Biotechnology firms have attracted billions in capital due to the belief that biotech can transform health care. More flexible than traditional big pharma, biotech drives past basic and applied science and creates huge rewards for investors.
Sure, biotech stocks can mean major investment gains, as long as the FDA approves the products you plan to invest in. But when products under development don't make it to market, you may be stuck with a faltering company's stock.
Does that mean you have to have a Ph.D. to assess whether a biotech company will succeed? Not necessarily. However, it's important to understand that biotech companies face regulations and unique uncertainty, which can challenge your ability to judge a biotech company's chances of success.
However, there's a wide appeal, particularly because you can dip into an area that shows wide potential.
Challenges Facing Biotech Investors
What are the challenges facing biotech investors? Let's explore.
You can't really do traditional financial analysis with biotech companies because they don't show traditional cash flows or revenue like other types of companies. Instead, you have to look at other factors, such as products, patents, management, investment in R&D, and other pieces of the puzzle.
- Patents are important in this arena because companies can also earn royalties from commercial partners (in addition to protecting biotech companies' products).
- Look for companies that show successful R&D for diseases that need help or that don't have a successful cure.
- Management should include experienced executives who have developed and commercialized treatments and who have developed solutions from beginning to end before. Executives should fully understand the clinical and commercial development process.
- How does the company seek partners for clinical trials and commercialization? Find out about collaborations and licensing partnerships and whether the company is well-financed alongside these favorable partnerships.
It's good to evaluate all of these areas before you decide on the right biotech company for you. Now, let's launch into the companies you may want to consider before you invest.
Three Biotech Companies to Invest in Now
Ready to invest in biotech stocks despite some of the above challenges? As long as you do your due diligence, you may find some exciting opportunities to take your portfolio to the next level. Let's dive into three companies you may want to consider.
Biolife Solutions Inc., headquartered in Bothell, Washington, develops, manufactures, and markets biopreservation tools for cells and tissues. It offers hypothermic storage and cryopreservation for cells, tissues, and organs, generic blood stem cell freezing, and cell thawing media products.
Biolife Solutions Inc. recently announced preliminary 2021 revenue of $119 million, up 148% over 2020. Total revenue for the third quarter of 2021 was $33.8 million, an increase of 200% from $11.3 million for the third quarter of 2020. Organic revenue growth was up 37%.
The company experienced demand for its cell processing platform. Its proprietary biopreservation products experienced tremendous growth throughout 2021 and its freezer and thaw systems platform grew in 2021. Storage and storage services platform far exceeded the company's expectations for revenue, growing 389% over 2020. Biopreservation media products grew nearly 50% year over year growth and 14% sequential growth. The company should meet performance goals of $250 million in revenue and adjusted EBITDA of 30+% within the next three to four years.
The company acquired Sexton Biotechnologies Inc., gained 230 new customers, and processed 20 new U.S. FDA Drug Master File cross-reference requests.
Seagen Inc., a biotechnology company headquartered in Bothell, Washington, develops and commercializes antibody-based therapies for cancer treatment. Its products include Adcetris and Padcev. The company is also advancing a pipeline of novel therapies for solid tumors and blood-related cancers and is an industry leader in antibody-drug conjugate (ADC) technology.
The company develops treatments for antibodies designed to deliver cell-killing agents to cancer cells. Three of its four approved medicines are built on this technology.
The company also researches novel targeted small molecule therapies and leverages expertise on empowered antibodies to build a portfolio of proprietary immuno-oncology agents.
Seagen reported net product sales of approximately $1 billion for the year to date in 2021 and $366 million for the third quarter of 2021, reflecting growth across its portfolio of approved medicines. It added TIVDAK to its portfolio, an important new medicine for women with previously treated metastatic cervical cancer. The company also added its late-stage pipeline by entering a collaboration with RemeGen for disitamab vedotin, a novel HER-2 targeted antibody-drug conjugate (ADC), and 13 programs for a range of solid tumors and hematologic malignancies.
Net loss for the third quarter of 2021 was $293.8 million, or $1.61 per diluted share, and net loss for the year-to-date in 2021 was $499.8 million, or $2.75 per diluted share, impacted by the $200 million upfront payment owed to RemeGen.
Net income in the third quarter of 2020 was $636.2 million, or $3.50 per diluted share, and net income for the year-to-date in 2020 was $446.6 million, or $2.47 per diluted share.
Incyte Corp., headquartered in Wilmington, Delaware, is a biopharmaceutical company that develops and commercializes proprietary therapeutics. Its portfolio includes compounds in various stages, ranging from preclinical to late-stage development and commercialized products such as JAKAFI (ruxolitinib) and ICLUSIG (ponatinib). The company is advancing a growing pipeline of medicines across oncology and inflammation and autoimmunity.
The company sought and earned three regulatory approvals, including Opzelura (ruxolitinib) cream in the U.S. for the treatment of atopic dermatitis, Jakafi in the U.S. for the treatment of chronic graft-versus-host disease (GVHD), and Minjuvi (tafasitamab) in Europe for the treatment of relapsed or refractory DLBCL.
Incyte Corp. showed revenues of $778 million in Q3 2021, 25% more compared to Q3 2020, and Jakafi (ruxolitinib) specifically shored up $547 million in Q3 2021, a 12% increase since Q3 2020.
Operating income (loss) GAAP and Non-GAAP operating income for Q3 2021 increased by $230 million and $232 million, respectively. As of September 30, 2021, and December 31, 2020, cash, cash equivalents, and marketable securities totaled $2.3 billion and $1.8 billion, respectively.
Business/Technology Combo for the Future
Before biotech, science and business rarely collided. Commercialization and basic science have since been fused, which means you can benefit from nanotechnology, advanced materials, and all the moneymaking opportunities available.
Before you consider BioLife Solutions, you'll want to hear this.
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