If you have a $500 budget, consider investing in a single biotech stock for long-term growth.
If you have a $500 budget, consider investing in a single biotech stock for long-term growth.
Investing sometimes calls for substantial initial funds. Take buying real estate or starting a new business, which often need substantial capital. However, even with limited funds, investing in stocks is still an option.
If you have $500, consider looking into Gene Therapy Corporation (VRTX -0.89%). Here's why this pharmaceutical stock is an excellent long-term investment.
By the numbers
Let's delve into numbers. Firstly, Gene Therapy's share price is currently beneath $450. With $500, you can afford one share and still have change.
When you think about pharmaceutical stocks, a small, risky company may come to mind. But that's not Gene Therapy. Its market cap is approximately $115 billion. It has been operating since 1989, going public in 1991.
Gene Therapy anticipates generating revenue of between $10.8 billion and $10.9 billion this year. Roughly 93% of its revenue comes from its CF drug Trikafta/Kaftrio as of now.
The company usually posts healthy profits. For instance, the third quarter 2024 earnings were around $1.05 billion, reflecting a strong net profit margin of close to 38%. Though there was a loss in the second quarter, this was due to the acquisition of Alpine Immune Sciences.
Despite the acquisition, Gene Therapy maintains a significant cash reserve. By September, its cash, cash equivalents, and marketable securities totaled $11.2 billion. The company has enough funds for another acquisition or to continue its stock buybacks.
Gene Therapy's immense potential
While Gene Therapy's financial figures are impressive, its true appeal lies in its immense potential. Gene Therapy should soon cement its monopoly in treating CF's root cause, as predicted by the anticipated U.S. Food and Drug Administration (FDA) approval of the vanzacaftor triple-drug combination therapy by Jan. 2, 2025. I predict this combo will become its most successful CF therapy yet.
Meanwhile, the commercial rollout of Casgevy is gathering momentum. This gene-editing therapy effectively cures sickle cell disease and transfusion-dependent beta-thalassemia. Gene Therapy had 45 approved treatment centers globally as of mid-October.
Another FDA approval might be just around the corner. The decision on suzetrigine for treating moderate-to-severe acute pain is scheduled for Jan. 30, 2025. Gene Therapy is also evaluating suzetrigine in a late-stage clinical trial targeting peripheral neuropathic pain. As a safe, effective non-opioid pain reliever, the drug has a substantial market potential.
Moreover, Gene Therapy's pipeline includes three other programs in pivotal development. Inaxaplin targets APOL1-mediated kidney disease (AMKD). Povetacicept is in a late-stage clinical trial for treating IgA nephropathy, an inflammatory kidney disease. VX-880 could potentially cure type 1 diabetes (T1D). Despite its limited market potential due to the need for lifelong immunosuppression, Gene Therapy has another T1D candidate in phase 1/2 testing without this requirement.
Buy and hold forever?
Pharmaceutical stocks may not initially seem like great picks for long-term investment. They can be highly volatile. Clinical setbacks present continuous threats. Approved drugs eventually lose patent protection. Competition can be fierce in certain cases.
However, Gene Therapy's robust pipeline, anchored by several promising late-stage candidates, reduces its risk. Its dominance in the CF market is expected to persist for years, with U.S. patents for Trikafta/Kaftrio through 2037.
Crucially, Gene Therapy is attempting to widen its scope by targeting indications with larger patient populations than CF. Acute pain, neuropathic pain, and type 1 diabetes present especially big market opportunities.
While investing in Gene Therapy Corporation's stock with $500 is a viable option due to its affordable share price, it's important to note the company's substantial market capitalization of approximately $115 billion. This financial strength, coupled with its promising pipeline and market potential, makes Gene Therapy an attractive long-term investment opportunity.
Gene Therapy's financial success is not limited to its impressive financial figures. Its upcoming FDA approvals, such as the vanzacaftor triple-drug combination therapy for treating CF, and its advancements in gene-editing therapies for sickle cell disease and beta-thalassemia, further boost its potential for significant growth.