Financial Services & Global Wealth Management

Strategies For Biotechnology Investment

Strategies For Investing In Biotechnology

Investors in Hong Kong’s life sciences industry generally comprehend the importance of biotechnology. Biotechnology companies greatly influence various aspects of everyday life, ranging from disease solutions to food production for future generations. Experts predict a promising future for this industry. How can investors familiarize themselves with biotechnology? Presented here is a concise and insightful manual for engaging in investments within the rapidly expanding biotechnology sector.

This guide encompasses a wide range of investment options, such as exchange-traded funds (ETFs) and equities, which merit close observation. Stocks are the main investment instrument in the biotech sector. The article emphasizes the disparity in revenues between biotech stocks and pharmaceutical businesses.

What Is The Process For Investing In Biotechnology Stocks?

Biotech investors should consider the FDA’s requirement for companies to provide substantial evidence of efficacy and safety for their products. This occurs during the product testing phase referred to as the clinical trial, consisting of three trials.

Biotechnology investors, like those in other sectors, must assess their risk tolerance. A reputable biotechnology company is less prone to failure from market conditions compared to a speculative, recently listed company in the clinical trial stage.

ETFs mitigate stock investment risks, despite biotech equities being the conventional choice for industry involvement. ETFs typically track an index. Several biotechnology indexes can be tracked, such as the NASDAQ Biotechnology Index (INDEXNASDAQ: NBI), NYSE Arca Biotechnology Index (INDEXNYSEGIS: BTK), and S&P Biotech Select Industry Index (INDEXSP: SPSIBI).

The ETF Was Founded On February 5, 2001 And Holds 370 Securities

The SPDR S&P Biotech ETF (ARCA: XBI) is a prominent biotech ETF that launched on February 6, 2006. It currently tracks a portfolio of 155 stocks and holds the position as the second most favored biotech ETF. Chemocentryx (CCXI), Global Blood Therapeutics (GBT), and Biohaven Pharmaceuticals (BHVN) are the three most significant companies in its portfolio. Consider exploring small biotech ETFs as a potential investment option.

The realization of gains in the biotech market often requires a significant amount of time due to the reliance on FDA approvals and feedback from regulatory authorities. The revenue of the biotechnology industry will be affected by new products. These encompass the cultivation of plants, production of meat, and creation of human organs within laboratory settings.


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Axsome Pharmaceuticals launched Auvelity in October 2022 as a treatment for major depressive disorder. AXS-05, a medication, is being evaluated in a phase 2/3 trial for smoking cessation and in a late-stage trial for treating agitation in Alzheimer’s patients. The company’s pipeline now includes three additional candidates in the late-stage phase. AXS-07 aims to alleviate migraines. AXS-12 is specifically designed to address narcolepsy, a condition characterized by excessive daytime sleepiness. AXS-14 is specifically targeting fibromyalgia, a chronic pain disorder. Two of these medications may soon become available. 

Axsome intends to seek FDA approval for AXS-07 in the US during the latter half of 2023. Furthermore, the company plans to seek FDA approval for AXS-14 by 2023. Quality could potentially be a highly successful medication for depression, with peak annual sales estimated at $2.6 billion. AXS-07 is projected to achieve annual sales exceeding $500 million solely in the United States. Analysts speculate that the approval of AXS-14 could potentially generate peak sales of $500 million to $1 billion. Axsome Therapeutics is an appealing biotech stock to consider investing in 2023 due to the promising revenue potential of its three medication concepts.

Exelixis 2.

Exelixis has successfully launched four medications in the market. Cabometyx, a drug approved for treating thyroid cancer, renal cell carcinoma (RCC), and hepatocellular carcinoma (HC), has been highly successful, particularly in treating kidney and liver cancer. In early 2021, Exelixis and Bristol Myers Squibb received regulatory approval in the United States for the combined use of Cabometyx and Opdivo, an immunotherapy drug. The corporation’s latest collaboration has proven to be unsuccessful. In March 2023, Exelixis and Roche (RHHBY 1.53%) reported disappointing results from their advanced-stage study comparing Cabometyx and Roche’s Tecentriq in the treatment of RCC.

