Investing in stocks isn't just for the rich and famous since quality stocks can be found at almost any price. Some are trading for well above $1,000 per share, while others go for less than $100 apiece. However, finding stocks under $100 may be better for those who are on a strict budget and who want to buy whole shares (versus fractional ones that some brokerages offer).
Let's discuss two healthcare-related stocks in this price range that could be excellent buy-and-hold options: Exelixis (EXEL -0.65%) and Axsome Therapeutics (AXSM -1.44%).
1. Exelixis
Exelixis' shares are changing hands for just under $22 apiece as of this writing, so investors can get four of them with $100, with change to spare. But why consider initiating a position in this stock? The biggest reason is Exelixis' proven ability to develop novel drugs in the field of oncology, one of the largest and most competitive areas in the entire biotechnology industry.
Although oncology is dominated by several much larger drugmakers, Exelixis has managed to carve out a small niche for itself thanks to Cabometyx, which treats some forms of liver and kidney cancer. Cabometyx is the top-prescribed tyrosine kinase inhibitor (a kind of therapy that specifically targets and destroys cancer cells) in renal cell carcinoma -- the most common type of kidney cancer -- and second-line hepatocellular carcinoma, the most common form of liver cancer.
Cabometyx continues to deliver clinical wins. Exelixis recently stopped a phase 3 clinical trial for its crown jewel early, after an interim analysis of the data from the study showed dramatic improvement in patients treated with Cabometyx compared to a placebo. The trial investigated the efficacy of Cabometyx as a therapy for advanced pancreatic or extrapancreatic neuroendocrine tumors.
Just a few days before, Cabometyx had recorded another win as a part of a combo treatment for metastatic castration-resistant prostate cancer. Clinical wins of this sort have been the norm for Exelixis, and that's why the company's revenue and earnings have generally moved in the right direction since Cabometyx first earned approval in the U.S. back in 2016.
There will likely be more label expansions for Cabometyx that should help it grow its sales further.
EXEL Revenue (Quarterly) data by YCharts.
Elsewhere, Exelixis is looking to develop new therapies. The company is targeting metastatic colorectal cancer and advanced kidney cancer with its most advanced non-Cabometyx candidate, zanzalintinib. There is unmet need in both of these areas; the five-year survival rate for colorectal cancer drops substantially if it's caught after it has metastasized.
And this type of cancer is currently the second-deadliest in the U.S. Developing a novel medicine that could address it would meaningfully move the needle for Exelixis.
The company has several other early-stage programs, too. Exelixis' expertise in developing cancer medicines should lead to key approvals, stronger revenue and earnings, and solid stock-market performance -- and all that at a share price equivalent to a few cups of coffee.
2. Axsome Therapeutics
Axsome Therapeutics currently has just two products on the market. One is Auvelity, indicated to treat major depressive disorder, and only approved about a year ago. The other is Sunosi, a treatment for excessive daytime sleepiness associated with narcolepsy (a sleep disorder) or obstructive sleep apnea; Axsome Therapeutics acquired it from Jazz Pharmaceuticals, also last year.
So the biotech doesn't currently record much revenue. In the second quarter, Axsome's top line was just $46.7 million although that was much better than the $8.8 million reported in the year-ago period.
This raises an important question: Does Axsome Therapeutics deserve its market capitalization of $3.6 billion? Yes, and here's why: The drugmaker has a deep pipeline that will help it improve its portfolio in the next few years, with both brand-new approvals and label expansions.
Auvelity is currently being investigated as a therapy for agitation in Alzheimer's disease; it's undergoing a second phase 3 clinical trial along those lines, having aced the first.
Axsome recently started a late-stage study for Sunosi in treating ADHD. The biotech should start two more late-stage trials for the drug in the fourth quarter of 2023 and the first quarter of 2024. It will test Sunosi as a therapy for binge eating disorder, and for shift work disorder (a sleep disorder that sometimes affects those who work at night or non-traditional working hours).
The company is also running a phase 3 study for AXS-12 as a potential medicine for narcolepsy. And it could make two regulatory submissions within the next nine months, for AXS-07 in migraine and AXS-14 in fibromyalgia (a chronic disease that causes pain and sleep problems). So, Axsome Therapeutics' lineup will look very different within the next two to three years.
In the meantime, its sales will continue growing, as Auvelity and Sunosi haven't been approved in their current indications for very long (Sunosi's first regulatory nod was in 2019). In my view, the full potential of Axsome Therapeutics' pipeline isn't yet baked into its market cap -- not even close. And with its shares trading for just under $77 apiece, investors can grab one with $100.
