Top Stock Picks for 2022 in Biotech and Genetics

Biotechnology is an exciting area known for the potential of high reward, albeit with high risk. Investment experts participating in our MoneyShow Top Picks 2022 report are also focused on healthcare stocks as favorite opportunities for the year ahead. Here are ideas from seven newsletter advisors for healthy portfolio gains in 2022. John Persinos, Investing Daily Intellia Therapeutics is the best way to profitably leverage the accelerating trend of creating new drugs by editing genes. This is the new frontier of science. Biotech firms are editing DNA to treat and prevent diseases such as Alzheimer's, Huntington's, Parkinson's, multiple sclerosis, sickle cell anemia, a wide range of cancers -- just about any scourge you can think of. In 2020, the Nobel Prize in Chemistry went to Jennifer Doudna and Emmanuelle Charpentier, for their advances in genome editing. They created a revolutionary gene editing tool called CRISPR, an acronym for clustered regularly interspaced short palindromic repeats. Let's put aside the jargon. Here's what you need to know: CRISPR is the hottest area in biotech research today. CRISPR guides molecular scissors to a targeted section of DNA, to disable or repair a gene, or to insert a new molecule where the scissors have made a cut. Think of CRISPR as a genetic-engineering cruise missile. Doudna went on to co-found Intellia, which was incorporated in 2014 and is headquartered near the Massachusetts Institute of Technology (MIT) campus in Cambridge, Massachusetts. The company started as a venture capital-backed startup and launched its initial public offering on May 6, 2016. Intellia currently has license and collaboration agreements with Novartis and Regeneron Pharmaceuticals . Intellia uses the CRISPR system to develop new treatments. The company doesn't have an approved drug ... yet. But when it comes to CRISPR, the company is the best pure play you can find. With $529 million in cash on hand (most recent quarter) and staffed with some of the best scientific minds in the world, Intellia has the wherewithal to continue its groundbreaking research. Hilary Kramer, GameChangers CytomX Therapeutics wasn't alone in having a miserable 2021 -- nearly 80% of the biotech stocks on my screen lost ground last year. But after shedding 36% of its market cap, CTMX trades at an 18% discount to cash and equivalents, with minimal debt to weigh on the balance sheet. Investors can buy the stock and get the clinical pipeline for free. And having reviewed the science and the FDA calendar, I suspect CTMX is a bargain down here below $5. While preliminary Phase II results on a head-and-neck squamous cell cancer trial weren't spectacular, the drug did a whole lot better getting advanced forms of lung cancer under control, comparing well to rival therapies and blowing conventional chemo away. That single indication in isolation would be a company maker -- with data coming on esophageal cancer and lymphoma as well as a breast cancer drug deep into its own Phase II trial. There's a reason Bristol-Myers Squibb keeps pouring cash into these programs. The giants see the potential of adding CTMX antibodies to existing oncology cocktails. Now it's time Wall Street adds the stock back to the core biotech portfolio. Joseph Cotton, Cotton's Technically Speaking Bluebird Bio, Inc. -- our Top Pick for 2022 -- is a clinical stage biotechnology company specializing in gene therapies for severe genetic disease and cancer. The company recently had two Biologics License Applications accepted for priority review by the FDA: 1) Beti-cel for b-thalassemia, and 2) Eli-cel for Cerebral Adrenoleukodystrophy. The company also has a gene therapy candidate, lovo-cel, for sickle cell disease in a phase ½ clinical trial that has shown promising results, including stable production of gene therapy-derived anti-sickling hemoglobin and continued complete resolution of severe VOEs up to 36 months. Patient-reported data on health-related quality of life (HRQoL) complemented clinical findings, and were the strongest HRQoL improvements in any sickle cell gene therapy program. In December, the FDA placed its clinical program for lovo-cel gene therapy on partial clinical hold for patients under the age of 18. Enrollment and dosing for patients 18 and older in the clinical studies were not affected. For full disclosure, we have bought the stock and expect it to double within six months. Michael Brush, Brush Up on Stocks Biotech name Design Therapeutics came public in March, 2021 at $20 and traded up to $40-$50 range right away. It got a lot of attention because it's in the popular genomic medicine space. By July-November it was a decidedly busted IPO -- trading well below $20 for months. That was the time to pick it up and by the end of the year, we were up 50%. But the stock is still a buy because key catalysts have not even kicked in yet, and it checks the boxes in the biotech model I use. The company has a proprietary platform that helps it design therapeutic candidates for inherited diseases driven a specific type of DNA problem called nucleotide