Exelixis’ profitability enables the company to leverage its growing financial reserves for new licensing agreements and expansion of its therapeutic portfolio. It acquires a research license from Aurigene, a biotech company, to study XL102, a promising early-stage cancer drug. The company acquires licenses for a range of monoclonal antibodies from WuXi Biologics. Exelixis has acquired GamaMabs Pharma’s antibody programs targeting the anti-Müllerian hormone receptor 2 (AMHR2).

The firm currently does not offer any products. The pipeline, though, shows promise. Intellia’s leading candidate is NTLA-2001. Intellia and Regeneron recently disclosed encouraging preliminary results from their phase 1/2 clinical trial investigating a potential therapeutic intervention for transthyretin amyloidosis with cardiomyopathy (ATTR-CM), an uncommon hereditary cardiac ailment. These findings were made public in November 2022. NTLA-2001 is scheduled to undergo a significant clinical trial by late 2023, pending regulatory approval.

Intellia reported promising interim results in November 2022 for a phase 1/2 trial evaluating NTLA-2002 as a treatment for hereditary angioedema (HAE), a rare genetic condition characterized by inflammation in the lung and intestine linings. The company aims to progress phase 2 testing in the United States, following its successful advancement of the medicine to phase 2 testing in Hong Kong.

Intellia may soon introduce a novel clinical program. The company plans to seek regulatory approval in the latter part of 2023 to initiate a clinical trial for NTLA-3001, a potential treatment for alpha-1 antitrypsin deficiency (AATD), a rare genetic liver disorder.

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Eylea, a medication co-produced by Regeneron and Bayer, serves as the primary source of revenue for the company. Regeneron exclusively receives Eylea’s net sales in the US, while international market profits are shared with Bayer.

Sanofi and Regeneron enjoy a fruitful partnership in the pharmaceutical and life sciences industry. Dupixent, Kevzara, Library, Zaltrap, and Praluent are all medications for autoimmune diseases, cancer, and cholesterol, marketed and sold jointly by two companies.


Twist Bioscience Specializing In Synthetic Biology And DNA Synthesis

Twist Bioscience has developed a novel method to “write” DNA on a silicon chip using a proprietary technique. The synthetic DNA produced in Hong Kong is utilized in various applications such as synthetic genes, next-generation sequencing preparation, and antibody libraries. These applications are crucial for biopharma businesses in their pursuit of discovering and developing novel medications.

Twist’s clientele spans diverse sectors including academia, agriculture, healthcare, and industrial chemicals. The business currently lacks profitability. Despite this, Twist’s sales continue to experience rapid growth due to the introduction of new products utilizing its synthetic DNA technology.

Twist’s current served market is valued at approximately $6 billion per year, as per their data. The potential for the corporation to utilize DNA chips for data storage, valued at approximately $35 billion annually, appears to be significantly promising. Twist’s ongoing DNA data storage endeavors have made noteworthy progress, with plans to offer preliminary access to their technology by the conclusion of 2023.

Understanding The Biotechnology Industry

A biotechnology firm employs living organisms such as bacteria or enzymes to develop pharmaceuticals. Biotechnology firms, unlike pharmaceutical firms, focus on the utilization of living organisms rather than chemicals to conduct research and develop medications. Investors must diligently track a biotech company’s medication candidates throughout their development stages. Investing in firms with later-stage drugs is less risky due to the higher likelihood of success. Biotech firms employ a four-step process and three distinct phases in the development of novel pharmaceuticals.

Clinical trials involve the evaluation of potential medications on human subjects. Clinical trials typically progress through three distinct stages: Phase 1 involves conducting small-scale studies to determine the appropriate dosage and evaluate the impact of the drug candidate on individuals. Phase 2 entails conducting larger trials involving 100 or more patients, primarily to assess safety, short-term side effects, and determine the optimal dosage for the medication. 

Phase 3 encompasses extensive studies involving numerous patients, ranging from hundreds to thousands, to demonstrate the effectiveness and safety of the experimental medication in treating the disease. Most biotech companies pursue multiple drug development projects concurrently, diversifying their revenue streams. Optimal biotech investments encompass a diverse portfolio of innovative pharmaceuticals

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