Biotech stocks may offer some of the most explosive opportunities on the market. For one, we have millions of baby boomers demanding better care. Two, there’s substantial demand for new innovative therapies, especially with gene editing. Three, multiple heavyweight companies are hunting for new drugs to keep their pipelines fresh with patent expirations nearing.
Even better, according to The Wall Street Journal, biotech M&A is gaining big momentum. All because drug makers are facing a patent cliff. Plus, biotech stock valuations are exceptionally low, making many of them attractive.
We also have to consider biotech stocks are relatively recession resistant. All because millions of people will always need care. That being said, investors may want to focus on biotech stocks, including these potential game-changers with strong catalysts.
Apellis Pharmaceuticals (APLS)
Weakness may be an opportunity for Apellis Pharmaceuticals (NASDAQ:APLS), whose eye-disease drug, Syfovre is the first US FDA-approved treatment for geographic atrophy. Granted, the stock was recently halved after six recipients of Syfovre said they experienced inflammation in their eyes. However, most of the negativity has been priced into the stock.
Plus, analysts have been coming out in support of the company. For example, Plus, according to STATNews.com, “the passing of more ‘clean’ days and weeks while the total number of eye injections continues to add up makes it more likely the scare will dissipate and strong demand for Syfovre will return.” Even better, with recent weakness – and a potential game-changing eye drug – APLS could be a potential acquisition target – especially for companies with patent cliffs nearing.
Recursion Pharmaceuticals (RXRX)
The last time I mentioned Recursion Pharmaceuticals (NASDAQ:RXRX), it traded around $10.75 on Aug. 8. While the stock dipped to about $8.58 following that note, there’s still a lot to like here. Remember, Nvidia (NASDAQ:NVDA) recently invested $50 million in the company to work on drug development using artificial intelligence.
With Nvidia’s help, Recursion can accelerate AI software that can identify relationships between trillions of genes and compounds. All in an effort to treat issues we never thought could be treated.
In addition, Recursion is also working on potential treatments for cerebral cavernous malformations, neurofibromatosis, familial adenomatous polyposis, mutant cancers, ovarian cancers, and cancer immunotherapy. If RXRX AI efforts can create treatments for issues such as cancer, the stock may never be as cheap as it is now.
Deciphera Pharmaceuticals (DCPH)
Also, take a look at Deciphera Pharmaceuticals (NASDAQ:DCPH), which could see higher highs. For one, the company just reported second-quarter earnings per share (EPS) loss of $48.6 million, or 57 cents a share. That was an earnings beat by five cents. It also posted revenues of $38.3 million, which beat expectations by $1.98 million.
Two, its lead therapy Qinlock (ripretinib), which was approved for gastrointestinal stromal tumors (GISTs), just saw $37.3 million in product revenue, an 18% jump year over year. Three, DCPH just began another Phase 3 study for patients with advanced GIST.
It also expects to post Phase 3 trial results on its vimseltinib treatment for tenosynovial giant cell tumor (TGCT) in the last quarter of the year. Another treatment in trials is DC-3116 for several types of cancer. At the moment, DC-3116 is in Phase 1 trials. Analysts at Stifel just upgraded the DCPH stock to a buy rating with a $20 price target. “Despite a significant ~40% drop from its 2023 peak, the continuous expansion of Qinlock’s core business, the prospective commercial roll-out of vimseltinib, and potential long-term gains from Qinlock label enhancements are encouraging signs,” said the firm, as quoted by WeBull.com.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.