repeat expansion, which creates lots of excess repeats in mutant genes. This is the underlying cause of more than 40 debilitating diseases impacting millions of people. The company's proposed fix: Targeted chimeras (GeneTACs). GeneTACs bind to genetic repeat sequences and tweak gene expression to improve cellular health. Currently, there are no therapies that address the cause of any nucleotide repeat expansion diseases. Design Therapeutics will take a big step toward changing that when it launches trials on a therapy for one called Friedreich ataxia in the first half of 2022. That will be a big catalyst. Next, the company is working to expand its pipeline into other therapies that handle unmet medical needs like Huntington disease, spinobulbar muscular atrophy, familial amyotrophic lateral sclerosis, frontotemporal dementia, and Fragile X syndrome. The company may also post updates on its early research on a therapy for another genetic disorder called myotonic dystrophy type-1 (DM1). And we may learn of strategic collaborations which will bring in funds, provide outside verification of the GeneTAC platform, and draw investor attention if a big pharma name is involved. Jeffrey Hirsch, Stock Trader's Almanac My Top Picks for 2022 come from our mid-cap seasonal Best Months stock basket. We screen for reasonably solid valuations, revenue and earnings growth and relatively low price-to-sales and price-to-earnings ratios. Then we look for positive price and volume action as well as other constructive technical and chart pattern indications. Finally, we lean towards stocks flying under Wall Street's radar with a below-average number of analysts following them. Pacira BioSciences is the leading provider of non-opioid pain management and regenerative health solutions. The firm is also developing innovative interventions to address debilitating conditions involving the sympathetic nervous system, such as cardiac electrical storm, chronic pain, and spasticity. Pacira has three commercial-stage non-opioid treatments: EXPAREL®, a long-acting, local analgesia currently approved for postsurgical pain management; ZILRETTA®, an extended-release, intra-articular, injection indicated for the management of osteoarthritis knee pain, and iovera, a novel, handheld device for delivering immediate, long-acting, drug-free pain control using precise, controlled doses of cold temperature to a targeted nerve. The company is actively expanding its portfolio with acquisition and boasts a solid balance sheet with strong growth and relatively reasonable valuations for a drug company. Jay Silverman, The Medical Technology Stock Letter Based upon its novel mast cell monoclonal antibody CDX-0159, Celldex Therapeutics is a favorite biotech stock pick for 2022. With exceptional Phase I/II data in chronic inducible urticaria (CindU or hives) -- a 100% response rate and a clean safety profile, Celldex will deliver additional key clinical results from that study beginning in Q1 2022 and another key trial in H1 2022/early summer in chronic spontaneous urticaria (CSU). An increasing number of studies are proving that mast cells are the dominant player in a variety of allergic and inflammatory conditions, including truly blockbuster conditions like asthma, allergies, arthritis. In addition to urticaria trials, which are delivered intravenously -- studies are underway with a subcutaneous (SC) version that would lead to even wider at-home use. A SC pilot study is due in early 2022 as well. Celldex also has an R&D pipeline based on humanized antibody technology (huMab) developed at Medarex, which was acquired by Bristol-Myers Squibb in 2009, and subsequently developed Ovdipo and Yervoy for metastatic melanoma. Celldex is an ideal takeover candidate as several drugs on the market are being developed for urticaria but none with the mechanism and data as impressive at CDX-0159. CLDX is a buy under $55 with a target price of $85. As the launch of its leading GNRH blocking pill -- Orgovyx (relugolix) -- heading to a best-in-class prostate cancer drug, Myovant is a top pick for 2022. The latest quarter report of $18 million in sales were up almost 80% Q/Q (and despite the Covid spike limiting in person physician calls), and the drug is now annualizing at over a $100 million run rate. The drug's oral bioavailability versus injectable GNRH drugs will continue to add new patients but just as importantly convert existing prostate cancer patients to take a once-daily pill versus shots for Lupron which generated roughly $800 million in 2020. Myovant's second drug, Myfembree, is also based upon relugolix, but is indicated for female conditions. It was approved last year for treating pain with uterine fibroids. The larger market of endometriosis is awaiting approval in U.S. and Europe. MYOV stock was under pressure in 2021 when Pfizer , its U.S. marketing partner for Orgovyx and Myfembree, declined an option for select non-U.S. marketing rights. However, the decision was not due to drug but PFE's internal strategic focus. Myovant expects to sign another partnership for this geographic area sometime before the expected