As 2023 Comes To A Close And Updates Are Expected From Many Companies, Are These Three Unique Biotech Names On Your Watchlist?

Biotech stocks have had a tough run in 2023 so far. As of early November, the iShares Biotechnology ETF (IBB) was down 7.5% while the S&P 500 was up more than 14%.

But that doesn’t mean investors should count them out. There are periods of time when the S&P 500 outperforms biotech stocks, but at other times, the reverse happens — for example, between 2012 to 2015, IBB beat the S&P 500 by more than 3-to-1. In general, when there is a risk for the general economy, traders often look to invest in longer-term biotech stocks. 

There are several reasons to be optimistic about the sector’s prospects as we head into the New Year, and many demand drivers remain intact. With the population growing and aging, there’s an increased need for medicines. Not just for old age diseases like diabetes, arthritis and cancer, but even more importantly, for infectious diseases. This is because the immune system performance decreases as a person ages. The biotech industry is up to its challenge, with many novel drugs and devices responding to meet this rising need now and into the future.

As a result of all this, some companies may still have the potential to grow, depending on factors like the market they’re treating, their pipeline and their technology.  

Here’s a quick look at three biotech companies that could potentially display growth in 2024. 

Eli Lilly’s Big Diabetes Market  

Diabetes is a big and growing global problem. By 2030, 578 million or 10.2% of the world population will have diabetes. That increases to 10.9% or 700 million by 2045. That has benefited Eli Lilly and Co. LLY, with 85% of its year-over-year increase in net earnings coming from drugs to treat diabetes. It's also in several phase three clinical trials which could drive a lot of growth in the years to come. 

Eli Lilly is targeting specific diseases with its developmental therapies and drugs, such as cancer, Alzheimer’s disease, obesity and diabetes. It is also using AI to streamline the drug approval process, which may mean it can bring medications to market quicker. 

NanoViricides’ Novel Approach  

Just like Eli Lilly is targeting diseases like diabetes, another company is developing drugs targeting viruses. 

COVID-19 woke the world up to the need for new treatments and cures for viruses. NanoViricides, Inc. NNVC, the clinical-stage drug company, is answering that call, developing nanomedicine drugs to fight viruses including COVID-19, RSV and shingles. Its drug candidate NV-CoV-2 holds promise as a broad-spectrum antiviral, which is why some Wall Street analysts are bullish on the stock. 

NV-CoV-2 is based on the company’s nanoviricide active pharmaceutical ingredient NV-387, which the company says blocks the reinfection cycle of the viral disease. It binds to the virus and fuses with the virus surface, uprooting the glycoproteins required for the virus to bind to the human cell – rendering it incapable of infecting a cell. If NanoViricides is correct, NV-387 is more effective than antibodies, which can only cover the virus. The company likens the revolutionary potential of its drug ingredient to antibiotics in that it can be used to treat a variety of viruses. 

Underscoring that, NanoViricides just announced NV-387 was highly effective in an animal model that is used in drug development for MPox and Smallpox virus infections in humans. 

Analysts, according to InvestorsObserver, expect shares to soar more than 350% in the next 12 months. InvestorsObserver, which ranks stocks based on a combination of technical and fundamental factors, gave NanoViricides an 18 rating. That puts it near the top of the healthcare sector, scoring higher than 70% of its industry peers.

Ginkgo Bioworks Leverages AI 

Synthetic biology is a growing market with companies using technology to design the microorganisms used to create drugs, additives and chemicals for all sorts of products. Ginkgo Bioworks Holdings Inc. DNA says it's taking that to the next level with the help of advanced technology. The company says its use of AI to design and test microorganisms enables it to make microbes more cheaply and efficiently than rivals.  

With the help of AI Ginkgo can convert microorganisms into data. It can then collect and catalog information on ways mutations affect the microorganisms. That data is fed into an AI system to predict the mutations. That reduces the number of microorganisms it has to test. 

That hasn’t been lost on Novo Nordisk A/S NVO and Pfizer Inc. PFE. Both signed collaboration agreements with the biotech. 

The world is getting older and sicker at the same time technology is advancing thanks to AI, machine learning and big data. Biotechs, especially the ones focused on drugs and synthetic biology, could stand to benefit in 2024 and beyond. 

Featured photo by RephiLe water on Unsplash.

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