2024 will be the time to separate the wheat from the chaff. In our new world of higher interest rates, funding for unprofitable biotech ventures has become scarce. Simply put, higher interest rates make it more appealing to invest in projects with guaranteed returns now, instead of dubious returns later. In this new world, biotech investors would be well advised to seek companies that are already well funded and have a clear path to profitability in place. Here are three outstanding candidates.
By The Sick Economist
1. Ionis Pharmaceutcals
2024 is the year where we will likely see poorly funded biotechs dropping like flies. Ionis investors can feel confident that their company will survive and thrive long into the future.
The company seeks to leverage RNA technology to help patients with unmet needs. Ionis sees itself as a “platform company,” meaning that the emphasis is on proprietary RNA technology, as opposed to any one particular disease state. This has lead to a diverse and advanced pipeline of commercially viable drugs.
As we write this, Ionis has no less than eleven drugs in phase three trials. Given that drugs in phase 3 trials make it to commercial launch more than 50% of the time, this means that investors can expect some serious revenue growth in the near future.
Additionally, Ionis has partnered with powerful pharmaceutical giants like Roche, Astrazeneca and Biogen to insure that the products receive a proper commercial launch.
Lastly, the company is sitting on more than $2 billion in cash and marketable securities. In the last nine months, they went through approximately $340 million in cash while advancing their research pipeline. This means that, even if, somehow, all of their phase three products flopped, they would still be well funded for at least 6 six more years. Ionis is in a solid financial position.
If you are looking for a company with a maturing research pipeline, and a hearty balance sheet, this would be your firm.
2. Abcellera Biologics
Abcellera is a company dedicated exclusively to the discovery and creation of new antibodies. These are proteins that act as “seek and destroy” agents in the human immune system. In effect, Abcellera is pioneering technology to soup up the human immune system so that you can more effectively destory unwanted invaders in your body.
Abcellera is another “platform” company. In other words, they focus on creating the most viable antibodies for a wide range of diseases, and they then partner with larger pharmaceutical companies who will carry the research to completion.
You could think of Abcellera as a gardner that is strategically planting seeds. In order for the investors to one day reap fruit from these sprouts, Abcellera must survive long enough to see the seeds grow. Abcellera is pursuing a patient, long term startegy, and they have the funding to match.
The company has $786 million in cash on their balance sheet, and they only burned $25 million during the past nine months while advancing their research. They have 110 active partnerships on antibodies they discovered. These partnerships span the entire pharmaceutical universe, involving big name players such as Gilead, Eli Lilly and Regneron. Even if it takes several more years for these partnerships to yield commercial products, Abcellera should be able to continue with their research unhindered.
Abcellera is only a good purchase for the patient investor. They are delving deep into the world of biological innovation, and their financial situation is optimized for this purpose. But it may take a while…..
3. Crispr Therapeutics, Inc.
Crispr is the definition of a company that is “turning the corner.” The company specializes in a kind of gene editing technology called CRISPR, which allows scientists to actually fix diseases directly at their genetic root. Up until now, most medicine is oriented towards treating symptoms of a disease, or temporarily surpresing it. CRISPR actually seeks to cure disease, once and for all, by fixing what is broken in a patient’s DNA.
That being said, its been a very long haul. When the technology burst on the scene ten years ago, it was immediately hailed as revolutionary. Crispr Therapeutics saw their stock rocket from $40 a share to $199 per share.
However, investors can be a fickle bunch. Like anything good, the technology took longer to perfect than many had anticipated. Investors grew impatient, and the stock price crashed.
Just this month, the company received full approval for its first commercial product, Casgevy. This is a one time treatment that cures sickle cell disease. Crispr is partnered with Vertex on this product. The smaller biotech will be entitled to an immediate, one time $200 million payment, and 40% of any ongoing profits. Some analysts calculate that the annual revenue for Casgevy could be over $2,000,000,000. This would yield a very nice haul for Crispr Therapeutics, which is only valued at $5 billion right now.
But Casgevy should be just the beginning. The company also has clinical stage products in the fields of oncology, diabetes and cardiology. Even if it takes years for the pipeline to further mature, the company is well funded. They have roughly $1.7 billion of cash on their balance sheet, but only burned $164 million over the last nine months. This means that the company can comfortably advance their research pipeline for years without having to worry about a cash crunch.
If Crispr Therapeutics were an airplane, they would just be leaving the ground, with every intention of flying high….
Every biotech investor knows that the last few years have been tough for unprofitable, fledgling ventures. 2024 looks like the year when many weaker, poorly funded ventures will fall by the wayside. While many small companies will be merely struggling to survive, these three firms look ready to thrive.