mid-year European approval. In our view, the deal will be both financially and strategically value-added. Potential suitors, in our view, are other leading injectable GNRH players such as AbbVie , Takeda or Astellas. Not to mention, its majority owned partner Sumitovant has been rolling in its assets and Myovant is the last one that it has not acquired. In November 2020, it bought Urovant -- another vant it had a majority ownership of -- at a 96% premium to its stock price. With over $650 million in cash, Myovant is well funded to maximize the development of relugolix with or without a new partner. The stock's weakness since PFE declined its option, we believe, has created an attractive buying opportunity for 2022. With a de-risked and already FDA approved, soon to be best-in-class drug in Orogvyx, and up-and-comer with various competitive advantages in Myfembree, plus a long list of value-enhancing catalysts, we recommend MYOV. Lastly, for reasons above we believe Myovant represents a potential biotech takeover for 2022. MYOV is a buy under $30 with a target price of $45. John McCamant, The Medical Technology Stock Letter Madrigal Pharmaceuticals is poised to deliver positive Phase III data in 2022 for resmetirom, its best-in-class NASH (nonalcoholic steatohepatitis) compound. The company remains on track to complete the double-blind portion of the Phase III non-invasive imaging and biomarker study, MAESTRO-NAFLD-1, and report top-line data in early 2022. The Phase III data will measure the reduction in imaging and biomarker measures of NASH, as well as the lowering of LDL-cholesterol and other atherogenic lipids. Resmetirom has huge potential due to its excellent efficacy at reducing both NASH/NAFLD and the underlying cause of NASH high LDL/atherogenic lipids, accompanied by outstanding safety and oral delivery. There are no current treatments approved for NASH/NAFLD and an efficacious and safe pill like resmetirom has the potential, in our view, to dominate the sector and become a multi-billion drug. The upcoming data will not just be watched by investors, Big Pharma/Big Bio will also be watching closely as MDGL is a fully owned, de-risked asset that would make an excellent M&A target for the big pharmaceutical companies. In our view, MDGL is poised to deliver positive Phase III data which will serve as major stock catalyst and also lead to a premium takeover candidate in 2022. MDGL is a buy under $200 with a target price of $275. We are making PLx Pharma a Top Pick for 2022 after the initial strong launch for Vazolore, the first and only FDA approved, liquid-filled aspirin capsule with a unique mechanism of action that avoids gastric distress. Vazolore is off to a very good start with initial sales revenue exceeding expectations despite a difficult Covid-19 environment. The company's continued targeted marketing efforts are expected to yield sequential sales growth. A recent survey indicated that 68% of cardiologists are receptive to switching to and/or initiating use of Vazalore based on superior efficacy and ability to prevent gastrointestinal issues compared to other aspirins. In our view, Vazalore has the potential to take a nice portion of the $10 billion aspirin market and even grow the market by itself. Additional upside for the stock lies in Vazalore's potential to be a pipeline in a pill and PLxGuard's potential to become a multi-drug delivery platform. PLXP's Vazalore is the first and only FDA approved, liquid-filled aspirin capsule with a unique mechanism of lipid encapsulated delivery called PLxGuard. The drug is a highly differentiated formulation with proven advantages over current offerings on both safety and efficacy parameters including achievement of 99% platelet inhibition significantly faster than standard-of-care enteric coated (EC) aspirin. We believe Vazalore has significant potential in platelet inhibition with nearly twice as many patients achieving a complete antiplatelet effect compared to EC aspirin. In our view, PLXP is de-risked with an approved product and a strong initial launch of Vazalore. The drug has super aspirin potential in platelet inhibition, pain relief, and as an anti-inflammatory drug. We are recommending PLXP based on a combination of Vazalore's market potential and management's demonstrated track record. Additional upside for the stock lies in Vazalore's potential to be a pipeline in a pill and PLxGuard's potential to become a multi-drug delivery platform. Potential upcoming catalysts include rising quarterly sales compared with very low Wall Street estimates that may be consistently beat, pipeline updates (Ibuprofen in Phase I), and new candidates added to pipeline. PLXP is a buy under $22 with a target price of $35. Get free access to the full 100+ page Top Picks Report featuring the nation's most respected and well-known newsletter advisors' favorite investment ideas for 2022.

Top Stock Picks for 2022 in Biotech and Genetics

Seven investment experts participating in Moneyshow's Top Picks 2022 report share their ideas for healthy portfolio gains in 2022.

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