Investing in biotechnology stocks is exciting, especially if you’ve got an appetite for risk along with reward.

Biotechnology has been defined as any type of technology “that involves the use of living organisms to develop agricultural or medical products.” Commonly, those companies focus on clinical research and development of pharmaceutical products to treat diseases. Investing in biotechnology shares is not for the faint of heart, and is risky for even seasoned and savvy investors.

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Five of the best biotechnology stocks to buy and own in 2019

There are lots of resources out there for researching biotechnology investment options all over the world. Here, based on a review of several sources, are five of the best biotechnology companies to buy or own in 2019.

Vertex (VRTX, NASDAQ)

Vertex’s three approved drugs — Kalydeco, Orkambi, and Symdeko — have a near-monopoly on treating the cause of cystic fibrosis. The company’s patents on those Kalydeco and Symdeko run until 2027, and until 2030 for Orkambi. Vertex does not need to worry about competition from generic versions for many years. Sales of Kalydeco, Orkambi, and Symdeko have soared, as have Vertex’ revenues by 22%.

The biotechnology firm’s adjusted earnings per share have more than doubled since 2017. In 2020, Vertex may add a triple-drug combination therapy to the market. The product pipeline includes an experimental pain drug, VX-150, and early-stage clinical programs with CRISPR Therapeutics on gene-editing therapy. As of December 6, 2019, Vertex shares were trading at $223.25 USD.

AbbVie (ABBV, NYSE)

The world’s best-selling drug is AbbVie’s Humira, which generated revenue of $19.9 billion in 2018. Humira was responsible for 61% of AbbVie’s revenue in 2018. Also bringing in sales of $1 billion or more were AbbVie’s cancer drug Imbruvica and hepatitis C drug Mavyret. AbbVie continues to see sales growth from leukemia drug Venclexta and even older drugs Creon and Lupron. Prospects are high for an endometriosis drug, Orilissa, approved in 2018.

AbbVie claimed to hold $8.8 billion in cash, cash equivalents, and short-term investments as of September 2018. That suggests AbbVie has the resources and flexibility to make acquisitions. It’s dividend yields more than 5% and, at 8.57, it’s profit-to-earnings ratio of 8.57 makes the share a relative bargain. As of December 6, 2019, AbbVie shares were trading at $86.98 USD.

Investing in biotechnology shares is not for the faint of heart, and is risky for even seasoned and savvy investors.

Celgene (CELG, NasdaqGS)

Celgene develops and markets drugs to treat cancer and inflammatory disorders. Celgene’s most prominent product – Revlimid – is approved for the treatment of multiple myeloma and some transfusion-dependent anemias. Revlimid generated sales of nearly $9.7 billion in 2017. A generic version of Revlimid will be available in limited volumes starting in 2023; volume restrictions will disappear at the end of January 2026. Other significant products include another multiple myeloma drug, Pomalyst, immunology drug Otezla, and cancer drug Abraxane.

The company’s pipeline includes myelofibrosis drug fedratinib and multiple sclerosis drug ozanimod. By 2020 approval of blood disorder drug luspatercept and cancer cell therapies bb2121 and liso-cel are anticipated. Celgene reports cash on hand of $6 billion. The company’s adjusted earnings per share increased by 20% in 2018. As of December 6, 2019, Celgene shares were trading at $108.24 USD.

Axsome (AXSM, NASDAQ)

Axsome is a clinical-stage biotech stock and, thus, an especially risky proposition. As of December 1, 2019, Axsome’s value had risen by over 1,200% in 2019. Axsome began the year with a market capitalization of about $79 million but is now a billion-dollar-company. Axsome expects to announce the topline results of three phase 3 clinical trials and one phase 2 clinical trial by the end of 2019. Those four studies relate to three different assets aimed at four disorders: major depressive disorder, treatment-resistant depression, Alzheimer’s disease agitation and migraines.

Clinical approval of migraine drug AXS-07, alone, could result in annual sales of at least $1 billion. There’s no assurance of positive results, but successful clinical results would project even greater gains. As of December 6, 2019, Axsome shares were trading at $45.43 USD.

Investing in biotechnology stocks is exciting, especially if you’ve got an appetite for risk along with reward.

Adverum (ADVM, NASDAQ)

In May 2019, the Food and Drug Administration lifted a clinical hold on one patient cohort in Adverum’s phase 1 clinical study that was evaluating gene therapy ADVM-022. ADVM-022 is intended to treat age-related macular degeneration. Adverum’s share price had risen steadily to that point but really took off with the FDA’s action. Adverum’s therapy delivers a gene to cells at the back of the patients’ eyeballs. The retina is expected to produce its own vascular endothelial growth factor inhibitor permanently after just one administration.

Results from the first six patients injected with ADVM-022 were not impressive initially. Five minor cases of inflammation caused worsening vision. Whether Adverium has a powerhouse therapy to market will depend on the results from patient groups receiving larger doses. As of December 6, 2019, Adverium shares were trading at $11.43 USD.

A deeper dive — Related reading from the 101:

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These relatively high-priced shares aren’t the only game in town. Check out entry-level share prices, too.

– 5 best biotech stocks to have in 2018 | Finance 101

Did you buy into any of these companies?