The stock market has given investors plenty to talk about over the last few years, and those who have stayed in it through the ups and downs have dealt with their fair share of volatility to be sure. Still, the S&P 500 is trading up by more than 20% over the trailing 12 months.
If you're investing in stocks and planning on holding them for the long-term, you're going to experience rough market waters. No one can predict exactly what the market will do next.
However, if you're consistently investing in great businesses with multiple tailwinds to drive future growth, you can benefit from the best days in the market and use the worst days to put extra cash to work.
If you're beefing up your portfolio to kick off the new year, here are two names you'll want to consider when you go stock shopping.
1. Regeneron Pharmaceuticals
Regeneron Pharmaceuticals (REGN -0.60%) is a biotech company with a portfolio of high revenue-producing medicines that treat everything from rheumatoid arthritis to various vision-related diseases. As is the case with many healthcare-centric businesses, the fact that Regeneron develops medicines that are essential and even lifesaving for patients lends it considerable resilience in a wide range of market environments.
Case in point: Over the trailing five-year period, Regeneron has seen its annual revenue climb by close to 86%, while annual profits have jumped 105% in that same time frame. It's also worth pointing out that while the S&P 500 has clocked a return of 102% in the trailing five years, which is nothing to scoff at, Regeneron's total return in that same period is a whopping 133%.
Regeneron makes most of its money from two blockbuster treatments: eczema treatment Dupixent, which it co-developed and co-markets with Sanofi; and Eylea, which treats wet age-related macular degeneration, and was developed and is now co-marketed in partnership with Bayer. According to Statista estimates, Dupixent is on track to be the third top-selling drug in the world in 2024, second only to Merck's cancer drug Keytruda and Novo Nordisk's weight-loss drug Ozempic.
Oncology drug Libtayo, which Regeneron purchased from Sanofi, is the third-largest driver of revenue for the company. Libtayo brought in $232 million in global revenue in the third quarter of 2023, considerably less than the billions in revenue Dupixent and Eylea rake in annually for Regeneron but still an eye-popping 62% increase from one year ago.
Regeneron also just completed the purchase of Decibel Therapeutics, a company that makes genetic medicines targeting hearing loss. The company is awaiting priority review from the U.S. Food and Drug Administration (FDA) for odronextamab, a medicine that treats two common forms of non-Hodgkin's lymphoma.
While the first of key patents for Eylea expired last summer, others extend until 2027, assuming legal challenges don't prevail. The company just asked a court to block Amgen's patent for a biosimilar of Eylea and won a recent case regarding the same issue with Viatris. As for Dupixent, key patents for the drug don't expire until the beginning of the next decade.
Notwithstanding these elements, Regeneron's portfolio of market-leading, profitable drugs, and the other drugs it has coming down the pipeline could reap rewards many times over for this business in the years ahead. Long-term investors may decide that now looks like a good time to snag a piece of the action.
2. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX -0.46%) is known for its portfolio of market-leading cystic fibrosis drugs, which are the only medicines on the market that treat the underlying cause of this potentially life-threatening genetic disease. In the third quarter of 2023, Vertex raked in profits of $1 billion on revenue of $2.5 billion due to the power of its cystic fibrosis drug franchise, which consists of four approved medicines at the time of this writing.
However, Vertex just celebrated another huge win late last year when it and partner CRISPR Therapeutics became the first to ever garner regulatory approval for a gene-editing therapy. Vertex will accrue 60% of the development and marketing costs while taking home 60% of the profits from Casgevy.
Casgevy was approved to treat sickle cell disease and transfusion-dependent beta thalassemia in the U.K. in November, followed by the FDA's approval for the former indication in December and the latter indication in January. The therapy was approved for both indications in Saudi Arabia in January. Additional approvals are expected in the coming months. The EU has recommended conditional approval for both indications and is expected to release its final decision this quarter.
Sickle cell disease is a genetic illness that afflicts close to 20 million individuals worldwide. The disease develops when anomalies occur in hemoglobin, the protein in red blood cells that conveys oxygen, resulting in early cell death and a shortage of red blood cells.
Transfusion-dependent beta thalassemia is another type of rare inherited blood disorder in which the gene that makes hemoglobin is mutated, impairing the quantity and quality of red blood cells. Casgevy could pose a one-time functional cure for both of these potentially deadly disorders, so its approval is monumental for many reasons.
It will take time for Vertex to witness the fruits of its labor with respect to Casgevy, which is expected to run with a price tag of $2.2 million per treatment. The process attached to administering the gene-editing therapy takes months, even though the patient receives the dose all at once. This is because the patient's blood stem cells are gathered and tweaked in a lab before being reintroduced into their blood stream. There is also a considerable preparation and recovery process for patients who receive these treatments.
Vertex is coming from a position of strength with its existing portfolio, and this latest approval and the wave of approvals expected to come in the months ahead could usher in a monumental new period of growth for the business. It also has a range of other promising drugs in its pipeline, including new cystic fibrosis medicines, a non-opioid treatment for acute pain, and stem-cell based diabetes treatments. Investors looking for waving green flags don't have to look much further than this no-brainer healthcare stock.
