Biotech stocks, and the sector in general, saw a widespread beat down over the past two years. Venture capital dried up, post-pandemic healthcare landscapes shifted, and regulatory clampdowns tightened already-slim margins. But 2024 might mark a renewal for biotech stocks. The FDA went on an approval spree throughout 2023, giving its stamp of approval to 50% more novel therapeutics than it did in 2022. The agency ultimately approved 55 treatment protocols containing a (previously) unapproved ingredient or compound, compared to just 37 in 2022. The FDA averages 45-to-50 approvals annually, so biotech stocks are back on track to begin pushing products to market.
Of course, interest rates remain high. Other market uncertainties continue swirling. If you’re ready to dive back into biotech stocks this year, make sure you’re sticking to those with strong prospects and enough cash to keep moving forward for years to come.
Regeneron Pharmaceuticals (REGN)
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Regeneron Pharmaceuticals (NASDAQ:REGN) is one of those few biotech stocks that marks win after win. The company’s stock stayed on a solid trajectory over the past five years, even amid economic turmoil. In fact, REGN has a shockingly low beta of just 0.16, which is even more impressive in the biotech industry.
Regeneron’s most recent win came from an August 2023 FDA approval for a high-dosage variant of the company’s eye disease therapeutic Eylea. The high-dose treatment helps Regeneron fight competitors more effectively and position the product against Medicare price negotiations that cut into REGN’s bottom line.
But Regeneron’s prospects lie in other therapeutics. One of the company’s flagship drugs, Dupixent, is primarily used to treat asthma and eczema. However, the company is leveraging the compound in ongoing Phase 3 testing to treat chronic obstructive pulmonary disease (COPD), with initial results pointing to a 34% decrease in symptoms when using Dupixent. The drug is already one of Regeneron’s top sellers, and analysts expect that successful productization of Dupixent for COPD sufferers could accelerate sales to $20 billion annually.
Beyond specifics, a look at Regeneron’s pipeline is revealing. The company is developing and testing compounds in some of the hottest sectors that attract investors to biotech stocks. These include monoclonal antibody therapeutics, gene therapy, and gene editing platforms – the holy grail of biotech stocks.
Arcellx Inc (ACLX)
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Arcellx Inc (NASDAQ:ACLX) is a juggernaut within the cancer and autoimmune disease sector of biotech stocks. Notably, through a partnership with Gilead Sciences (NASDAQ:GILD), Arcellx is pioneering cancer treatments called CAR-T therapeutics. In a nutshell, CAR-T therapies turn conventional cancer treatment wisdom on its head. Legacy treatments tend to include surgery, chemo, and radiation – all of which have devastating side effects and, in many cases, aren’t as reliably effective as we’d hope.
In contrast, CAR-T therapies leverage the patient’s own immune system by “training” the cells within it to identify and destroy cancer cells. The benefits of the method over traditional treatments are obvious, but, of course, innovation of this scope comes at a cost.
Luckily for Arcellx, Gilead seems to be primarily shouldering the financial burden. Gilead infused Arcellx with a $85 million cash payment alongside a $200 million stock purchase plan – giving Arcellx enough cash runway to keep the lights on through 2027 as they keep pushing towards ending cancer.
Beam Therapeutics (BEAM)
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Compared to our other two biotech stocks, Beam Therapeutics (NASDAQ:BEAM) is a bit of a moonshot. But if the gene therapy and editing company strikes gold, the biotech stock could easily turn into this generation’s biggest multibagger.
Like Crispr Therapeutics (NASDAQ:CRSP), Beam’s primary inroad into gene editing therapies is through sickle cell treatments. Unlike Crispr, though, Beam’s therapeutic is still in testing stages, though prospects look good. The company expects that initial testing results for the therapy, which involves editing cell insertion into bone marrow transplants, will drop in the back half of 2024.
But Beam has plans beyond its sickle cell treatment for 2024; the company’s CEO, John Evans, proclaimed that “2024 [will] be a year of significant catalysts for Beam.” Those catalysts will be fueled by Beam’s sizable cash position, totaling around $1.2 billion dollars – a hefty war chest, considering many biotech stocks struggle to maintain enough cash to match their R&D burn rates. Beam’s cash balance is sufficient to keep operations running smoothly through 2027 – plenty of time for its many therapeutic protocols to grow legs.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.
Jeremy Flint, an MBA graduate and skilled finance writer, excels in content strategy for wealth managers and investment funds. Passionate about simplifying complex market concepts, he focuses on fixed-income investing, alternative investments, economic analysis, and the oil, gas, and utilities sectors. Jeremy’s work can also be found at www.jeremyflint.work.
