Probably, most of us would find it hard to name 10 promising Biotech companies straightaway. Well, the experts say that this is about to change in the next few years and considering Biotech as your next investment choice already now might turn out to be a very good idea later.
If you were to find one industry that is promised to be as popular as the IT right now, it's definitely Biotech.
At the moment, the industry is not enjoying much of a buzz but the experts believe that Biotech will follow the path of the IT's success story in the near future.
Biotech came about as an industry at around the same time with the IT, back in the 20th century. However, the pace of development of information technologies rapidly accelerated in the past decade while Biotech innovations still need time to reach the same level. If you don't mind following the analogy, it can be said that Biotech right now is what the IT was back in the 90s: it's almost there, yet there is still a long way to go.
Even though most of the biotechnologies are still in the development phase, the industry has been receiving major investments in the last years. However, investing in Biotech is somewhat different from investing in the IT as the companies cannot produce immediate results or tangible products and mostly focus on research and innovation. Yet the experts say that in the next 15-20 years Biotech will revolutionize the market and definitely make you regret not investing in it earlier before the stock prices skyrocketed. How many of us wanted to go back to 2005 and invest in Facebook?
Editas Medicine (NASDAQ: EDIT) could be a good example of how Biotech investments work at the moment. The company has received large investments while their product (genome editing technology) is still far from being finished. Again, it's kind of similar to investing in an IT company back in the 90s when even Google (NASDAQ: Alphabet Class A [GOOGL]) didn't look that promising.
Today's Biotech companies rely on investors' trust in many ways as they still need time to succeed. But when the technological advances finally keep up with the industry's ideas, Biotech will be the next hot industry. So what should you consider right now regarding investing in Biotech? In order to make a good investment choice, thorough company analysis is your best (and almost only) friend.
As most companies cannot offer a final marketable product, it's important to analyze the team that is working on the idea and see whether they demonstrate persistence to maintain it in the long run, as biotechnological innovations require a lot of time. Next to that, if the company of your choice is on the list to get investments from a big pharmaceutical corporation or has already received some funding, that's a good sign to consider it for your own investment. Large pharmaceutical companies are always on the hunt for younger firms that are showing promising innovations.
“The reality is, large pharma doesn’t do a lot of innovation. They do partnerships,” said Mike Tung, a doctor and Biotech sector investor.
Just last week, Pfizer (NYSE: Pfizer [PFE]) acquired a Biotech company Medivation (NASDAQ: MDVN) that is developing prostate cancer treatment medicine for $14 billion. Similar to that, Pfizer bought Anacor Pharmaceuticals (US: ANAC) earlier this year. Marketwatch experts said that Pfizer's acquisition of Anacor was a good example of why investors should consider buying Biotech stocks even though they might not look promising sometimes.
“You have companies where investors are expecting a certain amount of revenue by a certain date, and mergers and acquisitions are the only way to get there,” said Brad Loncar from Loncar Investments.
4 Biotech stocks to buy right now
On this note, let's look at some Biotech companies that you can invest in already now. As Nasdaq Biotech Index was rallying up this week, here are 4 Biotech stocks to keep in mind.
- Exelixis (NASDAQ: EXEL)
This biotech company has recently announced development plans for a new kidney cancer medicine and closed this quarter with impressive results. EXEL stock that was trading for only $4 back in March, is now up to $11,44, growing more than 3 times in the last months. The experts say if the company can sustain these results, the stocks can be well expected to rise up to $13 within a short time.
- Nektar Therapeutics (NASDAQ: NKTR)
Nektar Therapeutics has received several awards for developing new diabetes medicine yet its stocks are quite affordable. This Monday, the company's stocks grew by 3,3% to $17,83 with 785,097 shares in trade. According to The Street if Nektar manages to break through the $18 range, the stock can be expected to spike to $20-$22.
- Progenics Pharmaceuticals (NASDAQ: PGNX)
The PGNX stock is also about to show steady growth as it rose by 2,2% to $6,97 with a volume of 1 million shares. In the near future, we might see the stock growing up to $7,75 and low $8s with a possibility of reaching $11 on an intermediate basis.
- Puma Biotechnology (NYSE: PBYI)
According to the experts, PBYI stock is seeing a strong growth from its value of less than $20 in May. This Monday, the stock grew $4,65 to a total of $54,65 followed by the announcement that Puma's breast cancer drug will be analyzed by the European Medicines Agency. The Street's Harry Boxer says that if the stock breaks through $55,50 value, it may well go up to $68s, making the PBYI stock an attractive investment.