Unveiling Two Trailblazing Shares with Potential for Extraordinary Gains
Many of Wall Street's prominent and successful stocks owe their success to innovation. While it's too late to invest in the established leaders that have already dominated their respective fields, there are numerous smaller, highly innovative companies that could still deliver substantial returns as they gradually gain recognition. However, these stocks often come with a fair share of risk.
For risk-tolerant investors, these potential gains are hard to overlook. In the spirit of exploration, let's examine two such companies from the healthcare sector that could disrupt the market and provide outstanding returns: Iovance Biotherapeutics (IOVA -5.01%) and Recursion Pharmaceuticals (RXRX -4.62%).
1. Iovance Biotherapeutics
Iovance Biotherapeutics is a biotech company specializing in cancer treatment. They concentrate on developing therapies based on tumor-infiltrating lymphocytes (TILs). TILs are immune cells that can pinpoint and eliminate cancer cells, and they naturally exist within each one of us. Iovance leverages the power of TILs by extracting them from patients, manufacturing tailored treatments, and then reintroducing them back into the patient.
While the process is complex, it has shown promising results. In February, Iovance secured approval from the U.S. Food and Drug Administration for Amtagvi, a therapy for advanced previously treated melanoma (a kind of skin cancer). The company anticipates a potential U.S. market of 20,000 annual cases for Amtagvi. Iovance also plans to pursue approvals in other countries, such as Canada, several European nations, and Australia.
Iovance's revenue in the third quarter amounted to $58.6 million, marking a substantial improvement compared to the $469,000 recorded in the previous year. The company also reported a net loss per share of $0.28, a notable improvement from the net loss per share of $0.46 in the prior-year quarter.
Manufacturing TIL therapies like Amtagvi takes approximately 34 days. Therefore, Iovance is just starting out in the U.S. market for its latest medication. Once it obtains approvals in other countries, its target market will significantly expand.
Furthermore, Iovance has a bustling pipeline. They are seeking numerous label expansions for Amtagvi and are developing new TIL treatments. Iovance Biotherapeutics' innovative cancer treatment methods may prove to be exceptionally profitable, permitting it to deliver impressive returns over an extended period.
2. Recursion Pharmaceuticals
Designing drugs can be challenging and costly. The process has grown more comprehensive, even with advancements in technology, a phenomenon known as Eroom's law (the reverse of Moore's law). Recursion Pharmaceuticals is aiming to revolutionize this process by using an AI-powered operating system (OS).
The company built a virtual lab where various clinical compounds are consistently tested in a human gene library. The most promising ones are then chosen for clinical trials. Recursion claims to save a significant amount of time and money on product selection for clinical trials.
Recursion currently has numerous products undergoing phase 2 trials, with data releases planned for the next year or so. One of these, REC-994, demonstrated positive outcomes in a phase 2 study for cerebral cavernous malformation, a condition that occurs when irregular blood vessels cluster in the nervous system. The drug can cause severe health complications, so regulatory approval is still several years away.
If its strategy works, Recursion could potentially license its OS to other drug developers, in addition to reaping profits from its own medicines. Reducing the time and cost required to develop drugs could result in significant profits for the company.
Fine Print
Before diving headfirst into an investment, it's crucial to weigh the potential downsides, regardless of how innovative a company may appear. Investors should be aware of the risks associated with these two biotech stocks.
Iovance's methodology is intriguing, but the 34-day manufacturing time for Amtagvi is a notable drawback. The company may also encounter clinical or regulatory hurdles, a risk that is more pronounced for smaller pharmaceutical companies.
Recursion has yet to launch a single drug on the market, despite its promising platform.
These two stocks offer considerable growth potential. However, the heightened risk means investors would be wise to start with a modest position before gradually increasing their holdings in Iovance and Recursion, should they demonstrate their capabilities.
- Investing in Iovance Biotherapeutics could be an interesting proposition due to its innovative cancer treatment methods and promising results. Despite the complexity of manufacturing TIL therapies and potential regulatory hurdles, the company's substantial improvement in revenue and expanding target market make it an appealing option for risk-tolerant investors.
- For those considering investing in Recursion Pharmaceuticals, its AI-powered operating system and potential to revolutionize drug design are compelling. However, it's essential to consider the risks involved, such as the lack of marketed drugs and the lengthy process of regulatory approval, before making any investment decisions.
