegovy and Zepbound, the onus is on Novo Nordisk and Eli Lilly to defend their turf. Viking can win simply by bringing another option to the obesity-treatment arena at a competitive price.
This might help make the bullish case: Goldman Sachs believes the worldwide anti-obesity drug market could swell from $6 billion per year now to $100 billion by 2030.
Just don't wait too long if you're going to act. Viking Therapeutics believes it will be making an important public update on the development of the oral version of VK2735 within the next several weeks. That could prove quite catalytic for the stock.
