Genomics is undeniably medicine’s future, and genomics stocks stand to be the next big thing in healthcare as the industry matures. But the crux of the matter is when the industry will mature. Medical advancement lead times, regulatory approval, and expensive R&D combine to make genomics stocks a risky speculative play today while we await the industry’s winner.
But betting on the future is inherently a risky move, and not for the week of heart. Just ask Cathie Wood, whose genomics fund, the ARK Genomic Revolution ETF (BATS:ARKG), is down nearly 75% from past highs. But adjust your lens slightly. ARKG is up 42% over the past five years and 15% since January. ARKG is a microcosm of the overall genomics opportunity – volatility, shakiness, and gains for those who get in early. But not for those with paper hands.
If you want to manage your own portfolio of genomics stocks, these three stand as top picks for healthcare’s future.
Recursion Pharmaceuticals (RXRX)
Recursion Pharmaceuticals (NASDAQ:RXRX) made waves this year as the AI-centric biotech company got a $50 million investment from mega-firm Nvidia (NASDAQ:NVDA). The enthusiasm proved short-lived, though, and today, shares trade around half of what they did after the announcement. Still, the company has returned 25% since January, and little has materially changed about the company’s prospects.
RXRX’s AI-powered platform performs rapid cross-gene relationship and interaction matching using info pulled from a vast and growing data set. This helps cut drug discovery time into a fraction of what it once was. Discovery is the first step of a lengthy product pipeline, and RXRX’s platform means companies can bring better therapeutics to market faster. This is undoubtedly driving Nvidia’s bullish attitude towards the company, and RXRX stands to gain where other genomics stocks can’t.
Since RXRX offers a platform leveraged by biotech and genomics researchers, Recursion stands to gain no matter which genomics company eventually wins the gene editing arms race. And, while we wait for genomics to advance toward market viability, RXRX’s suite of tools serves biotech and pharma firms alike and helps keep the cash coming in.
Crispr Therapeutics (CRSP)
Crispr Therapeutics (NASDAQ:CRSP) is undeniably the name in genomics stocks. In a huge move, the FDA approved the world’s first gene-editing treatment earlier this month. The therapeutic, called Casgevy, is Crispr’s flagship productization effort and treats sickle cell disease. Casgevy’s approval is a watershed moment for genomics. But markets didn’t love the news – offering a buying opportunity for investors in it for the long run.
In a nutshell, markets assessed Casgevy’s total addressable market – about 100,000 – and price per patient, which exceeds $2 million. Weighing those, it seems like Casgevy’s financial potential in the short term won’t compensate for the steep running R&D and operational costs. But this misses the forest for the trees. Casgevy’s approval means genomics is a viable treatment plan moving forward. It also gives CRSP bulls a booster shot of enthusiasm as the company navigates the next few years.
Twist Bioscience (TWST)
Twist Bioscience (NASDAQ:TWST), like RXRX, is a genomics stock positioned to win no matter which companies capture the largest market share. TWST creates synthetic DNA, which is critical to early-stage genomics testing across many applications. Like RXRX, Twist’s products are in demand today for many biotech firms. This demand creates a recurring source of revenue as the industry matures.
Twist counts more than 300 partners among its clientele. The company marked $264 million worth of orders and $245 in total revenue for the last fiscal year concluded in November. While the company still isn’t profitable, it has a firm grasp on cash burn and projects strong gross margin increases in 2024 as it expands operational reach and begins getting R&D costs under control.
Twist is one of the strongest-performing biotech and genomics stocks this year. Shares surged by over 50% since January and have more than doubled in the past six months. But there’s still plenty of upside available. Adding TWST to your genomics stock holdings is a great diversification tool as we await widespread approval and use.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.