January is often a strong month for equity markets, and this year was no exception. However, as the excitement of the early-year rally begins to fade, long-term investors are reminded that short-term market fluctuations are meaningless in the grand scheme of things. What truly matters is identifying companies with the potential to deliver exceptional returns over the long haul, regardless of how they performed in a single month. Two biotech stocks that have grabbed attention so far this year—Vertex Pharmaceuticals (NASDAQ: VRTX) and Moderna (NASDAQ: MRNA)—are perfect examples of this principle. While their stock prices have moved in opposite directions, both companies have the potential to generate outsized returns for patient investors. Let’s dive into why these two biotech giants are worth considering.
Vertex Pharmaceuticals is off to a stellar start in 2024. On January 30, the company announced a groundbreaking achievement: the U.S. Food and Drug Administration (FDA) approved Journivay, the first non-opioid oral pain relief medication to receive regulatory clearance. This news sent Vertex’s shares soaring, and for good reason. The opioid crisis has devastated communities across the U.S., and Journivay addresses a critical need for effective pain management without the dangerous side effects associated with opioids. This approval not only underscores Vertex’s commitment to innovation but also highlights its ability to fill unmet medical needs.
Vertex’s success isn’t limited to Journivay. The company has built a diverse portfolio of approved medicines, treating conditions such as sickle cell disease (SCD), transfusion-dependent beta-thalassemia (TDT), and cystic fibrosis (CF), its core area of expertise. While its CF franchise remains the primary driver of revenue, newer therapies like Alyfta (a next-generation CF treatment) and Casgevy (for SCD and TDT) are expected to significantly contribute to sales growth over the next two years. In the third quarter of 2023, Vertex reported a 12% year-over-year increase in revenue, reaching $2.77 billion, demonstrating its financial strength and momentum. Beyond its approved products, Vertex has a robust pipeline, including late-stage candidates like inaxaplin (for APOL1-mediated kidney disease) and povetacicept (for IgA nephropathy), both of which target conditions with no approved treatments addressing their root causes. With its strong financials, diversified portfolio, and promising pipeline, Vertex Pharmaceuticals is an excellent choice for long-term investors looking to capitalize on the biotech industry’s growth potential.
On the other hand, Moderna has faced a tougher journey in 2024. The company rose to fame in 2020 with the rapid development of its COVID-19 vaccine, a feat that few other companies could achieve. However, as the pandemic subsided, Moderna’s financial performance and stock price has struggled to regain momentum. Despite this, there are compelling reasons to believe that Moderna is poised for a strong comeback. Its innovative mRNA platform, which enabled the swift creation of the COVID-19 vaccine, remains a game-changer in the biotech industry. This technology holds immense potential for developing vaccines for other infectious diseases, many of which still lack effective treatments. Moderna’s mRNA expertise is likely to give it a competitive edge as it expands its product pipeline.
Moderna’s recent progress is a testament to its innovative capabilities. The company has already earned FDA approval for mRESVIA, a vaccine for respiratory syncytial virus (RSV), a significant achievement given the lack of effective treatments for this common and debilitating illness. Additionally, Moderna’s combination coronavirus/flu vaccine has shown promising results in phase 3 trials, further demonstrating the versatility of its mRNA platform. The company is also making strides in other areas, including its investigational personalized cancer vaccine, which has delivered remarkable results in phase 2 clinical trials. When combined with Merck’s Keytruda, this vaccine reduced the risk of recurrence or death in melanoma patients by 49% compared to Keytruda alone. Moderna’s pipeline also includes a phase 3 candidate for cytomegalovirus and several other promising therapies in phase 2 studies. While the stock may still be lagging, Moderna’s pipeline and regulatory progress over the next few years could lead to significant financial growth, making it an attractive investment opportunity for those willing to wait.
One of the most exciting aspects of Moderna’s story is its mRNA technology, which is faster and more adaptable compared to traditional vaccine development methods. This advantage could enable the company to quickly respond to emerging infectious diseases and address unmet medical needs in the future. Additionally, the success of its personalized cancer vaccine, if replicated in later-stage trials, could revolutionize the treatment of various cancers and position Moderna as a leader in the oncology space. With its robust pipeline, innovative platform, and demonstrated ability to deliver under pressure, Moderna is a biotech stock that long-term investors should keep on their radar.
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In conclusion, while the stock market’s short-term ups and downs can be enticing, it’s important for investors to stay focused on the long-term potential of their investments. Vertex Pharmaceuticals and Moderna are two biotech companies that exemplify this principle. Vertex’s diversified portfolio, strong financial performance, and cutting-edge pipeline make it a standout choice for long-term growth. Moderna, on the other hand, is a testament to the power of innovation and the potential for mRNA technology to transform the drug development landscape. Both companies remind us that patience and resilience are key to unlocking outsized returns in the stock market. If you’re looking for biotech stocks to buy and hold, Vertex and Moderna are certainly worth considering this month. And don’t forget to keep an eye out for those “Double Down” recommendations—they could just lead you to the next big thing in investing.
