Biotech giants Vertex Pharmaceuticals (VRTX 1.70%) and Moderna (MRNA -5.69%) have had very different starts to 2022. Vertex, which has underperformed the market over the past 10 years, has seen impressive returns year to date when compared to the S&P 500. Moderna, on the other hand, has had a dismal start to the year, but still boasts returns of over 600% since the start of 2020, due in large part to its successful COVID-19 vaccine.
Some might think it’s too late to get in on these winning companies. But in my view, there remains plenty of fuel left in both biotechs’ growth engines. Let’s consider why Vertex Pharmaceuticals and Moderna are great stock picks to buy and hold through the next decade.
1. Vertex Pharmaceuticals
Vertex Pharmaceuticals made its fortune by marketing the only approved drugs that treat the underlying causes of cystic fibrosis (CF), a rare genetic disorder that affects patients’ internal organs. The company still has some room to grow in this space, but it is also looking to develop blockbuster medicines in other therapeutic fields.
Of the 83,000 CF patients in North America, Europe, and Australia, there remain more than 25,000 who are eligible for its therapies but have yet to undergo treatment. Vertex Pharmaceuticals is developing new medicines for an additional 5,000 CF patients who aren’t eligible for its existing medicines.
Elsewhere, the company has a pipeline full of promising products. Last month, Vertex Pharmaceuticals announced a pivotal clinical trial for VX-147, a potential treatment for APOL1-mediated kidney disease, a kidney disorder associated with mutations of the APOL1 gene. The company’s investigational treatment for acute pain, VX-548, is currently in a phase 2 study. Its potential therapy for type 1 diabetes, VX-880, is in a phase 1/2 clinical trial.
Another promising program is CTX001, a potential gene-editing treatment for two rare blood diseases called transfusion-dependent beta-thalassemia and sickle cell disease. Vertex is developing CTX001 in collaboration with CRISPR Therapeutics (CRSP -3.87%), and the partners could submit regulatory filings for this treatment by the end of 2022.
Vertex Pharmaceuticals will almost certainly earn some major regulatory wins in the next couple of years, helping the company launch brand-new products on the market. That’s on top of its continued dominance in the CF space, which will continue to help it drive top-line revenue growth. The biotech looks in an excellent position to continue rewarding shareholders in the long run.
Moderna’s shares are down by 44.48% since the year started. While the company has made billions off its coronavirus vaccine, Spikevax, some investors worry that this tailwind is ending. Though the pandemic isn’t officially over, many governments have continued to lift mask mandates and travel restrictions as a growing percentage of the population becomes vaccinated. Still, Moderna expects to generate $21 billion in sales from its crown jewel this year.
Notice that the company reported total revenue of $18.5 billion last year, so Moderna will probably improve its top line this year, even compared to an excellent 2020. Further, the $21 billion in projected sales for Spikevax is a revised figure. The company had initially said it expected $19 billion in sales from the vaccine. Moderna has also already signed advance purchase agreements for 2023.
It’s hard to know how much the company’s vaccine will rack up in sales next year, but the most important thing is that Moderna will benefit from its coronavirus-related work for a little while longer. Meanwhile, the company can use all the cash it is generating to fund other promising programs. Last year, Moderna reported $13.34 billion in free cash flow.
The company recently started a phase 1/2 clinical trial for a pair of potential flu vaccines, mRNA-1020 and mRNA-1030. As the biotech argues, the flu continues to cause hundreds of thousands of deaths worldwide despite the availability of vaccines. Moderna currently boasts 25 ongoing clinical trials in a slew of different therapeutic areas.
Investors can also expect Moderna to register significant regulatory wins in the next couple of years. Moderna may continue facing severe issues in the short run as the pandemic recedes. The current volatile environment, rife with geopolitical tensions and various macroeconomic headwinds, further contributes to investor uncertainty. However, investors focused on the long game should ride out the storm with this biotech stock. In 10 years, you’ll be glad you did so.